Huntly boarding house operator ordered to pay $8,956.28 for failing to lodge bonds

Published: 02 February 2021

A Huntly boarding house operator has been ordered to pay $8,956.28 and received a restraining order following evidence brought forward by MBIE’s Tenancy Compliance and Investigations Team (TCIT) at the Tenancy Tribunal.

A TCIT investigation found landlord Poomia Investments Limited failed to lodge the bonds for 37 of its tenants at Rawhiti Lodge boarding house, and asked eight of those tenants to pay rent in advance before the expiry of the period for which their rent had already been paid.

Tenancy Services Compliance and Investigations & Information and Education Manager Steve Watson says the way in which Poomia Investments Limited handled the lodgement of bonds and the requirement of excessive rent in advance was unlawful and unprofessional.

“Despite being informed by TCIT of their obligation under the Residential Tenancies Act 1986 (RTA) to lodge bonds, Poomia Investments made a conscious decision not to comply with this obligation,” says Mr Watson.

Poomia Investments was originally investigated by TCIT in October 2017 for failing to lodge bonds and was informed of its obligation under the RTA to lodge bonds. The landlord was made aware of TCIT’s expectation that it would lodge bonds moving forward.

Upon a complaint received in October 2019, TCIT investigated again and identified that Poomia Investments had continued not to comply with their bond lodging obligations; these breaches were then brought to the Tenancy Tribunal.

“Landlords of boarding houses need to be aware they are running a residential accommodation business; with this comes the obligation to comply with the RTA”, says Mr Watson.

“They cannot rewrite the rules if they are of the opinion that lodging bonds is too much of a burden; they need to comply with the law.

“Under the RTA, landlords who are operating a boarding house require a bond of more than one week’s rent, they must lodge that bond with Tenancy Services within 23 working days and provide their tenant with a receipt. Other landlords must lodge all bonds within 23 working days regardless of the amount.

“The lodgement of bonds is fundamental to the integrity of the tenancy system and Tenancy Services will not tolerate deliberate non-compliance with the RTA. Where necessary, TCIT will escalate to more punitive enforcement approaches when the initial attempts to work with landlords to achieve voluntary compliance are wilfully ignored  

“Under the second phase of the Residential Tenancies Amendment Act 2020, which comes into force on 11 February 2021, failing to lodge bond will be an infringement offence and a boarding house landlord may be liable for an infringement fee of $3,000.

“This is also a timely reminder that boarding house landlords should be preparing for 1 July 2021, when all boarding houses will need to be compliant with the Healthy Homes standards. These standards introduce minimum requirement for heating, insulation, ventilation, moisture and drainage, and draught stopping in rental properties.”

The total amount awarded by the Tenancy Tribunal was made up of $7,400 in exemplary damages for the failure to lodge bonds and $800 for the rent paid in advance, alongside costs of $756.28.

As a result of the previous non-compliance with the RTA, the Tribunal order restrains Poomia Investments from committing breaches of a similar nature in the future. Should the landlord be found to do so they may incur a fine up to $2,000.

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Last updated: 02 February 2021