The difference between having a flatmate and a tenant in your property and the legal differences and challenges under New Zealand property law. The law covers clear differences between a flatmate and a tenant – don’t be caught out!
Do I have a Tenant or a Flatmate?
Auckland Property Manager, Barry Bridgman, says that he key to a successful rental is every party knowing their responsibilities. With legal tenants, these responsibilities are clearly set out in the Residential Tenancies Act (a more user friendly version of this is the Ministry of Business, Innovation and Employment’s leaflet “Renting & You”). The responsibilities of a flatmate are less clear, yet therefore, more flexible.
Legally, the difference between a flatmate and a tenant is pretty clear; a tenant is named on the tenancy agreement. A flatmate is not specifically on the tenancy agreement, but does live at the property. It is always best when renting out a property or a room within the property, to ensure that the renter is included in the tenancy agreement. This means that the individual is legally responsible for any damage they inflict, as well as any bills for which they are exclusively responsible. Possibly more importantly, a tenant can be held accountable in the eyes of New Zealand law, for any rent arrears which they incur. A flatmate however, cannot.
Tenant or Flatmate – Which suits best?
Sometimes, it is preferable to have a flatmate, not a tenant. The most common case for this is if the property may need to be vacated at short notice. Tenants require 90 days written notice before they must vacate a rented property, which is not the case with a flatmate. Regardless of the situation, it is always strongly advised that a flatmate fills out a House Sharing Agreement with the landlord prior to starting the tenancy. A house sharing agreement, whilst not covered by New Zealand rental legislation, namely the 1986 Residential Tenancies Act, they are extremely useful for both ensuring that the terms of the rental are clear to both parties and in settling common disputes.
A house sharing agreement should clearly state the details of the rental. Obvious clauses, including rent amount, rent frequency, payment methods and tenancy tenure must be outlined in the agreement, but these are rarely the issues found with flatmate tenancies. The less obvious, but often more prickly issues like the splitting of bills, housework and responsibilities are also very useful to include. Also house rules regarding house guests, pets or smoking may be outlined within the agreement to ensure all parties are clear as to what is expected.
Where business starts, friendship ends. Often, friends are invited to rent a room, and in most cases, this is a very amicable, simple solution to two friend’s problems. However, sometimes, if the deal is not crystal clear from the outset, problems and disputes can occur.
A common dispute with flatmates is the responsibility for repairing damage to the property. With no Property Inspection Report (an integral part of a Tenancy Agreement), it is impossible to legally prove responsibility for damage. Of course, if a flatmate agreement shows signs of failing, the agreement may be turned into an official tenancy by placing the flatmate onto the tenancy agreement. This is done by legal contract between the landlord and the tenant. They would then require a 90 day written notice period.
It is especially important, if taking a bond from the tenant, that the bond is properly managed. Bonds must be registered and lodged with the Ministry of Business, Innovation & Employment within 23 working days. This protects both parties in the agreement by ensuring that there is an independent judge on any bond disputes.