A recent Tenancy Tribunal decision gives us an opportunity to consider the strengths and limitations of fixed term tenancies.

Background

Shadrock was a tenant under a fixed-term residential tenancy. She attempted to terminate her tenancy, citing that the rent was too expensive. The landlord reminded her that she had a fixed-term tenancy and could not end it by notice. Shortly thereafter, she tried to terminate the tenancy under s 56B of the Residential Tenancies Act, which allows tenants to urgently withdraw from residential tenancies if they have been victims of family violence. She could not, however, provide the evidence required by the Act.

Shadrock eventually vacated the premises and the landlord re-took possession. The landlord sought an order from the Tenancy Tribunal seeking payment of the bond to them, payment for rent up to the date they had re-taken possession, and other costs (including the costs to repair water damage that had occurred to the premises).

The Tribunal found that the tenant had no grounds to terminate the lease under s 56B, ordered that the entirety of the bond be released to the landlord, and that the tenant pay an amount to the landlord for cleaning and carrying out repairs to the premises.

S 56B Residential Tenancies Act 1986

This section permits a tenant to withdraw from a residential tenancy (whether periodic or fixed term) with 2 days’ notice, provided qualifying evidence is provided showing that either the tenant or a dependent of the tenant has been the victim of family violence while a tenant of the premises.

The qualifying evidence must be given by one of a broad number of prescribed people, such as a medical professional, police employee, social worker, school principal, or lawyer, and can be:

• a written statement that they reasonably believe that the tenant or their dependent has been a victim of family violence;
• the first page of a family protection order;
• a Police safety order; or
• a charging document under s 14 of the Criminal Procedure Act 2011 relating to family violence against the tenant.

All of the above must show or state that the violence occurred while the tenant was a tenant of the premises.

If the tenant is the sole tenant under the lease, the lease immediately terminates. If there are remaining tenants, the rent is temporarily reduced for two weeks and a special procedure determines how the bond is to be treated.

Termination of a Fixed-Term Residential Tenancy

Landlords and tenants are obviously limited in their ability to terminate a fixed-term tenancy prior to its expiry. Aside from the provisions of s 56B, a tenant may terminate a fixed-term tenancy:

• where the premises is destroyed or otherwise rendered uninhabitable; or
• where the premises has been contaminated above the prescribed maximum safe level.

A landlord may also terminate a fixed-term tenancy with 14 days’ notice where a tenant has assaulted the landlord, a member of the landlord’s family, or the landlord’s agent.

The Tenancy Tribunal may also order a residential tenancy to be terminated where the tenant is chronically arrears in rent, has seriously breached the tenancy agreement, or has committed incidents of anti-social behaviour.

Tenant’s Liability for Damage to the Premises

In Shadrock’s case, the tenant was found to have carelessly, but not intentionally, caused water damage to the premises from a series of accidental floods in the kitchen and bathroom.

Section 49B(3)(a) of the Residential Tenancies Act sets out a tenant’s liability for damage to premises:

• When caused carelessly and covered by the landlord’s insurance, the tenant’s liability is limited to either the landlord’s excess, or four weeks’ rent (whichever is lesser).
• When caused carelessly and not covered by the landlord’s insurance, the tenant’s liability is limited to four weeks’ rent.
• When caused intentionally, the tenants will be liable for the costs of repair, and an insurer will be entitled to pursue the tenant for the full costs of repair.

A Trap For Unwary Players

A fixed term tenancy of longer than 90 days does not automatically end on the scheduled end date – it will instead automatically become a periodic tenancy unless either the landlord or the tenant give written notice to the other between 21 and 90 days before the end of the term, confirming that the tenancy will end on the end date.

Conclusion

Even if a fixed term tenancy is brought to an end correctly, there can be unanticipated costs for the tenant. Both parties – landlord and tenant - need to be aware of their rights and obligations when a tenancy ends, whether it is a fixed-term or periodic tenancy.