Unlawful Rentals in NZ - What Landlords Need to Know

What happened in While v Moffitt?

In September 2026, the High Court gave a tenant permission to take his case to the Court of Appeal (While v Moffitt [2026] NZHC 2780).

The tenant rented a downstairs unit for just over three years and paid more than $113,000 in rent. The unit didn't have the consent it needed to be a second dwelling. He also said the deck and conservatory above his outdoor area were unsafe. The Tenancy Tribunal awarded him $4,000, the District Court added $1,000, and the High Court kept that result.

Now the tenant can ask the Court of Appeal a bigger question: how much rent should a landlord have to refund when a property turns out to be unlawful?

What are "unlawful residential premises"?

Under the Residential Tenancies Act, a rental is an unlawful residential premises when it can't legally be lived in. Common examples include:

• a sleepout or minor dwelling built without building consent
• a garage or shed converted into a bedroom or unit
• a second dwelling that doesn't have the resource consent it needs

Why does this matter to landlords?

If a rental is unlawful, the Tenancy Tribunal can order the landlord to refund all the rent paid, or all of it minus a fair deduction. It also becomes much harder for the landlord to recover unpaid rent or claim for damage.

Since 2019 the Tribunal has usually taken a middle road. It weighs how serious the problem is against the fact that the tenant still had a roof over their head. When the home was safe and sound and the problem was a paperwork gap, refunds have tended to be small.

That approach relies on an earlier Court of Appeal case about a different part of the law. The Court of Appeal has never ruled directly on how rent refunds for unlawful premises should work. Now it will.

Could full rent refunds come back?

Probably not across the board. But no one can predict the outcome, and there's a real chance the courts become less forgiving. Even a small shift could be the difference between paying back a few thousand dollars and paying back years of rent.

Waiting to see what happens isn't a great plan. The safest move is to make sure your property is lawful now.

How to protect yourself as a landlord

• Check your paperwork. Make sure any extra dwelling, sleepout, minor unit or conversion has the right building and resource consents for people to live in it.
• Look at the property with fresh eyes. Additions or alterations done years ago can still be a problem, even if a previous owner did them.
• Get advice early. If something doesn't add up, talk to your council, a building professional or a lawyer before you advertise or renew a tenancy.
• Talk to us. Ted Property Management can help you work out where your property stands and what your options are.

Frequently asked questions

Can I rent out an unconsented sleepout in NZ?
It's risky. If the sleepout can't legally be lived in, the Tenancy Tribunal can order you to refund some or all of the rent you've been paid.

Do I have to refund rent if my rental is unlawful?
The Tribunal can order a full refund, or a full refund minus a fair deduction. At the moment it usually looks at how serious the problem is, but the Court of Appeal may change that approach.

How do I check whether my rental is consented?
Ask your local council for the property file or a LIM report, and compare it with what's actually on the site.

The bottom line: "they had somewhere to live" may not protect you the way it used to. A bit of checking now could save you a very expensive surprise later.

Thanks to Sarina Gibbon of Tenancy Advisory Limited for flagging this case. Sarina works hard to keep property managers up to date with changes that affect landlords and tenants. You can read the full High Court decision (PDF) here.