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Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

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tenancy

Can a landlord charge a fee for transferring a lease?

Key Takeaway

Under New Zealand law, landlords cannot charge a fee for consenting to a tenant's request to transfer their tenancy to another person, known as an assignment of tenancy. While consent fees are prohibited, tenants are responsible for the landlord's reasonable expenses incurred during the assignment process, such as preparing new tenancy documents.

Transferring a Residential Lease: Fees and Obligations in New Zealand

In New Zealand, the process of transferring a residential lease, known as an assignment of tenancy (the transfer of a tenant's rights and responsibilities under a tenancy agreement – a legally binding contract between a landlord and a tenant that sets out the terms and conditions of a tenancy – to another person), is governed by the Residential Tenancies Act 1986. This legislation sets out specific rules regarding a landlord's ability to charge fees for such transfers.

Landlord's Consent for Assignment

A tenant may assign their tenancy if the tenancy agreement does not specifically prohibit it [Source: Residential Tenancies Act 1986, s 43A(1)]. Where the tenancy agreement does not prohibit assignment, the landlord must not unreasonably withhold their consent to an assignment of tenancy [Source: Residential Tenancies Act 1986, s 43A(2)].

Prohibition on Charging Fees for Consent

The Residential Tenancies Act 1986 explicitly states that a landlord must not charge a tenant any fee for giving consent to an assignment of a tenancy [Source: Residential Tenancies Act 1986, s 43A(5)]. This means that a landlord cannot demand payment solely for agreeing to the transfer of the lease from one tenant to another. This provision aims to protect tenants from unfair charges when seeking to transfer their tenancy.

Tenant's Responsibility for Reasonable Expenses

While a landlord cannot charge a fee for giving consent, a tenant is responsible for paying the landlord's reasonable expenses incurred in respect of the assignment. These expenses may include, for example, the costs associated with preparing new tenancy documents, carrying out reference checks on the prospective new tenant, or other administrative tasks directly related to processing the assignment [Source: Residential Tenancies Act 1986, s 43A(6)]. It is important to distinguish these legitimate, reasonable expenses from a prohibited consent fee. The expenses must be actual, provable costs incurred by the landlord due to the assignment process.

What if a Prohibited Fee is Charged?

If a landlord charges a fee for giving consent to an assignment, this constitutes a breach of their obligations under the Residential Tenancies Act 1986. A tenant who has been charged such a fee may apply to the Tenancy Tribunal (an independent body that resolves disputes between landlords and tenants) to have the matter resolved. The Tenancy Tribunal has the power to order the refund of any unlawfully charged fees and may also impose exemplary damages on the landlord for breaching their obligations [Source: Residential Tenancies Act 1986, s 77, s 109].

When to Seek Independent Legal Advice

Individuals seeking to understand their specific rights and obligations regarding residential tenancies, including lease transfers or disputes over fees, should consult official information from Tenancy Services or seek independent legal advice. Free legal assistance may be available through Community Law Centres throughout New Zealand.

Key Resources