Property Title and the Residential Tenancies Act in New Zealand: What Landlords and Buyers Must Know

How the Residential Tenancies Act Affects Your Property Title

The Residential Tenancies Act 1986 is the backbone of landlord-tenant law in New Zealand. If you own — or are buying — residential rental property, understanding how this Act intersects with your property title is essential. The title reveals the legal structure of your ownership, while the Act defines what you can and cannot do with tenants living on that property.

This guide explains the key connections between your title and tenancy law, what to check before buying a rental property, and how to protect yourself as a landlord.

What the Residential Tenancies Act Covers

The Residential Tenancies Act 1986 (RTA) governs virtually all residential tenancies in New Zealand. Key provisions include:

• Tenancy agreements — Mandatory written agreements for all residential tenancies
• Landlord obligations — Maintaining the property in a reasonable state of repair, complying with all building and health regulations
• Tenant rights — Quiet enjoyment, reasonable privacy, protection from unreasonable rent increases
• Bond requirements — Maximum 4 weeks' rent, lodged with Tenancy Services
• Termination rules — Specific notice periods and valid reasons for ending a tenancy

Recent amendments (2020) added stricter rules around:

• Healthy Homes Standards — minimum heating, insulation, ventilation, moisture ingress, and draught stopping requirements
• Limiting rent increases to once every 12 months
• Prohibiting rental bidding
• Removing no-cause 90-day terminations for periodic tenancies (subsequently modified by the National-led government in 2024)

Title Types and Tenancy Implications

Freehold (Fee Simple) Title

The most common title type for residential rental properties. As the freehold owner, you have full ownership rights and can rent the property subject to any restrictions registered on the title. Check your Record of Title ($42.90) for covenants or encumbrances that might restrict renting.

Unit Title

Common for apartments and townhouses. Unit title properties have a body corporate with by-laws that may restrict:

• Short-term rentals (Airbnb-style lettings)
• Maximum number of occupants
• Pet policies for tenants
• Noise restrictions and common area usage

Before buying a unit title rental, obtain the body corporate rules and check the title for any Guaranteed Search ($45.90) that shows all registered interests, including the unit title declaration.

Cross Lease

Cross lease titles create a unique situation for landlords. You own an undivided share of the underlying land plus a lease of your specific flat. Key tenancy implications:

• Any alterations to the flat (including tenant modifications) may require consent from all cross-lease holders
• The flats plan on the title must accurately reflect the current building — discrepancies can cause serious problems at sale
• Tenants should be informed that the property is cross-lease, as it affects their rights

Read more about cross lease vs freehold titles in New Zealand.

Leasehold

If you're buying a leasehold property to rent out, you need to understand the ground lease terms — because your leasehold interest has an expiry date. Key considerations:

• Ground rent is typically reviewed every 7 or 21 years and can increase substantially
• As leasehold landlord, you're effectively a sub-landlord — the ground landlord is above you
• Tenants have rights under the RTA regardless of your leasehold status
• Financing a leasehold rental property is more difficult, and banks may require larger deposits

What to Check on the Title Before Buying a Rental Property

1. Restrictive Covenants

Covenants on the title can limit how you use the property. Common rental-related restrictions include:

• Prohibiting commercial use (which could include short-term holiday lets)
• Limiting the number of dwellings on the site
• Requiring specific maintenance standards
• Restricting exterior modifications

A Historical Title ($42.90) search shows the full covenant history, including any that have been removed or modified.

2. Easements

Easements registered on the title directly affect tenants:

• Right of way — Shared access must be maintained for all parties, including tenants
• Utility easements — Drainage and power easements may restrict building or landscaping
• Pipeline easements — Can prevent tenants from erecting structures or planting trees

Learn more about how to check for easements on a property title.

3. Encumbrances and Mortgages

Existing encumbrances on the title may affect your ability to:

• Rent the property for certain uses
• Subdivide or develop (relevant if you plan to add minor dwellings)
• Make alterations required by Healthy Homes Standards

4. Caveats

Any caveats on the title signal that someone claims an interest in the property. This could be a former owner, a tenant with a registered lease, or a creditor. Always investigate caveats thoroughly — a Guaranteed Search gives you official confirmation of the current title state.

Landlord Obligations Under the RTA That Connect to Your Title

Healthy Homes and Title Compliance

The Healthy Homes Standards require landlords to provide:

• A fixed heating device in the living room capable of reaching 18°C
• Ceiling and underfloor insulation (where applicable)
• Extract fans in bathrooms and kitchens
• Ground moisture barriers (if there's a subfloor)
• Draught stopping

For some properties, title restrictions may complicate compliance. For example:

• Heritage covenants may restrict window modifications needed for ventilation
• Body corporate rules may limit where heat pumps can be installed
• Cross-lease agreements may require neighbour consent for exterior alterations

Maintenance Obligations and Title

Under the RTA, landlords must maintain the property in a reasonable state of repair. For multi-unit properties, the title and body corporate agreement define who is responsible for what:

• Unit title: Body corporate maintains common areas; owner maintains the interior
• Cross lease: All owners share responsibility for the common areas
• Freehold: The landlord is responsible for everything on the title

What Tenants Can and Cannot Do Under the RTA

Minor Changes

Tenants can make minor changes without landlord consent (with conditions):

• Hanging pictures and shelves
• Installing baby gates
• Garden plantings (removable)
• Installing curtains or blinds

However, if your title has restrictive covenants or you're in a cross lease or unit title, some of these "minor" changes may actually breach the title restrictions. This creates a conflict between the RTA and your title obligations.

Subletting

Under current RTA provisions, tenants cannot sublet without landlord consent. As a landlord, you can refuse subletting — but you must not unreasonably withhold consent. Check your title for any restrictions on the number of occupants, as subletting could breach those restrictions.

When Buying a Rental Property: Your Due Diligence Checklist

Before making an offer on any rental property, order these searches:

1. Record of Title with Diagram ($42.90) — Check title type, covenants, easements, and encumbrances
2. Historical Title ($42.90) — Review the title's history for removed interests or past issues
3. Guaranteed Search ($45.90) — Official confirmation of all current registered interests
4. Legal Owner Search ($65.90) — Verify ownership and check for any caveats
5. Pre-Purchase Due Diligence Package ($189.90) — Complete bundle for comprehensive review

Also request from the vendor:

• Current tenancy agreement(s)
• Rent ledger showing payment history
• Healthy Homes compliance statement
• Body corporate financials (for unit titles)
• Any outstanding Tenancy Tribunal orders
• Insurance claim history

Selling a Rental Property: What the RTA Requires

When selling a tenanted property, you have specific obligations under the RTA:

1. Disclosure — You must inform the buyer about existing tenancy arrangements
2. Notice periods — If you want vacant possession, you must give proper notice under the RTA (currently 90 days for periodic tenancies in most cases)
3. Settlement adjustments — Bond transfers and rent adjustments must be calculated at settlement
4. Tenant access — Tenants have the right to reasonable peace and quiet during open homes

For more on selling with title restrictions, see our guide on how to sell a property with title restrictions in New Zealand.

FAQ: Property Title and the Residential Tenancies Act

Can a tenant register a caveat on my property title?

Yes, under certain circumstances. A tenant with a long-term lease (3+ years) can register their lease on the title, which effectively creates a caveat-like interest. Tenants may also lodge a caveat if they claim an equitable interest — for example, if they've contributed financially to property improvements. If a caveat appears on a property you're considering buying, investigate it thoroughly with a Legal Owner Search.

Do I need to tell tenants I'm selling?

Yes. Under the RTA, you must give tenants reasonable notice before entering the property for inspections or open homes. You must also inform them that the property is for sale. The tenancy continues regardless of the sale — the new owner becomes the new landlord.

What happens to the bond when a tenanted property sells?

The bond stays lodged with Tenancy Services. At settlement, the vendor and purchaser agree on bond adjustments, and the new landlord's details are registered with the Tenancy Tribunal. The tenant does not need to pay a new bond — the existing bond simply transfers to the new ownership.