A warm, dry and safe house with quality fittings, functioning appliances and aesthetic appeal can make a house a home and an employee happy.
Be a successful landlord
To help ensure staff look after housing you've supplied:
Have a signed Service Tenancy Agreement with staff renting from you
A service tenancy is the correct agreement when the accommodation is linked to employment. You can find a Service Tenancy Agreement template here.
Charge a bond
You are entitled to ask for a bond and must follow some basic rules to ensure you meet your requirements under the Tenancy Act - see charging a bond.
- a bond can be paid in a lump sum or instalments
- every bond payment must be lodged with Tenancy Services within 23 days here
- the landlord and tenant must both sign the bond lodgement form.
Complete a pre-inspection
Before staff move in, complete a property inspection together and note existing damage. Rectify anything that will impact on the tenants' lives.
- identify and fix hazards such as broken windows and holes in walls
- check and maintain smoke alarms
- ensure the house can be kept warm.
Undertake regular property inspections
Once staff move in, conduct regular house inspections throughout the tenancy period to ensure any damage or neglect is addressed (you must give 48 hours' notice).
Be realistic about what constitutes damage and what is wear and tear. Look for mould or dampness and undertake basic maintenance that will improve living conditions. Try our property inspection form.
- Perform basic maintenance. Keep the property in good repair by checking:
- gutters and downpipes are clear
- for any leaks in the roof
- for rotten weatherboards
- the chimney has been swept prior to winter.
- Perform basic maintenance. Keep the property in good repair by checking:
Discuss and come to an agreement on tasks you would like done by the tenant and how often, for example, lawns mowed at least fortnightly.
By discussing with and setting expectations with tenants, you are giving the message you care about your property and, in turn, they are more likely to take care of it.
Legal tenancy requirements
You are considered a landlord if you have houses on farm rented by farm staff or private tenants.
As a landlord, you have certain obligations under the Residential Tenancies Act and the Housing Improvement Regulations Act, summarised by TenancyServices.govt.nz here. The purpose of the Housing Improvement Regulations is to ensure properties are warm, dry, safe, and sanitary.
Housing must meet minimum requirements
Regulations include provisions for:
- Light, ventilation, drainage and dampness
- Sewerage and sanitation
- Room size, function and safety - often an issue for single-man accommodations which will not always meet these requirements; if these facilities are not available in the accommodation they MUST be available 24/7 within the main homestead for the worker.
- A clean property - if a landlord rents out a property contaminated by 'P' they are breaching their obligations under the Residential Tenancies Act 1986, as well as other legislation such as the Building Act and the Health Act.
Further information on legal tenancy requirements
- Summaries of the Residential Tenancies Act, the Housing Improvement Regulations Act, the Building Act, and the Health Act can be found at tenancyservices.govt.nz
- Download the Tenancy Services information pack for new landlords here
- Key rights and responsibilities of landlords and tenants can be found here
- The Residential Tenancies Act 1986 can be found at legislation.govt.nz
From 1 July 2019, it’s compulsory for all tenanted homes - including sleepouts - to have underfloor and ceiling insulation which meets the required standard where it can practically be installed.
- It is compulsory to provide an Insulation Statement with all new Tenancy Agreements.
- If you are unsure of the existing levels of insulation in your property, contact a professional, see the Insulation Association of NZ Inc. for members here
- Insulation must meet ‘R-value’ ratings. The higher the R-value, the better the insulation. Understand more about R-values here
Need to know:
Foil type insulation is now banned from being repaired or replaced. If you suspect you have this type of insulation be careful to turn off the mains power before checking.
More info here.
What if we can't access areas of the house to upgrade insulation?
If you (or your agent) are genuinely unable to safely access areas of the house you may qualify for an exemption. An example of where it would be impractical is if the house is built on concrete foundations - you would be unable to install underfloor heating.
See insulation exceptions at Tenancy Services
How do I know the R-value of existing insulation?
An R-value is a rating which measures how well insulation can resist heat flow; the higher the R-value the greater the insulating effectiveness. It is advisable to get an insulation expert or builder in to assess a property’s R-value.
Detailed information on R-values:
Further information on insulation
All tenanted houses (including caravans and sleepouts) are legally required to have working smoke alarms. These must be either photo-electric (long life) or hard-wired and installed according to the manufacturer’s instructions.
As a landlord you are required to supply and maintain smoke alarms. Smoke alarms must be situated within 3 metres of each bedroom and on all levels of multi level houses.
Further information on smoke alarms
- For smoke alarms in rental properties see tenancy.govt.nz
- For choosing, checking, and installing smoke alarms, see Fire Emergency New Zealand
- For landlord’s fire safety checklist - tips to ensure the safety of your tenants/employees, see Fire Emergency New Zealand
If your smoke alarms have a symbol like this, they are ionisation alarms and should be replaced. You may have to look underneath the alarm to see the symbol. Find more information here.
Questions frequently asked by employers
What value do I put on accommodation?
As an industry to maintain our reputation as good employers it is important to value accommodation fairly. If employees understand the financial benefit they are gaining, it allows a true comparison of total pay to other industries.
The IRD require a fair market rental is charged for accommodation provided to dairy farm employees. They expect that a “reasonable and appropriate process” is followed in determining the Market rental rate and this will include having a documented process that can be made available for review.
Market rent is described in the Residential Tenancies Act as the amount of rent a willing landlord might reasonably expect to receive, and a willing tenant might reasonably expect to pay, for a tenancy.
This means it needs to be similar to the rent charged for similar properties in similar areas. This can prove a little difficult if there are not many rentals in your area. Some ways of agreeing a fair market rental include considering;
- a valuation from a registered valuer;
- an estimate from a real estate agent or property manager, or other suitably experienced person;
- a review of comparable properties on internet sites that advertise rental property (for example, TradeMe).
- Talking to your accountant
- Checking valuation company information services such as QV https://www.qv.co.nz/property-trends/rental-analysis
Other factors that might be considered include:
- The location of the accommodation – including desirability, access to amenities, etc;
- The specific functional characteristics of the accommodation – including the number of bedrooms, size, parking, etc;
- The condition of the accommodation;
- Any restrictions of use.
What is the relationship between accommodation and the minimum wage?
The Ministry of Business, Innovation and Employment outlines that:
- “An employer must pay its employees at least the relevant minimum wage set annually under the Minimum Wage Act 1983. The minimum wage must be paid for each hour worked on the farm. Wages cannot be averaged over a season.
- Employees must be paid their wages in money, and cannot be paid through other non- cash benefits except deductions from their wages agreed by the employees for accommodation or other goods or services.”
So in effect both employer and employee may agree that the employer will provide accommodation to an employee, and also that the cost of that accommodation will be deducted from the employee’s wages.
This then allows you to use an employees wages including the rent portion when reviewing an employees hours to assess that they have been paid at least minimum wage for every hour worked.
What level of accommodation do I need to offer?
This depends on the quality of staff you want to employ. Good quality farm accommodation is likely to attract quality job applicants and employees. It is also likely to help you retain these employees.
The Health and Safety at Work Act 2015 details that PCBUs providing accommodation they own, manage or control to employees (where occupancy is necessary for work purposes because other accommodation is not reasonably available), they must, so far as is reasonably practicable, maintain the accommodation.
Further to this there is general guidance about farm worker accommodation. Including a basic list of conditions that the property must include.
These are the bare necessities you must provide, but it is best to be honest and consider if your accommodation will result in an employee who lives and works in their best health, mentally and physically. If the answer is no, then think about, and implement changes to improve it.
Of particular interest is insulation which is now required to be a term detailed in the tenancy agreement. Ceiling and underfloor insulation will be compulsory in all rental homes from 1 July 2019 where it is reasonably practicable to install.
How does an employee pay for accommodation?
Accommodation is often incorporated into the Total Package Value (TPV), or total earnings, that you offer as part of the terms and conditions of employment.
To fulfil IRD requirements you can either:
a) Take the rent out of the person's wages after tax has been paid. Note: the provision of accommodation is a taxable benefit so it is liable for PAYE.
b) Pay an accommodation allowance (which covers the value of the accommodation) within an employee’s wages and then deduct the rent back from the employee once tax has been paid on the total earnings or wages.
c) Pay Fringe Benefit Tax on the value of the accommodation.
Options a) and b) are essentially the same, there is just more paperwork in option b). Option c) is the only method which can be considered free rental.
The amount of rent paid for accommodation must be clearly written into the employment agreement and the employee must agree in writing to the deduction of rent from their wages. If they do not agree then no deduction can occur.
Find out more about employment agreements and why you must have them. Make sure your agreement includes any accommodation or other wage deductions and that they are specific.
Learn about your other legal responsibilities as an employer.
What notice period must I give tenants before entering the property?
- If you are coming onto the property to do section maintenance, e.g. mowing lawns or pruning trees, you do not have to legally give any prior notice but you cannot enter the dwelling.
- If you want to enter the property to do maintenance you must give 24 hours’ notice
- If you want to do a property inspection you are required to give tenants 48 hours’ notice
- Rights and responsibilities for landlords and tenants
Questions frequently asked by a sharemilker or contract milker
Should sharemilkers pay the farm owner rent for all the houses on the farm?
If you are a sharemilker or contract milker you should not have to pay the farm owner rent for any houses supplied as long as they are being used for staff that are working on the farm - this is considered part of the infrastructure of the business just like any other buildings on the farm such as cow sheds.
Is the landlord the farm owner or the sharemilker or contract milker?
If you are a sharemilker or contract milker you are deemed to be the landlord and can charge rent for the properties supplied., You are responsible for conducting property inspections and for any resulting damage from tenants.
Who is responsible for ensuring the house meets the required standard?
The farm owner is responsible for any capital structural requirements such as meeting insulation standards but as a sharemilker or contract milker you are responsible for managing the tenancy on a day-to-day basis, for example checking smoke alarms are working and conducting property inspections.
Who is responsible for damage?
It is important for farm owners and their sharemilker or contract milker to discuss who will be liable to pay for damages. Standard contracts don't currently take this into account. As contracts stand, if a house is destroyed or damaged the sharemilker or contract milker would be responsible for the whole cost to repair or replace.
A fairer way to manage this is by including a clause in the contract that states if there is damage to property then the sharemilker or contract milker will pay the excess and the farm/property owner pays the rest from their insurance cover. It is very important to address this matter or else it could cost a sharemilker or contract milker their business, which is devastating for them but also has implications on the business for the owner.
Changes to the Residential Tenancy Act Bill are coming
Under the Residential Tenancies Amendment Bill (No 2) 2017, which is at its second reading in Parliament (and likely to come into force within the next 12 months) the following changes are likely to be made:
- Under new clause 4A(2), landlords would have to provide a written statement, as part of the tenancy agreement, specifying whether or not the premises were insured. If the premises were insured, the statement would have to include:
- the amount of the excess under the insurance
- what relevant risks are insured against, and any relevant exceptions
- what (if any) acts or omissions of the tenant, or of a person for whose actions the tenant is responsible, would make insurance monies under the policy irrecoverable
Clause 7 of the bill seeks to amend section 49 of the Residential Tenancies Act by inserting new sections 49A to 49E regarding responsibility for damage to rental premises. Proposed subsection (3) outlines what the limits on a tenant’s liability would be.
There are further changes currently being considered by government. For up to date information always check www.tenancy.govt.nz