Queenstown landlord fined $113,000 for unlawful boarding house

A Queenstown landlord has been fined more than $113,000 for illegally using his property as a boarding house for 22 tenants — migrant workers.

Landlord James Truong must pay this amount to the Ministry of Business, Innovation and Employment (MBIE) on behalf of the tenants, who were primarily employed in Queenstown's hospitality industry.

In 2020, the Queenstown Lakes District Council and MBIE's Tenancy Compliance and Investigations Team warned Truong to stop using the property as a boarding house or apply for permission to formally change its use.

He was clearly informed the rules of operating a boarding house and communicated his decision to return the property to use as a regular home.

However, after receiving a complaint in 2023, the team investigated the property again and found 11 people living in the five-bedroom house, and a further 11 people in two converted garages and a shed.

The investigations team took the case to the Tenancy Tribunal, which found Truong committed "multiple breaches of the Act" including operating an unconsented boarding house, failing to meet healthy homes standards, interfering with tenants’ electricity supply, invalid rent increases and harassment of a tenant.

The property had several problems, such as electricity overloading, missing smoke alarms and non-compliance with healthy homes standards.

Truong claimed the premises were safe and compliant, and he was simply helping his tenants out, but the tribunal declared the premises to be unlawful residential premises, as he did not have the necessary consent to operate a boarding house with six or more tenants.

Investigations team national manager Brett Wilson said Truong was "an experienced landlord who would have been well aware of his obligations and responsibilities under the Act, including through previous interactions with him".

"Mr Truong knew the rules but chose to ignore them. There was significant non-compliance in this case with multiple breaches of the Act ranging from failure to comply with healthy homes and insulation statement requirements to interfering with the supply of electricity. The level of damages awarded reflects the seriousness of the non-compliance in this case and the number of people affected," he said.

Wilson said the tenants were in a vulnerable situation, given most of them were new to the country and there was a shortage of rental properties in the Queenstown area.

"Many of the tenants were overseas workers on working holiday visas who had little knowledge of their rights as tenants in New Zealand. They were also working in a location with a shortage of rental accommodation which made them vulnerable to a landlord who was knowingly operating outside of the Residential Tenancies Act."

The adjudicator, R Woodhouse, said the investigation had been conducted in a fulsome and careful manner by MBIE, saying: "The witness evidence was consistent and credible".

Woodhouse also did not accept that Truong was motivated by purely altruistic intentions, noting the commercial levels of rent charged at the premises were not consistent with that approach, and when attention from authorities came onto the premises, the tenancies were abruptly terminated.

The Tribunal also criticised Truong for secretly recording private conversations between tenants and MBIE investigators, using security cameras installed throughout the property.

Truong was ordered to pay $113,723.56 for breaches of the Residential Tenancies Act 1986, and to refund 40% of the rent paid while the property was operating as an unlawful boarding house.

He was also issued with a three-year restraining order from committing any further unlawful acts related to operating a boarding house.