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Buying a Property with Tenants: How to Handle Rent and Bond Increases

Anna
28 February 2024

Purchasing a property with an existing tenant means taking over the current tenancy agreement as it stands. This situation limits your ability to make immediate changes, especially regarding rent and bond.

Rent Increase:

You are bound by the terms of the existing tenancy agreement.

If the rent was increased within the last year, you must wait until a year from that date before proposing another increase. Additionally, a standard notice period of 60 days must be provided to the tenant before the new rent takes effect.

Learn more - Everything you need to know about rent increases

Bond Increase:

Any adjustment to the bond can only occur in relation to a rent increase. It's important to note that the bond can only be increased proportionally to the rent increase and cannot exceed the original bond amount agreed upon in the tenancy agreement. For example, if the bond was initially set at three weeks' rent, you can't top it up to be to four weeks. If you increase the rent by $20, the bond can be topped up by an amount equivalent to the weekly increase, but not beyond the original bond cap.

Learn more: Buying a property with tenants? What you should know

The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.

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What the community has to say
  • PE
    Paul

    If the previous landlord has set a rent increase and then sells BUT the rent increase takes place after settlement - can the new landlord stop the rent increase and offer a new rent examples are : grossly under rented

  • AS
    Anna

    @Paul You can't simply "stop" the rent increase but as a new landlord you might be able to apply to the Tribunal to withdraw the previous landlord's rent increase notice, as per section 24 of the Act. Do note that the tenant is also within their right to challenge this proposed rent increase. So it would be up to the Tribunal to decide if it's valid, and/or on any specific rent amount.

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