Cash is king for underground landlords

In most cases tenants coughing up cash for their rental don’t have a tenancy agreement or pay a bond, leaving no official record of the tenancy, leading to problems if there is a dispute.

New Zealand Property Investors Federation president Peter Lewis has come up against the issue when he been called in by the Citizens Advice Bureau to help with thorny tenancies inquiries and he believes it is only going to become a bigger issue with tax payments under the new tax laws looming. 

He often finds landlords, particularly those receiving some kind of benefit, are renting out part of their property or another property for cash. “It leaves tenants in an invidious position. If there is an issue between a tenant and landlord and it is suggested the Tenancy Tribunal might be the appropriate place to settle the dispute, the tenant often refuses saying the landlord ‘wouldn’t like it’ and they don’t want to lose their home.”

Lewis says the only way underground tenancies come to light is if there is a bond paid, but there is no legal requirement for a landlord to request a bond, although most do. “However, not every landlord is conducting their tenancy in the right way.”