Blog » Renting to a family member

Renting to a family member

Alide Elkink  |  June 8, 2022

While the Residential Tenancies Act 1986 (RTA) generally applies to all residential tenancies, section 5 of the Act lists a significant number of situations where the Act is specifically excluded. Of particular relevance to family rental situations is s.5(1)(n), which excludes rentals where a rental property is used as a residence by the landlord, the owner of the premises, or a member of the landlord’s or owner’s family.

Section 8(1) of the RTA on the other hand, does allow for parties to a tenancy that is otherwise excluded from the Act, to agree that the RTA can apply as long as the agreement is made in writing. Modifications to the application of the RTA may be made but the intention of any modifications must be clearly stated and signed by both parties.

While this sounds all very straightforward, it is not necessarily as straightforward as it first appears.


A standard tenancy agreement is not enough

The biggest pitfall is that a standard tenancy agreement form, such as the one available from Tenancy Services, is not sufficient to contract back into the RTA. Even if both parties have signed the standard agreement, the Tenancy Tribunal, part of Tenancy Services that provides disputes resolution services for tenants, has no jurisdiction under the Act to mediate or provide any disputes resolution. This means that if, for example, you have bought a rental property for your daughter or son and friends when they go to university and they stop paying the rent, you have no ability to enforce payment or eviction through the Tenancy Tribunal.


A specific “contract-in” clause is required

In order for the RTA to apply to family rental situations, a specific “contract-in” clause must be added to the tenancy agreement. The clause should state that both parties (landlord and tenants) agree that the provisions of the RTA will apply and it must be signed by both parties.

Family rental situations can turn sour, which can in turn result in the breakdown in a family relationship. But with a tenancy agreement that includes a clause to contract back into the RTA and signed by both parties, family rentals can work extremely well.

So if you are contemplating a family rental situation, ensure that the tenancy agreement includes a specific clause that states that both parties agree to “contract back into” the RTA.