Finding the right type of rental agreement is crucial whether you're a tenant searching for a new home or a landlord looking to lease your property. There are various types of tenancy, each with its own characteristics and benefits. Understanding these options can help you make informed decisions and ensure a smooth rental experience.

In this article, we'll explore the different types of residential tenancy agreements available in Auckland, detailing their key characteristic and benefits.

Types of Tenancy

Auckland offers a variety of tenancy types to suit different needs and lifestyles. Let's explore the main options available to tenants and landlords.

1. Fixed-Term Tenancy

A fixed-term tenancy is a rental agreement with a defined start and end date. This type of tenancy is common in Auckland and typically lasts for a set period, such as six months or one year.

Characteristics:

• Clear Duration: Both the landlord and tenant agree on a specific timeframe for the tenancy. This period is clearly outlined in the rental agreement.
• Stable Rent: The rent amount remains constant throughout the entire term, providing financial predictability for both parties.
• Stability: Fixed-term tenancies offer stability, ensuring that tenants have secure housing for the agreed period and landlords have a guaranteed rental income.

Ending the Agreement:

• Tenancy Automatically Becomes Periodic: If notice isn’t given by either party, all tenancies automatically roll over to period terms upon the fixed term expiry. The tenant must give 28 days’ notice to vacate prior to the fixed term end date, the landlord must provide a valid reason and the correct notice period to the end the tenancy.
• Early Termination: If either party wants to end the tenancy before the agreed date, they must follow the legal notice requirements. This often involves providing notice and possibly paying penalties depending on the terms of the agreement. This agreement can only end early by mutual agreement.

Fixed-term tenancies are ideal for those who prefer a clear structure and commitment, making it a popular choice for both tenants and landlords in Auckland.

2. Periodic Tenancy

A periodic tenancy, also known as a month-to-month tenancy, differs from a fixed-term tenancy in that it doesn’t have a set end date. This type of tenancy continues until either the landlord or tenant decides to end it.

Characteristics:

• Indefinite Duration: The tenancy lasts indefinitely until either party provides notice to terminate the agreement. This flexibility can be beneficial for tenants and landlords who prefer not to commit to a long-term lease.
• Rent: As with all tenancies, rent can only be increased once every 12 months.
• Flexibility: Periodic tenancies offer greater flexibility, making it easier for tenants to move with relatively short notice and for landlords to adjust rental terms as needed.

Ending the Agreement:

• Notice Period: To end a periodic tenancy, the tenant must provide a minimum of 28 days' notice; unless agreed otherwise. On the other hand, landlords are required to give at least 90 days' notice, provided they give a valid reason. In some situations, such as selling the property or moving a family member in, landlords may need to provide only 63 days' notice.
• No Fixed End Date: Unlike fixed-term tenancies, periodic tenancies do not automatically terminate. They continue rolling over month-to-month until either party decides to end the agreement with the appropriate notice.

You can use this tool for notice to end a tenancy.

Periodic tenancies are ideal for those who value flexibility and the ability to adapt to changing circumstances without the constraints of a long-term lease.

3. Room-by-Room Tenancy

In Auckland, another type of residential tenancy is the room-by-room tenancy. This arrangement involves renting out individual rooms within a larger property.

Characteristics:

• Separate Tenancies: Each room in the property is treated as a separate tenancy, meaning each tenant has their own rental agreement. This is common in shared houses or flats where tenants may not know each other.
• Shared Common Areas: Tenants share common areas such as the kitchen, bathroom, and living spaces. It's essential for landlords to clearly outline the rules for using these shared areas to avoid conflicts.
• Less Formal Agreements: The terms of room-by-room tenancies may be less formal compared to standard tenancy agreements. However, it’s still important for both landlords and tenants to have a written agreement outlining the terms of the tenancy.

Room-by-room tenancies are particularly popular among students, young professionals, and others looking for more affordable housing options with the flexibility of shorter-term commitments.

4. Short Fixed-Term Tenancy

Like a standard fixed-term tenancy, a short fixed-term tenancy has a specific start and end date. However, the duration of this type of tenancy is shorter, typically lasting for a few months rather than a year or more.

Characteristics:

• Temporary Situations: Short fixed-term tenancies are ideal for temporary situations where tenants need housing for a specific period, such as short-term work assignments, academic terms, or transitional living arrangements.
• Flexibility: These tenancies offer tenants the flexibility to find more permanent housing solutions while providing landlords with consistent rental income for the agreed-upon period.

Short fixed-term tenancies provide a balance between the stability of a fixed-term lease and the flexibility needed for temporary living arrangements.

5. Boarding Houses

Boarding houses are properties where multiple tenants rent individual rooms and share common facilities, such as kitchens and bathrooms. This type of accommodation provides an alternative housing option, especially in areas like Auckland where rental demand is high.

Characteristics:

• Individual Rooms: Tenants typically rent individual rooms within the boarding house, which may vary in size and amenities.
• Shared Facilities: Common areas like kitchens, bathrooms, and sometimes living spaces are shared among tenants. It's essential for landlords to maintain these shared facilities to a high standard.
• Landlord Services: In some cases, landlords may provide additional services such as meals, cleaning, or laundry facilities as part of the rental arrangement.
• Specific Regulations: New Zealand law has specific regulations governing boarding houses to ensure the safety and well-being of tenants. Landlords must comply with these regulations to operate legally.

Boarding houses cater to individuals who prefer shared living arrangements and may offer a more affordable housing option compared to renting an entire property.

6. Service Tenancy

Service tenancies are arrangements where tenants, often employees, live on the property as part of their job responsibilities. This type of tenancy is common in situations where certain roles require on-site presence, such as caretakers, security personnel, or property managers.

Characteristics:

• Tied to Employment: Service tenancies are typically tied to employment contracts. The tenant's ability to reside on the property is contingent upon their employment status.
• Rent Subsidization: In some cases, the rent for service tenancies may be subsidized or included as part of the employee's compensation package. This can be an attractive benefit for employees, especially if the property is in a desirable location.
• Special Considerations: Service tenancies may come with specific terms and conditions tailored to the nature of the tenant's role and responsibilities. Landlords and tenants should clearly outline these terms in the tenancy agreement.

Service tenancies provide a convenient housing solution for employees who need to be onsite for their job roles, offering both accommodation and employment benefits within the same arrangement.

7. Build-to-Rent Tenancy

Build-to-rent properties are purpose-built for rental rather than for individual ownership. This emerging trend in the property market offers a unique housing solution, particularly in urban centres like Auckland.

Characteristics:

• Professional Management: Build-to-rent properties are typically managed by professional property management companies, ensuring high-quality service and maintenance for tenants.
• Quality Amenities: These properties often come equipped with high-quality amenities and services, such as communal spaces, fitness centres, and concierge services, to enhance the tenant experience.
• Long-Term Rentals: Build-to-rent properties offer long-term rental options, providing tenants with stability and security in their housing arrangements.
• Community Atmosphere: With multiple tenants residing in the same development, build-to-rent properties foster a sense of community, creating opportunities for social interaction and networking among residents.

Build-to-rent tenancies cater to tenants seeking a modern, well-managed rental experience with access to premium amenities and a strong sense of community.

Key Considerations for Deciding Type of Tenancy

Before deciding, it’s important to consider several factors to ensure the chosen tenancy aligns with your specific requirements and circumstances. Here are some key considerations to keep in mind when deciding on the type of tenancy that’s best for you.

1. Duration of Stay:

Determine how long you plan to stay in the property. Fixed-term tenancies are suitable for those who prefer a stable, long-term arrangement, while periodic tenancies offer flexibility for short-term living.

2. Financial Stability:

Fixed-term tenancies provide stable rent throughout the agreement period, which can be beneficial for budgeting.

3. Flexibility Needs:

Consider your need for flexibility. Periodic tenancies are ideal if you anticipate potential life changes, such as job relocations or personal circumstances that might require you to move on short notice.

4. Living Arrangements:

Decide if you prefer renting an entire property or just a room within a shared house. Room-by-room tenancies and boarding houses are good options for those looking for more affordable, communal living arrangements.

5. Employment Situation:

For employees who need to live on-site as part of their job, service tenancies are a practical choice. This arrangement often includes rent subsidization or inclusion as part of the compensation package.

6. Housing Quality and Amenities:

Build-to-rent offers modern amenities and professional management, catering to tenants looking for high-quality, community-oriented living environments.