Tenancy Tribunal Rules Accommodation in Commercial Lease Falls Under RTA
📌 In brief
The Tenancy Tribunal ruled that accommodation within a commercial lease is primarily for residential use and thus falls under the Residential Tenancies Act 1986, ensuring the tenant's rights under the RTA are protected.
⚖️ Legal holding
A tenancy that includes accommodation used primarily for residential purposes falls under the Residential Tenancies Act 1986.
📖 Technical summary
The Tribunal found that the accommodation was primarily for residential use under the RTA.
📜 Headnote Official document
The Tribunal determined that accommodation within a commercial lease was primarily for residential use and thus fell under the jurisdiction of the Residential Tenancies Act 1986, despite the parties having a commercial agreement.
📚 Full judgment Official document
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[2026] NZTT 5419028
TENANCY TRIBUNAL AT INVERCARGILL | TE TARAIPIUNARA RETIHANGA KI WAIHŌPAI
APPLICANT: [redacted]
Tenant
RESPONDENT: [redacted]
Landlord
TENANCY ADDRESS: [ADDRESS], [POSTCODE]
ORDER
1. The property is a residential property, and the tenancy falls within the definition of the Residential Tenancies Act (RTA) and therefore all of the obligations under the RTA for both landlords and tenants apply.
Reasons:
1. Both parties attended the hearing. [NAME_5] represented the Applicant, and the Respondent was represented by Mr [NAME_4].
Background:
2. The parties entered into a commercial lease for a [NAME_6] in Southland. It included the accommodation, a separate property, with independent access to the [NAME_6], that was three bedrooms, a separate kitchen and living area, toilet, laundry and bathroom. It was fully self contained. The access to the residence is separate from the [NAME_6], that is, the accommodation commercial business could be easily two separate entities.
3. The property is for sale currently and was at the time the parties entered into the commercial lease, the advertisement states “accommodation included”.
4. The issues arose when the tenant raised concerns regarding repairs and the landlord stated that it was not within his obligations under the commercial lease.
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5. Whilst both parties had legal advice when they entered into the commercial lease, both chose not to enter a separate Residential Tenancy agreement. The tenant now seeks clarification as to the nature of the tenancy, is it a residential tenancy or a commercial lease. The tenant seeks the security of the Residential Tenancy Act.(RTA)
6. Whilst the landlord does not dispute the accommodation ‘exists’, he claims that the agreement was for a commercial lease, with significant low rent to include both. If the accommodation was deemed to fall under the RTA the rent would be higher given the obligations of a landlord under the RTA.
7. The applicant states that at the time they chose to have the commercial lease covering both buildings because of simplicity and because they did not understand the law in relation to giving up their rights under the RTA.
8. The Issue to determine is whether the tenancy falls within the RTA.
The Law:
9. Section 5(1)(a) of the RTA states that the Act does not apply to Commercial premises.
10. Section 2(1) definiens ‘commercial premises” as premises that are not residential.
11. Section 2(3) provides that if premises are used for both residential and commercial purposes, they are deemed residential unless it is provided, they were let “principally for purposes other than residential purposes”.
12. The Tribunal looks to the substance of the agreement and the actual use of the premises, not just the label given by the parties.
13. In summary the commercial property becomes residential for the purposes of the RTA if it is used, or intended to be used, mainly as a place of residence. If there is a mix of uses, the property is deemed residential unless it is shown that the main purpose is commercial.
Decision:
14. The landlord claims that the lease entered into was for a commercial property, it was a commercial transaction. That all parties had independent legal advice before signing. Further, that the [NAME_7] had accepted the terms with conditions that included “we would like it included that our clients have full tenancy of the dwelling and that they have the right to Air B n B the property if they so wish”
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15. He claims that he himself lived at the property at the time the tenants were shown through. He states that he did not know that the tenant would be staying there and living full time, and it was ten months into the tenancy when he was advised that in fact, he and his wife, [NAME_8] and [NAME_8] were living in the accommodation. He accepted that it was going to be used by the person running the business and that it would not be full time.
16. The number of nights the tenant stays at the property is not a decisive factor.
17. The insurance policy for the commercial building includes “alternative residential accommodation”
18. In relation to the properties consent, the correspondence from the Council states that “the property is in the General Residential Zone with the Commercial Precinct Overlay.” The commercial activity is a permitted activity in the Commercial Precinct provided it complies with each of the performance standards” It is therefore consented for residential use.
19. The property remains on the market, and it is marketed as ‘accommodation being attached’.
20. The landlord claims that there was no discussion about the transaction being anything other than a commercial transaction. He claims that the rent is cheap to include the accommodation and if it was separate to be considered under the RTA then the rent would be higher. He claims that the agreement at the time the commercial agreement suited the tenant given it was low rent for both the business and the accommodation.
21. The tenant claims that the person running the business stayed in the accommodation full time, and that the landlord should have known because he helped move in a couch and mattress for the tenant.
22. The accommodation is a separate building to the [NAME_6]. The commercial [NAME_6] is able to run independent of the accommodation. There is different access, and the accommodation is three bedroom, with a separate lounge and kitchen area, and has a separate bathroom, laundry and toilet area.
23. The accommodation and the [NAME_6] share separate electricity accounts.
24. The tenant claims they would never have contracted out of the RTA and allowed the landlord to use the lease as a ‘shield’ to avoid his responsibilities as a landlord.
25. Having considered all of the evidence and submissions by both parties, I am not satisfied on the balance of probabilities that the accommodation, was for any other purpose other than residential. It was not principally used for any part of the commercial property. Its primarily purpose was residential, to house the person operating the commercial premises. They can be separated out and the [NAME_6] and residence can operate as two separate entities.
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26. Given the above, I find that the property and tenancy does fall within the Jurisdiction of the tenancy Tribunal and RTA. All tenant and landlord obligations apply.
S Munro
02 June 2026
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Please read carefully: Visit justice.govt.nz/tribunals/tenancy/rehearings-appeals for more information on rehearings and appeals.
Rehearings You can apply for a rehearing if you believe that a substantial wrong or miscarriage of justice has happened. For example: • you did not get the letter telling you the date of the hearing, or • the [NAME_9] improperly admitted or rejected evidence, or • new evidence, relating to the original application, has become available.
You must give reasons and evidence to support your application for a rehearing. A rehearing will not be granted just because you disagree with the decision. You must apply within five working days of the decision using the Application for Rehearing form: justice.govt.nz/assets/Documents/Forms/TT-Application-for-rehearing.pdf
Right of Appeal Both the landlord and the tenant can file an appeal. You should file your appeal at the District Court where the original hearing took place. The cost for an appeal is $260. You must apply within 10 working days after the decision is issued using this Appeal to the District Court form: justice.govt.nz/tribunals/tenancy/rehearings-appeals
Grounds for an appeal You can appeal if you think the decision was wrong, but not because you don’t like the decision. For some cases, there’ll be no right to appeal. For example, you can’t appeal: • against an interim order • a final order, or the failure to make an order, where the amount in dispute on appeal is
less than $1000 • a final order to undertake work, or the failure to make an order, where the value of the
work in dispute on appeal is less than $1000.
Enforcement Where the Tribunal made an order about money or property this is called a civil debt. The Ministry of Justice Collections Team can assist with enforcing civil debt. You can contact the collections team on [PHONE] or go to justice.govt.nz/fines/civil-debt for forms and information.
Notice to a party ordered to pay money or vacate premises, etc. Failure to comply with any order may result in substantial additional costs for enforcement. It may also involve being ordered to appear in the District Court for an examination of your means or seizure of your property.
If you require further help or information regarding this matter, visit [NAME_10]/disputes/enforcing- decisions or phone Tenancy Services on [PHONE].
Mēna ka hiahia koe ki ētahi atu awhina, kōrero ranei mo tēnei take, haere ki tenei ipurangi [NAME_10]/disputes/enforcing-decisions, waea atu ki Ratonga Takirua ma runga [PHONE] ranei.
https://www.justice.govt.nz/tribunals/tenancy/rehearings-appeals https://www.justice.govt.nz/assets/Documents/Forms/TT-Application-for-rehearing.pdf https://www.justice.govt.nz/tribunals/tenancy/rehearings-appeals/ https://www.justice.govt.nz/fines/about-civil-debt/ https://www.[NAME_10]/disputes/enforcing-decisions https://www.[NAME_10]/disputes/enforcing-decisions http://www.[NAME_10]/disputes/enforcing-decisions/
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A manaomia nisi faamatalaga poo se fesoasoani, e uiga i lau mataupu, asiasi ifo le matou aupega tafailagi: [NAME_10]/disputes/enforcing-decisions, pe fesootai mai le Tenancy Services i le numera [PHONE].
Reasons:
❓ Frequently asked questions
What did this decision decide?
The Tribunal decided that the accommodation within the commercial lease was primarily for residential use and thus fell under the Residential Tenancies Act 1986.
What was the dispute about?
The dispute was about whether the accommodation within a commercial lease was primarily for residential use or commercial use.
How did the court decide, and why?
The court decided that the accommodation was primarily for residential use because it was used mainly as a place of residence, not for commercial purposes.
Which laws or rules were applied?
The Residential Tenancies Act 1986, sections 54 and 2(3) were applied.
What was the argument that mattered most?
The argument that mattered most was that the accommodation was primarily used for residential purposes, not commercial ones.
Was the decision for or against the person who brought the case?
The decision was for the person who brought the case, confirming that the accommodation falls under the Residential Tenancies Act 1986.
What does this mean for someone in a similar situation?
For someone in a similar situation, it means that if the accommodation is primarily used for residential purposes, it falls under the Residential Tenancies Act 1986, protecting the tenant's rights.
What evidence or documents mattered?
Evidence such as the advertisement stating 'accommodation included', the separate electricity accounts, and the intent of the parties played a role in the decision.