One legal development warrants close monitoring- the Court of Appeal is expected to consider how rent repayment should operate where a property has been rented as residential accommodation despite being an unlawful residential premises.

This does not change the current law at this stage. However, the eventual Court of Appeal decision could have significant implications for landlords and property managers, particularly where apartments, converted spaces, studios or other areas have historically been used for residential purposes despite questions over their approved or lawful use.

The High Court has granted leave for While v Moffitt [2026] NZHC 2780 to proceed to the Court of Appeal.

The issue concerns section 78A of the Residential Tenancies Act, which allows the Tenancy Tribunal to order repayment of all or part of the rent paid while the premises were unlawful residential premises.

Why this is particularly interesting for Auckland CBD apartments

The issue deserves close attention in the Auckland CBD because the distinction between the approved use of a space and its practical use is not always straightforward.

A significant number of CBD apartments were originally designed and marketed with internal rooms variously described as a flexi-room, study or office, while in practice some of these spaces have been used as bedrooms for many years. In some cases, properties have also historically been advertised and rented in the market according to the number of rooms actually being used as bedrooms.

That does not necessarily mean those apartments are “unlawful residential premises” for the purposes of section 78A.
However, the Court of Appeal’s interpretation could become important where a property, or part of a property, has been represented or used in a way that is inconsistent with its lawful residential status.

A broad interpretation requiring full repayment of rent as the presumptive position could potentially produce substantial consequences.

For example, a tenant may have occupied an apartment for several years, received the benefit of the accommodation throughout that period and paid an agreed market rent. If a technical or historic compliance issue subsequently resulted in the premises being classified as unlawful, the question becomes whether repayment of 100% of the rent should automatically be the starting position, or whether the Tribunal should have greater discretion to recognise the actual circumstances and benefit received by the tenant.

This appears to be one reason the appeal is important: the High Court has acknowledged significant inconsistency in how the Tribunal and District Court have approached rent repayment in these cases.
We will monitor the Court of Appeal decision closely before drawing broader conclusions.