Renting out unconsented basement conversion

[Sicknote]

Hi everyone,

My wife and I are currently property hunting and, we've been hoping to find a property with separate living space. We're both British and we regularly have family and friends over to visit which is why we'd like somewhere with the additional space. Unfortunately, the reality in our area (Auckland) is that we can only afford this additional space if we rent the space out whenever we don't have anyone visiting.

We recently viewed a property and it had the additional space but the LIM identified that the space was an unconsented conversion from rumpus room to a self contained flat (Granny Flat). The LIM says that the council is aware and has decided to take no further action

The granny flat has 2 bedrooms, a bathroom and a kitchenette. For the purposes of selling the house, the owner has removed the sink from the kitchenette and

We want to do everything above board and legally so my questions are:

1. Are we forced to consider this space a minor dwelling as soon as we put the kitchen sink back in?
2. Could I just get the plumbing work consented and then rent out the space as a 'flat' without it being considered a 'minor dwelling'? The tenants would need to be happy with the fact that it would still have a stairwell to the main house.
3. Can we rent out the bedrooms individually to 'flat mates'?

The house is currently uninsulated and its something we'd rectify in the coming years but does that mean its illegal to rent it out? Even to flat mates?

Bottom line is that I'm just trying to work out the financial implications if we were to buy this house.
I don't want to break the law but nor do I want to buy a house that's going to require $50k + investment before I can legally rent out the space.

Thanks

[RollingCloud]

Oh dear do you want to go there...
If you are going to rent it out then you need to follow all the rules for what a rentable abode requires, so yes insulation! Also has the flat got a fire wall to separate it from the house? Have a look at the cases where the tenants have been refunded rent because of living in an unconsented space. If you were going to go anywhere get flat mates. You don't want to have a tenancy agreement.
And then there is a all the unconsented buuilding work (insurance). What if you 'tenant' or 'flatmate' starts a fire in the unconsented kitchen.

[sidinz]

\ Also has the flat got a fire wall to separate it from the house? \

If there's a stairwell up to the rest of the house, then it's not fully separate, let alone fire rated.

You basically have two options: rent it out under a lodger's agreement, being very clear and careful with the wording so it can't muddy the picture and have anyone claiming they are tenants if things break down. The other option is Airbnb.

Neither of these situations invoke the RTA.

[John the builder]

If there's a stairwell up to the rest of the house, then it's not fully separate, let alone fire rated.

You basically have two options: rent it out under a lodger's agreement, being very clear and careful with the wording so it can't muddy the picture and have anyone claiming they are tenants if things break down. The other option is Airbnb.

Neither of these situations invoke the RTA.

I agree with this.
Do not rent out as a separate exclusive space. You are entitled to share your house with others and that includes family (granny) but also members of the same household that can include flatmates and boarders. As above treat as flatmates and avoid the RTA with its onerous obligations and jurisdiction.

The vendor was foolish to take the kitchenette out as it seems council have acknowledged it.

Having said that you can put it back as a replacement of existing. Especially if council have a record of it. This means all the work if unauthorised is the responsibility of previous owners and you are not liable for the actual building work done without consent. You can replace existing under schedule 1 exemption.

Disclose the arrangement to insurer now so they dont renege later. (get electrical certificate to ensure safety (for the whole house)).

Be prepared for a challenge

[Wayne]

If there's a stairwell up to the rest of the house, then it's not fully separate, let alone fire rated.

You basically have two options: rent it out under a lodger's agreement, being very clear and careful with the wording so it can't muddy the picture and have anyone claiming they are tenants if things break down. The other option is Airbnb.

Neither of these situations invoke the RTA.

Those were the the best options I thought of - stay away from the RTA!
Maybe AirBnB is the best as it gives you flexibility to have it vacant when relies and friends are coming otherwise you'd have to kick out a tenant or lodger.

[Beano]

Would you consider buying a motel ?
Live in and run the business