Queenstown Landlord Hit with $113K Fine for Illegal Housing

A landlord in Queenstown, New Zealand, is facing steep penalties after illegally operating his property as a boarding house. The hefty fine follows an investigation that revealed unsafe living conditions for migrant workers.

Illegal Boarding House Operation

**James Truong** has been ordered to pay over $113,000 to the Ministry of Business, Innovation and Employment (MBIE) on behalf of his tenants. These tenants, mainly employed within Queenstown’s hospitality sector, were found living in substandard conditions.

Ignoring Warnings

Back in 2020, **Truong** received warnings from both the Queenstown Lakes District Council and MBIE’s Tenancy Compliance and Investigations Team (TCIT). He was instructed to cease using the property as a boarding house or to seek formal permission to alter its use.

Despite acknowledging the rules and stating his intention to revert the property to a regular home, a 2023 complaint triggered a new investigation. Authorities discovered eleven individuals residing in the five-bedroom house, with an additional eleven people occupying converted garages and a shed.

Tribunal Findings

The Tenancy Tribunal ruled that **Truong** had committed “multiple breaches of the Act.” These breaches encompassed operating an unapproved boarding house, neglecting healthy homes standards, tampering with the electricity supply, imposing invalid rent increases, and even tenant harassment.

The property was found to have several hazards, including electrical overloading, missing smoke alarms, and general non-compliance with healthy homes standards.

Landlord’s Defense Rejected

**Truong** argued that the premises were safe and compliant. He claimed he was simply assisting his tenants. However, the tribunal declared the property an unlawful residential space because he lacked the necessary permits to run a boarding house with six or more occupants.

According to Stats NZ, the median rent in the Queenstown-Lakes area was $650 in April 2024, reflecting the challenges renters face in the region Stats NZ, 2024.

Experienced Landlord Should Have Known Better

**Brett Wilson**, national manager of the investigations team, stated that **Truong** “was an experienced landlord who would have been well aware of his obligations and responsibilities under the Act, including through previous interactions with him.“

**Wilson** added, “**Mr Truong** knew the rules but chose to ignore them. There was significant non-compliance in this case with multiple breaches of the Act ranging from failure to comply with healthy homes and insulation statement requirements to interfering with the supply of electricity. The level of damages awarded reflects the seriousness of the non-compliance in this case and the number of people affected.“

Tenants’ Vulnerability

**Wilson** highlighted the vulnerability of the tenants, noting that most were new to New Zealand and that Queenstown has a shortage of rental properties.

He explained, “Many of the tenants were overseas workers on working holiday visas who had little knowledge of their rights as tenants in New Zealand. They were also working in a location with a shortage of rental accommodation which made them vulnerable to a landlord who was knowingly operating outside of the Residential Tenancies Act.“

Investigation Praised

Adjudicator **R Woodhouse** commended the investigation conducted by MBIE as “fulsome and careful,” adding that “the witness evidence was consistent and credible.“

**Woodhouse** dismissed **Truong’s** claims of altruism, noting the commercial rent rates and the abrupt termination of tenancies once authorities intervened.

The Tribunal also criticized **Truong** for secretly recording conversations between tenants and MBIE investigators using security cameras.

Financial Penalties and Restraining Order

**Truong** must pay $113,723.56 for violating the Residential Tenancies Act 1986 and refund 40% of the rent collected while running the unlawful boarding house.

Additionally, he faces a three-year restraining order preventing him from engaging in further unlawful activities related to boarding house operations.

Should **Truong** intentionally breach the restraining order, he could face a fine of up to $3600 in the District Court under Section 109A of the Residential Tenancies Act.