Can I rent out my downstairs flat?

With living costs continuing to rise, many Wellington homeowners are looking at unused areas of their properties as a potential source of extra income.

A converted garage, downstairs area or part of the home previously used by children may appear to be an obvious rental opportunity. However, just because a space looks like a self-contained flat does not necessarily mean it can lawfully be rented as a separate dwelling.

This was the question raised during a recent meeting with a Newlands homeowner.

While walking through the downstairs area, we noticed it had a hob and microwave, but no oven.

A small detail prompted a bigger conversation

The absence of an oven did not, by itself, determine whether the space could be rented. However, it prompted several important questions:

• Was the downstairs area consented as a separate household unit?
• Does its current use match the council property records?
• Does it meet the relevant building and fire-safety requirements?
• Is there appropriate separation between the two living areas?
• Can it meet rental property and Healthy Homes requirements?
• Would the proposed arrangement create a separate residential tenancy?

These questions need to be answered before the space is advertised or a tenancy agreement is offered.

Why council consent matters

Creating a separate dwelling within an existing home can involve more than installing a kitchen and bathroom.

The work may require building or resource consent, depending on the property, the alterations completed and how the space will be used. Fire separation, access, ventilation, sanitation and other building requirements may also apply.

The first step is usually to check the council property file and approved plans. If the records do not match the existing layout or intended use, the owner may need advice from your local Council and an appropriate building professional.

What are the risks of renting an unlawful dwelling?

Renting premises that are not lawfully able to be used as a separate dwelling can have serious consequences.

Depending on the circumstances, the Tenancy Tribunal may make orders relating to rent, required building work, compensation or other financial penalties. The owner could also encounter difficulties with council requirements or insurance cover if something goes wrong.

A tenancy agreement does not remove these risks. Landlords should establish that the premises can lawfully be rented before accepting rent or allowing a tenant to move in.

Could a flatmate or boarder arrangement work instead?

In this situation, there may have been another option.

If the owner continued living in the main home, it might have been possible to offer the downstairs space under a private flatmate or boarder arrangement rather than creating a separate tenancy.

However, this is not simply a matter of changing the name of the agreement. Whether the arrangement falls under the Residential Tenancies Act depends on how the property is configured and occupied, including whether facilities are genuinely shared.

The owner should obtain advice specific to the proposed arrangement and document it clearly.

Check before you advertise

The answer to “Can I rent out my downstairs flat?” is not always a simple yes or no.

The space may already be approved as a separate dwelling. It may be possible to complete further work and obtain the necessary consents. Alternatively, a genuine flatmate or boarder arrangement may offer a lawful way to achieve a similar outcome.

The important step is to investigate before advertising.

Checking the council records and obtaining appropriate advice early can help you find the right arrangement without creating unnecessary legal, financial or insurance risk.

If you are considering renting out part of your Wellington property and would like a second opinion on the proposed tenancy setup, contact Manage My Rental before taking it to market.

Written by Lisa Nimmo
Property Consultant and Business Development Manager | Manage My Rental

Lisa Nimmo works with landlords throughout Wellington, Lower Hutt, Upper Hutt and Porirua, providing rental appraisals and practical advice to help owners maximise returns, minimise risk and protect their investment properties.

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