What is a service tenancy?
A service tenancy is where accommodation is provided as part of an employment relationship, or is otherwise related to the tenant being employed or contracted (s 2 RTA). These kinds of tenancies are common in farming, the armed forces, tourist accommodation (eg, hotels, camping grounds) and other industries where it’s helpful to have the workers live on-site or where finding appropriate housing can otherwise be difficult.
The Residential Tenancies Act 1986 applies to service tenancies and all the standard tenancy laws apply, except for a couple of differences about rent and ending a service tenancy.
A tenant in a service tenancy should have a written tenancy agreement signed by the employer (as landlord) and the employee or contractor (as tenant). This can be included in the tenant’s employment agreement or contract but it’s preferable and much clearer if these are kept separate.
Tenancy Services has a useful resource on service tenancies Service Tenancy - A guide for landlords and tenants.
How does rent work in a service tenancy?
In a service tenancy it’s common for the value of the accommodation to be factored into the overall employment package - it might be seen as one of the perks of the job.
Service tenancies have special rules that allow the parties to agree that the rent can be automatically deducted from the tenant’s (employee’s) pay each pay period. This avoids unnecessary transferring of money between the parties. If this is the arrangement it should be clearly set out in the employment agreement.
Rights as a tenant as well as rights as an employee
In a service tenancy it’s easy for the focus to be on the employment relationship and for the landlord / tenant relationship to be an afterthought.
Raising issues or concerns with your landlord can be tricky when this also happens to be your employer, but it’s important to remind people living in service tenancies that they have rights as a tenant as well as rights as an employee.
Ending a service tenancy
There are special rules about ending a service tenancy which reflect the fact that the tenancy is tied to the tenant’s employment (s 53 RTA).
The service tenancy cannot be terminated by the landlord before the employment relationship ends.
The tenant can decide to end the tenancy while still working for the landlord as an employee. If they do this, they will need to give 28 days’ notice.
If the employment relationship has ended, or the employer or employee has given appropriate notice for it to end, then either party can give 14 days’ notice that the service tenancy will also end.
The 14-day notice period can only be shortened if:
- the landlord reasonably believes that the tenant will cause substantial damage to the premises if the tenant is allowed to remain for 14 days, or
- The landlord needs to employ a replacement employee sooner than that 14 day period and there’s no suitable alternative accommodation available for them during that time.
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