It is not uncommon to find properties that have been altered by previous owners to create two self-contained living areas, complete with separate kitchens, bathrooms and entrances. In some cases, these alterations were undertaken without the necessary building consent or change-of-use approval.
But what happens when the property is sold? Is the new owner responsible for obtaining retrospective consent or correcting work they did not undertake?
The answer may surprise many property owners: under New Zealand building law, a subsequent owner is not automatically responsible for remedying unconsented building work carried out by a previous owner.
This principle has been confirmed in several Ministry of Business, Innovation and Employment (MBIE) determinations and, importantly, by the High Court.
Undersection 40 of the Building Act 2004, building work generally requires building consent unless an exemption applies.
Where a house is converted from one household into two independently occupied residential units, the change may also trigger requirements under sections 114 and 115 concerning changes of use.
However, the legislation distinguishes between the person who undertook the original work or change of use and someone who subsequently purchases the property.
This determination concerned a three-bedroom house and an adjoining two-bedroom self-contained flat.
When the owners purchased the property in 2007, both accommodation areas were already rented separately. The owners continued this arrangement.
Far North District Council raised concerns about the fire separation between the accommodation areas and required the owners to address the building’s use or fire safety.
MBIE found that the owners had not themselves changed the property’s use. Any change had occurred before their purchase.
At paragraph 6.2.6, MBIE concluded that the owners could not be held responsible for a previous change of use that may have occurred, nor required to change the existing use on that basis.
MBIE determined that Council was incorrect to require these owners to submit a change-of-use notification.
An important distinction is that the alterations in this case were found to have occurred before 1 July 1992, when the national Building Code came into force. This influenced MBIE’s separate conclusions about Building Code compliance.
Read MBIE Determination 2015/077 – particularly paragraphs 6.2.5–6.3.5
This determination considered building work undertaken without consent in 2013, shortly before the property changed ownership.
Tauranga City Council issued the new owners with a notice to fix, despite their not having undertaken the work.
MBIE reversed the notice.
At paragraph 5.3.6, MBIE explained that a purchaser who did not undertake the unconsented building work could not be issued a notice to fix solely for the previous owner’s contravention of section 40.
At paragraph 5.5.2, MBIE explained that where unconsented building work was undertaken by a previous owner and the dangerous-building threshold was not met, the subsequent owner could decide whether to remedy that historical contravention.
This is particularly significant because the work was undertaken after 1992. The protection for subsequent owners is therefore not confined to older buildings constructed before the introduction of the national Building Code.
Read MBIE Determination 2014/035 – particularly paragraphs 5.3.6 and 5.5.2
The position was reinforced in Waikato Regional Council v The District Court at Hamilton [2023] NZHC 1271, concerning non-compliant building work undertaken before the current owner purchased the property.
The High Court confirmed that the Building Act does not impose a general obligation on a subsequent owner to bring inherited non-compliant building work up to Building Code standards.
The Court declined the Council’s application for judicial review, leaving intact the decision that the subsequent owner could not be issued a notice to fix for the previous owner’s contravention.
Read the High Court judgment – particularly paragraphs 39–49
MBIE subsequently applied this reasoning inDetermination 2023/025.
No. There are important exceptions.
Although subsequent owners are not automatically liable for historical Building Act contraventions, Council retains powers to take action where other statutory requirements apply.
For example, under sections 121, 123 and 124 of the Building Act 2004, Council may require action where a building meets the statutory definition of dangerous or insanitary. This can include serious fire safety concerns.
A current owner may also trigger new Building Act obligations by undertaking further alterations or changing the property’s use themselves.
Furthermore, building consent and resource consent are separate matters.
Even if the current owner is not responsible for the historical building work, the use of the property as two separate households must still comply with applicable planning legislation.
Undersections 9 and 10 of the Resource Management Act 1991, the use may be permitted under current planning rules, authorised by resource consent or protected by lawful existing-use rights.
If none of these applies, the continued two-household use could raise a separate planning compliance issue.
This introduces another important consideration.
Undersection 36 of the Residential Tenancies Act 1986, landlords must take all reasonable steps to ensure there is no legal impediment to residential occupation when a tenancy commences.
Section 78A allows the Tenancy Tribunal to make orders concerning unlawful residential premises, potentially including repayment of rent.
Tenancy Services identifies a single house divided into two self-contained homes as an example of accommodation that may be unlawful. However, this does not mean every such property is automatically unlawful.
Where a tenant brings a claim alleging that their accommodation is an unlawful residential premises, the burden generally rests with the tenant to prove their claim on the balance of probabilities.
Under section 78A(2), the evidence must establish that:
The mere absence of historical consent records does not automatically establish either of these requirements.
A building may have been altered many years ago, with incomplete council records, without necessarily being unlawful for its current residential occupation.
Likewise, the existence of two kitchens, two entrances or two separate tenancy agreements does not, by itself, establish that the property breaches the Residential Tenancies Act.
The particular legal impediment must be identified and supported by evidence.
Importantly, the Tribunal can also consider unlawfulness on its own initiative where the evidence raises the issue. The burden of proof therefore does not remove a landlord’s statutory compliance obligations.
A particularly relevant example is Tenancy Tribunal case 5348873/5372603, decided in 2026.
The tenant alleged that a separately rented, self-contained granny flat was unlawful because its consent status and fire separation were uncertain.
However, the landlord produced evidence including:
There was also conflicting information from Council.
At paragraph 37, the Tribunal found that the tenant had failed to establish, on the balance of probabilities, that the premises were unlawful residential premises.
The Tribunal also found insufficient evidence that the landlord had failed to take reasonable steps to establish that there was no legal impediment to occupation.
The significance of this decision is that uncertainty about council consent does not automatically establish an unlawful tenancy. A landlord’s documentary evidence and reasonable investigations can be crucial in defending such allegations.
Read Tenancy Tribunal case 5348873
Where a property has been converted into two household units by a previous owner, landlords can strengthen their position by taking reasonable steps to investigate and document its condition and legal status.
These may include:
These measures can help a landlord demonstrate that they have taken reasonable steps to establish the property’s lawfulness and safety.
A Safe and Sanitary Report does not itself constitute council approval or retrospectively authorise unconsented work. However, it may provide valuable supporting evidence, particularly where the allegations concern the physical safety or suitability of the accommodation.
Similarly, the absence of a council notice to fix or dangerous-building declaration can support a landlord’s position, but it is not conclusive proof that the occupation is lawful.
Where section 78A applies, rent repayment is not necessarily automatic in full. The Tribunal has discretion concerning the amount to be repaid, taking account of the statutory criteria and particular circumstances.
The strongest defence is therefore not simply that the landlord did not undertake the original conversion, but that the evidence does not establish an actual legal impediment to occupation or a contributing breach of the landlord’s statutory duties.
Purchasing a property containing historical unconsented work does not automatically make the new owner responsible for the previous owner’s Building Act contravention.
This is an important distinction that has been recognised by MBIE and confirmed by the High Court.
Equally, a house divided into two self-contained accommodation areas is not automatically an unlawful residential premises simply because historical council approvals cannot be located.
However, the absence of a requirement to retrospectively consent or remedy historical building work does not necessarily mean the existing configuration is legally authorised for every purpose.
Owners should distinguish between responsibility for previous building work, the current safety of the building, applicable planning requirements and any obligations arising from its present use.
For landlords, proactive investigation and good recordkeeping can be particularly valuable if the lawfulness of a tenancy is subsequently questioned.
For those selling a property with historical alterations, accurate disclosure remains important. Purchasers should be made aware of known consent uncertainties and given the opportunity to undertake appropriate due diligence.
The key takeaway: An owner does not automatically inherit liability for a previous owner’s unconsented building work, and an allegation of unlawful residential occupation must be supported by evidence. However, owners remain responsible for applicable obligations arising from the property’s present condition and use.
Disclaimer: This article provides general information about New Zealand building, planning and tenancy legislation and relevant legal decisions. It does not constitute legal advice. The application of the law depends on the particular property’s circumstances, including when alterations were undertaken, the applicable rules and how the property is occupied. Property owners and purchasers should obtain independent legal and professional advice where necessary.
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