Offering accommodation can be a powerful way to attract and retain employees. But when a home comes with a job, employers take on another role too: landlord.

Service tenancies are common in sectors such as agriculture, tourism and healthcare, where housing can make a role more attractive and practical. The arrangement can work well for everyone—as long as the employment and tenancy sides are handled clearly from the outset.

What is a service tenancy?

Put simply, a service tenancy is a residential tenancy connected to a person’s work. It is governed by the Residential Tenancies Act 1986 (RTA) and gives an employee the right to live in a property provided by their employer. The same type of arrangement can also be offered to a contractor working under a contract for services.

Once an employer provides a service tenancy, it is not just an employer—it is also a landlord. That brings many of the same responsibilities that apply to any other residential landlord, including:

  • respecting the tenant’s right to quiet enjoyment of the property;
  • maintaining the property;
  • providing a written service tenancy agreement that clearly records the rent and any bond, together with the required insurance, insulation and Healthy Homes statements;
  • lodging any bond collected, including any pet bond, with the Ministry of Business, Innovation and Employment within the required timeframe;
  • ensuring the property meets the Healthy Homes Standards, including the requirements for heating, ventilation and insulation; and
  • using the Tenancy Tribunal process to resolve tenancy disputes.

Can rent be deducted from wages?

It may seem straightforward to deduct rent from an employee’s wages, but a service tenancy does not automatically allow this. The employment agreement must expressly authorise the deduction.

What happens when employment ends?

Here is the key point: ending employment does not automatically end a service tenancy.

The tenancy is a separate legal arrangement and must be ended in accordance with the RTA.

An employer-landlord must follow the specific rules for ending a service tenancy and, except in certain circumstances, cannot bring it to an end before the employment finishes. Equally, a tenant may end the tenancy while continuing in the job.

This distinction matters most when the employment relationship ends unexpectedly or on difficult terms. Before taking steps to recover the property, employers should pause and check the required timing, notice and process.

Getting the arrangement right

The best time to get a service tenancy right is before the employee moves in. The employment agreement and tenancy agreement should work together, clearly set out the intended arrangement and meet the relevant legal requirements.

It is also worth checking the tax implications of providing accommodation as part of an employment package.

Thinking about offering accommodation—or dealing with a service tenancy that is coming to an end?

Our property and employment lawyers can help you put the right agreements in place, understand your obligations and navigate the next steps.

Talk to our team about an approach tailored to your circumstances.