While rent subsidies for apartment managers are common, linking a rent discount to management’s right to control letting for all apartments in the building proved fatal for Shiraz Holiday as manager of ‘Bianco off Queen,’ in Auckland’s central business district. Shiraz had no lawful right to exclusive control over apartment lets.
Bianco’s two towers include a mix of owner occupiers, investors with their apartment held in a pool for hotel lets and Kainga Ora social housing. Masoud Bassamtabar’s Shiraz Holiday Ltd purchased Bianco’s management rights in 2014 for $1.46 million.
A dispute over Shiraz’ management rights led to a High Court ruling in 2022 that a Unit Titles Act body corporate has no authority to give exclusive letting rights to anyone. The right to let is a personal right held by each apartment owner. That right cannot be usurped by a body corporate, selling the rights to someone else.
This High Court ruling led to a further dispute over rent subsidies allowed by the body corporate to Shiraz. The Court of Appeal ruled invalid a Shiraz rent subsidy in respect of a unit it used for an office and hotel reception area. Wording of the rent subsidy was linked in the management contract to exclusive control of letting rights. Since Shiraz had no valid right to exclusive control of apartment letting, the linked rent subsidy was also invalid.
The case was sent back to the High Court to determine how much Shiraz should refund the Bianco body corporate for previous years’ rent subsidies.
Body Corporate 406198 v. Property Opportunities Ltd – High Court (19.07.23)
23.119