A decision by Dunedin District Court Judge Kevin Phillips may prove to be a game changer for landlords.

Photo: 123rf

In April, the Tenancy Tribunal ordered Vic Inglis to repay almost $11,000 in rent to tenant Natalie Parry after ruling the tenancy was unlawful due to a technicality - the house contained unconsented work during the letting period.

That order was the latest in a string of decisions ruling large repayments of rent by landlords as a result of a 2013 High Court decision.

But Judge Phillips found the tribunal's interpretation of that decision was incorrect and overturned the tribunal's decision, saying it overlooked the principles of fairness and justice; and ordered the money paid back to Mr Inglis.

New Zealand Property Investors Federation executive officer Andrew King said Judge Phillips' decision might set a precedent for the Tenancy Tribunal.

"There was a very unjust decision here but it's leading to a lot of unjust decisions because of the way the High Court ruling was interpreted," Mr King said.

"It now gives the adjudicators far more flexibility to be able to apply some rationality and justice so that landlords will know a little bit more about where they stand and they won't have to pay back these large amounts to the tenants."

The federation would meet with Housing Minister Phil Twyford next week to discuss legislation which could reinforce the judge's decision.

"We will be going over potential legislative changes just to confirm this and get it into the Residential Tenancies Act," he said.

Photo: RNZ / Alexander Robertson

He was pleased for Mr Inglis that the right decision was reached on appeal, but the decision could have ramifications for other landlords.

Mr Inglis said he was relieved to have won the case.

Ms Parry was awarded all seven months' rent repaid due to the technicality, despite her causing damage to the property and subletting its downstairs area for profit.

Mr Inglis only became aware the property's alterations - carried out during its original build - were unconsented when Ms Parry confronted him with the news.

"We're just pleased it's over and long term coming out of it hopefully we get a law change so that there's plenty of clarity going forward for everyone," he said.

The unconsented work was of a high standard and granted a compliance certificate days after Mr Inglis became aware of the issue.

As Judge Phillips noted there was no risk to Ms Parry's health and safety as a result of living in the house.

Mr Inglis said he wanted the tribunal to assess its initial decision as a result of the appeal.

"I'm still a bit annoyed it wasn't the right decision the first time around," he said.

"It shouldn't be up to the district court to rectify what should be done right the first time round at the tribunal."

Ms Parry's father, Steve Parry, who is also chief executive for the Gore District Council, spoke on his daughter's behalf.

"Natalie respects the court's decision and will honour the judge's orders," he said.

He said they were taking stock of the decision and might take further litigation against Mr Inglis - though he would not provide details.

The decision gives Ms Parry until November 30 to repay the money.