Property

Tenant damage liability changes unfair

New Select Committee recommendations on tenant liability for damage are needlessly complicated and simply unfair to landlords, investor advocates say.

Thursday, April 19th 2018

NZPIF executive officer Andrew King

The Governance and Administration Select Committee reported back on the Residential Tenancies Amendment Bill (No.2) earlier this week and its proposed changes have left the NZ Property Investors Federation unhappy.

The Bill, which was drafted in response to widespread dismay over the fallout from the controversial Osaki ruling, was meant to address the issue of tenant liability for damage to rental properties.

But rather than clarifying the situation and rebalancing the responsibility for damage back towards tenants, the Select Committee’s recommendations further complicate the issue.

The Bill states that, assuming a property is insured against damage, a tenant’s liability is limited to either the applicable excess under the insurance or four weeks rent under the tenancy agreement - whichever is lower.

Now the Select Committee wants the words “for each incident” to be removed from this section as it does not consider them necessary.

NZPIF executive officer Andrew King says the Select Committee’s removal of the wording “for each incident” in the section dealing with liability leaves it all up in the air.

Removing those words just creates further confusion but it appears that any amount of damage will only be counted as one incident of damage, he says.

“It’s not clear how this will play out at the Tenancy Tribunal and it may give the adjudicators discretion. But it seems that if a landlord finds damage they are going to lump it all together as one.

“That won’t work in landlords’ favour and seems grossly unfair to me.”

He says the whole point of the changes was to give tenants the option of using the insurance policy but this means it’s only there to a limited degree.

“The issue doesn’t need to be this complicated. They should have just made it that a tenant is responsible for the damage that they cause.”

Tenants used to be responsible for careless damage but now the onus is on the landlord to prove the damage was careless, King says.

“The situation will be more unfair, unnecessarily complicated and expensive as a result of these recommendations.

“There are also ramifications for tenants that people haven’t thought about. For example, it will only make landlords even more reluctant to allow tenants to have pets in rental properties.”

The Bill was also meant to address issues surrounding tenancies over rental premises that are unlawful for residential use and meth contamination of rental premises

King says he is disappointed that the Select Committee report doesn’t say anything much on the area of unlawful properties because that area is a mess.

“That will have more unintended consequences. It could lead to a whole heap of properties not being able to be rental properties and leaves landlords operating under a cloud of risk.”

Meanwhile, the proposal to change the wording relating to meth to contaminants is simply confusing and odd – given the whole furore over meth and levels of contamination, he adds.

“What is the point? What does it mean? It could mean asbestos or even mould or it might even include pests like cockroaches. How will this help? It just makes it more unclear.”

King says that, given the Bill has gone through the public consultation period and is now due for its second reading in Parliament, there is not much that can be done to influence the Bill.

“We will be talking to MPs and expressing our views. We hope there will be some debate around it all in Parliament and that there are some changes to make it more balanced.”

Read more:

Tenant damage liability: the Select Committee speaks 

Tenant damage law change 

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