Tenancy Bill too complicated
02 Jun 2017
Landlords are not happy about a Government move to close a loophole which can leave owners with the bill for tenant damage to their rentals.
They say the change is still "overly complicated", and would prefer tenants were liable for any damage they caused.
The Residential Tenancies Amendment Bill would ensure tenants paid a capped amount towards a landlord's insurance excess in cases of careless damage.
Tenants would be liable to a maximum of four weeks' rent for each incident.
The change is in reaction to a recent court decision which ruled that a couple called the Osakis were not liable for an accidental fire in their rental.
Since then, the Tenancy Tribunal has been tested several times over whether tenants should be let off the hook for damage which might not have been deliberate but was arguably negligent.
Building and Construction Minister Nick Smith said he wanted to provide an incentive for tenants to take care of their property, while also ensuring landlords were insured.
"A tenant remains fully liable where the damage is deliberate or a criminal act, and the landlord liable for fair wear and tear and damage beyond the control of the tenant, like a natural disaster."
Tenancy.co.nz tenancy consultant Scotney Williams said the changes had been eagerly anticipated by the tenancy industry.
"Meth, Osaki and poor landlord behaviour are three of the biggest issues for property managers, landlords and tenants."
But landlord group the New Zealand Property Investors Federation said that while the Government's intentions were good, it wanted to see the situation revert back to a 'damager pays' scenario.
"There are groups, I think, that are going to find it much harder to get a tenancy because of this," executive director Andrew King said.
As it stood, insurers were carrying more risk and might put up their premiums because they could no longer hold accountable the person responsible for the damage.
And landlords might still end up footing most of the bill, if there was a dispute over whether the damage required more than one excess.
"Let's say a carpet has been destroyed and it's going to cost $4000 to fix it and the excess on the landlord's insurance is $1000, and the insurance company says there's four incidents [and four excesses], so they are not going to pay anything out.
"It would be unfair if the tenant was just restricted to four week's [rent] - the landlord would still be responsible for the other $3000.
"We're not really covered properly, the tenants are not really covered properly and the insurance companies lose their right of subrogation."
Williams agreed the number of excesses could be problematic, but felt it was a fair and reasonable approach.
"As we read the release, where the tenant knocks over a bottle of wine in two different rooms which do actionable damage, the tenant will be liable for both incidents separately."
The bill also covers meth contamination, clarifying testing standards and giving tenants the right to end their tenancy in cases of unsafe contamination.
"We want homes to be safe but we also don't want properties being vacated when the risks are low," Smith said.
It also tackled illegal tenancies, with stronger powers to prosecute in cases of illegally converted garages, warehouses or other unsuitable buildings.