Otago Property Investors Association Inc

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07-10-2016

Tenants' liability for damage 2

In last month's article I discussed the ramifications of the court's decision to exemplify tenants from responsibility for any damage that they cause to their rental property.

Since then we have been working with the Minister of Housing and other political parties seeking to correct the unjust situation that has been caused, potentially unintentionally,  by the court decision.

We had meetings with Labour leader Andrew Little and housing spokesperson Phil Twyford , plus ACT leader David Seymour to explain what was happening and to seek their support for Government to rectify the situation. Unfortunately we couldn't organise meetings with other parties, however we hope to as soon as possible.

Both Labour and ACT immediately saw the unjustness of the situation caused by the court ruling. While no one wants tenants to be financially ruined through an accidental mistake, it is clearly unjust to hold property owners financially responsible for tenants actions causing damage, no matter how large or small.

We were extremely pleased that Labour and Act  agreed in principle to support Government in correcting the situation. This will be dependent on what legislative changes Government intends to make of course.

Minister of Housing, Nick Smith, could see that there were problems, however he doesn't want to see tenants financially ruined. Extra information was sought to clarify the situation so that any potential solutions could be correctly considered.

The NZPIF surveyed members to estimate the cost of damage claims over the past year. Taking out some extremely large claims that skewed the results, the average claim for damage was estimated at $3,079. With approximately  7,000 claims to the Tribunal from landlords for damage each year, the cost to landlords is estimated at around $21m.

However this figure doesn't include all the informal instances of landlords agreeing to use their insurance cover with the tenant agreeing to cover the excess. It also doesn't cover all the smaller instances of damage that tenants previously just sorted out themselves and paid for. Likewise it doesn't include the cases of tenants using their own contents insurance to cover the cost of damage they have caused.

It is highly likely that the real cost of damage that rental property owners will have to cover will be considerably higher than $21m.

Members also provided copies of recent tribunal rulings where claims for tenant damages were dismissed. One of these involved a drunk tenants relative who fell through a skylight while fooling around on the roof. Why should a landlord have to cover the cost of this kind of activity?

There was also the outrageous case of a Foxton tenant who's tenancy agreement did not allow pets, but she kept dogs in the property anyway. The dogs were kept inside and defecated on the carpet more than 50 times in five separate rooms. Fifty separate excesses meant insurance didn't cover replacing the carpet and the owners claim for damages was dismissed.

This information has been provided to Minister Smith who has also requested extra information from his Ministry. We are hoping to have further meetings very soon to hear what can be done to provide a suitable solution as fast as possible.

Tags: federation reports

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