Specialist landlord insurer Initio said just seven of its last 100 property damage claims had been for what it deemed careless damage. Photo / Nick Reed
Specialist landlord insurer Initio said just seven of its last 100 property damage claims had been for what it deemed careless damage. Photo / Nick Reed
Should tenants pay up after spilling wine on the carpet or should it be classed an accident? Or are they responsible if a dog knocked the glass over?
The answer is no longer clear after a new tenancy law came into effect this week.
And it's threatening to trigger awave of quarrels over who should pay for rental property damage and plunge landlord-tenant relations to a fresh low.
Landlords had previously only been able to claim money back if they proved tenants intentionally damaged their rentals.
Now the new law allows them to also chase tenants over careless damage.
Tenants, on the other hand, won't have to pay if they can prove the damage was accidental rather than careless.
Rene Swindley, chief executive of specialist landlord insurer Initio, said the scene had been set for a wave of small disputes and increase in Tenancy Tribunal cases.
"The tenant will say, 'I tripped over a dog and caused all this damage, and so it was totally an accident'," he said.
"But the landlord will say, 'no, you were responsible because you shouldn't have been carrying so many things and the dog should have been locked away'.
"It is so subjective that arguments are absolutely inevitable."
Specialist landlord insurer Initio said just seven of its last 100 property damage claims had been for what it deemed careless damage. Photo / Nick Reed
The uncertainty comes as tenant-landlord relations were already under strain.
Renters have in recent years become increasingly frustrated by high rents, misbehaving property managers and skyrocketing house prices that have made dreams of home ownership unaffordable for many.
Rental owners on the other hand say ownership costs are getting out of hand due to a raft of stricter Government regulations.
Owners had also been exasperated by a landmark court case in which the owners of a Dunedin house which burned down were not even able to claim the insurance excess back for the damage.
This week's law aimed to address the issue by making renters contribute to the cost of careless damage, capped at a maximum of either four weeks rent or the price of the property owner's insurance excess.
But Swindley worried landlords were misinterpreting the law and looking to claim money from tenants for all damage done to their rentals.
In reality, just seven of the last 100 property damage claims lodged with Initio had been for what it deemed careless damage, he said, such as leaving a pot cooking on the stove and going to bed.
Another 14 were for accidental damage, such as a tenant slipping and spilling wine, while 16 were intentional whereby a tenant smashed a hole in the wall or contaminated the property with meth.
Because of the difficulty distinguishing between careless and accidental, Swindley tipped landlords and renters would now frequently bicker at the end of tenancies about the true cause of damage left behind.
Often these disputes would be for small amounts of money that might not even make it to the Tenancy Tribunal, he said.
He called on the Government's Tenancy Services to better outline the differences to help keep the peace.
Real Estate Institute chief executive Bindi Norwell agreed it would take time for tenants and landlords to understand where they stood.
The Tenancy Tribunal needed to first hear enough cases to establish precedents, she said.
But Ministry of Housing and Urban Development's Claire Leadbetter said the tribunal already had a working idea of what careless damage meant.
It was generally defined as negligence, lack of care, or lack of forethought, she said.
The question was often expressed by the tribunal as, "was the tenant exercising a degree of care and attention that a reasonable and prudent tenant would exercise in the circumstances".
Despite the new law, some landlords suspected the tribunal would err on the sides of tenants in contentious cases.
Owner Paul Sheehy recently had to pay compensation for not having a smoke alarm in his rental - despite believing his tenant Aaliyah Elmira Rafiee removed it - because he had not kept proof it was there at the start of the tenancy.
Yet the same burden of proof didn't apply to Rafiee, Sheehy argued.
He collected her belongings when she had to vacate the rental after a police visit and then gave her and her family two opportunities to collect them.
Despite this, Rafiee successfully won almost $3000 compensation for lost goods even though she didn't have receipts to prove she owned all the missing items.
Property Investors' Federation executive officer Andrew King said he had heard property owners complain of tenant bias by the tribunal.
He suspected tribunal adjudicators considered investors like businesses and held them to a higher account.
