More tenancy law reform has arrived. Bear with me before rolling your eyes though — these new rules will finally give much-needed clarity to tenant-landlord liabilities for property damage. The changes will set in stone what tenants and landlords pay when there is damage, sort out the issue of unconsented rented properties, and add certainty around checking for contamination.
Burning down the house - who covers repairs now?
A burning pot of oil that led to a devastating house fire started the debate (cue the Talking Heads 1983 hit Burning Down the House). But this fire led to legal action by the landlord to recover the cost of the damage caused to their property by the burning pot of oil.
The court ruled that the tenants didn’t have to pay damages due to the landlord’s insurance cover, despite the fact that the landlord failed to even recoup their insurance excess. Landlords claimed the ruling was unfair, tenants breathed a sigh of relief and the news moved on.
But the issue didn't go away and after years of debate, the new amendments to tenancy law will make tenants liable for accidental as well as deliberate damage, but only to a cap of the insurance excess or four weeks' rent (whichever is lower).
Landlords appealing to the Tenancy Tribunal will be able to claim back this figure to cover the cost of repairs. Most of the time that is. The legislation does stipulate that landlords’ insurance information must be included and clearly stated in the tenancy agreement.
Getting out of the garage
Another alteration will restrict landlords from using garages and sheds as accommodation. The power tools and lawnmower might be moving home, but for many New Zealanders (like students and families on a budget) this cheap living option was entirely necessary. It meant cheaper rent for tenants, and an extra source of income for landlords - but this alfresco living did come with a catch. A legislative loophole meant tenants living in a garage or shed either couldn’t report their landlord to the Tenancy Tribunal because the Residential Tenancies Act didn’t define their dwelling as legal, or, if the Tenancy Tribunal accepted jurisdiction then they awarded tenant’s refunds of rental due to the tenancy being an illegal one.
This maddening Catch 22 was unsatisfactory for both landlords and tenants and created a great deal of uncertainty all around. The new reform means tenants can raise issues to the Tenancy Tribunal if their landlord breaks the terms of the signed lease agreement.
Compulsory contamination checks
The law change also ushers in mandatory checks for contaminants, such as meth or other synthetic drugs, clarifying when and how landlords have to test their properties. This is a major success for those who don’t like meth — most people, in other words. Any homeowner who fails to undertake these assessments or clean the property after discovering contaminants will not be allowed to rent it out.
This change also means landlords will need to improve how they inform tenants about potential contamination issues. Now landlords will have to tell tenants about their property’s past (any history of pollutants, not ghosts). The amended Residential Tenancies Act will also allow tenants to request a copy of contaminant test results within a week of the landlord receiving them.
What you need to know
Landlords and tenants will welcome the legislation change as it clarifies the two parties’ responsibilities in what was previously a legal minefield.
Although tenants are now liable for damage caused to a rental property, this liability is capped at the excess or four weeks' rent, whichever amount is lower. This restricts insurance companies’ ability to go after tenants after a landlord’s policy claim. For landlords, these alterations reduce their financial burden to repair damages out-of-pocket or claim on their policy.
The amendments also usher in a new regime of contamination-testing for properties and restrictions on renting unsuitable spaces like garages as accommodation.