Every landlord dreads receiving a negative final inspection report after tenants vacate their rental property.
Your initial reaction might be to withhold the bond, but complications arise if the damage is claimed as ‘fair wear and tear’. If this is disputed, tensions can escalate. The tenant might vent on social media, criticising both their landlord and property manager, or they might apply for a bond refund, potentially leading to a prolonged dispute at the Tenancy Tribunal.
Clearly, this is a situation everyone wants to avoid.
The crux of the problem often lies in the vague definitions of ‘fair wear and tear’ versus ‘accidental damage’.
In New Zealand, unless specified otherwise in the tenancy agreement, tenants are not responsible for paying for what is considered ‘fair wear and tear’ to a property. Liability for repairs arises only when the tenant has caused damage through negligence, irresponsibility, or intentional actions. For example, a curtain faded due to sunlight exposure is considered ‘fair wear and tear,’ whereas curtains torn by the tenant’s pet would be their responsibility.
Let's explore these terms further and understand their implications for landlords and tenants.
According to Tenancy Services New Zealand, wear and tear refers to the natural deterioration of a property resulting from normal, everyday use. Factors such as exposure to the elements, time, and daily living contribute to fair wear and tear. This definition is broadly accepted across the real estate industry in New Zealand.
Accidental damage generally refers to sudden harm caused by an unexpected and unintentional action. This can include physical damage to the property or its contents, resulting in loss of function.
Insurance policies typically cover such incidents, which must occur unexpectedly and without intent.
It’s important to note that many insurance policies do not cover damage caused by animals, such as chewing, tearing, or scratching.
Tenants are responsible for damage caused by negligence, irresponsibility, or intentional actions. Policies can vary, so it’s essential to understand the specifics of your insurance coverage.
Definitions:
Deliberate act: An act carried out without permission but without malice or spite, knowing it will alter the property.
Malicious damage or vandalism: A wrongful act motivated by malice or spite, intended to damage the property.
Thorough rental condition reports, including detailed photos and possibly videos, are crucial for avoiding or settling disputes over fair wear and tear. Both tenants and landlords should ensure these reports are complete and signed. Proper documentation can make dispute outcomes more predictable.
Regular inspections of your rental property help ensure it is well-maintained and necessary repairs are made. New Zealand regulations allow for up to four inspections per year.
During these inspections, check that:
Another key to avoiding disputes is to thoroughly understand and communicate the details of your insurance policy. Some policies may not cover periodic tenancies or may reduce claims based on depreciation. Being transparent with tenants about what is covered can prevent misunderstandings later.
Understanding the difference between fair wear and tear and accidental damage can prevent many headaches when a tenancy ends or urgent repairs are needed. Once tenants and landlords clarify what constitutes damage versus wear and tear, the next step is to determine what their specific home insurance policy covers.
Disputes over rental property damage can often be avoided through transparency about insurance coverage and regular property maintenance. However, it’s important for both tenants and landlords to recognise that accidents do happen.
The team at LJ Hooker can assist both tenants and landlords in understanding and navigating insurance policies. Recognised as a leading real estate brand, LJ Hooker’s expertise can be invaluable in choosing the right insurance coverage and avoiding disputes.