A Property Manager Explains ‘Fair Wear & Tear’

A Property Manager Explains ‘Fair Wear & Tear’

 

As a general rule, tenants are not liable for damage to their rented property caused by “fair wear and tear”.  As property managers it is our job to assess wear and tear on a property and decide what is ‘fair’.  Thanks to our many years of property management we have become ‘dab’ hands’ at doing this, but for landlords out on their own it can be a minefield.  This blog provides a short explanation of what the law says in New Zealand.

In accordance with Section 40 of the Residential Tenancy Act 1986 (Tenant Responsibilities), damage is defined as follows:

(4) Where any damage (other than fair wear and tear) to the premises is proved to have occurred during any tenancy to which this Act applies, it shall be for the tenant to prove that the damage did not occur in circumstances constituting a breach of subsection (2)(a).

In other words, tenants are not liable for any damage caused to a property that has come about as a result of reasonable use of the property, but they must prove they did not “2(a) intentionally or carelessly damage, or permit any other person to damage, the premises”.

The tenancy services website explains it like this –

Fair wear and tear refers to the gradual deterioration of things that are used regularly in a property when people live in it.

An example of this would be where a stove element wears out from normal cooking. This is fair wear and tear. However, if the stove was being used to heat the kitchen and stopped working properly, this would not be considered normal use.

Take carpets for example, while burn marks and stains would be considered damages, fading and thinning of carpet is usually considered fair wear and tear.  Of course the length of tenancy comes into play here i.e. you wouldn’t expect carpet to thin dramatically over a 6 month tenancy, but would expect this to occur if a tenant had been there a number of years.

The number of tenants and their age also plays a part in wear and tear. The more bedrooms and tenants that you have the more wear and tear will occur in shared spaces like living rooms and bathrooms.  Children are also more active in a house than adults.  If you rent to couples as opposed to families then your property will have less wear and tear.

The lifespan of chattels such as dishwashers and ovens should also be taken into consideration.  If your dishwasher has stood the test of time but finally breaks down after 10 years then it would be unreasonable to claim this as damages.  

If there are any disputes between a landlord and tenant about ‘fair wear and tear’ then the tenant can make an application to the Tenancy Tribunal disputing the landlord’s bond claim (if the landlord is claiming for damage caused by ‘fair wear and tear’ against the bond). This type of dispute may be resolved through mediation, the first step in the dispute resolution process, or may proceed to a Tribunal hearing.

To keep our landlords protected, we always take digital photos of every room before a tenant moves in, these can then be used to compare the state of the property at the termination of tenancy.  We also carry out regular checks on properties and ensure maintenance issues are up-to-date.

As you can see, it can be very tricky navigating your legal requirements as a landlord, that’s why we recommend using an experienced property manager.

New Smoke Alarm Regulations For NZ Landlords

New Smoke Alarm Regulations For NZ Landlords

 

In July this year new smoke alarm regulations were introduced in New Zealand.  These regulations state that smoke alarms are compulsory in all rental homes. Not only are they compulsory but Landlords must also have the right type of smoke alarms installed in the right places to meet new regulations.

Connect Realty will ensure all the properties we manage meet these new regulations.  For landlords who are unfamiliar with the regulations we outline the main details below:

Type Of Alarms

All new or replacement smoke alarms must be long-life photoelectric smoke alarms with a battery life of at least eight years that meet the required product standards, or a hard-wired smoke alarm system.

The product standards required are:

AS 3786:1993 (Australia) or an equivalent such as:

  • UL217 (USA)
  • ULCS531 (Canada)
  • BS5446: Part 1 (United Kingdom)
  • BS EN 14604 (United Kingdom)
  • ISO12239 (International).

The standard should be displayed prominently on the packaging and on the alarm. If in doubt, ask the retailer you are purchasing the alarms from.

If there are smoke alarms already installed in your rental property, but they are not long-life photoelectric smoke alarms, they do not need to be replaced as long as they are in the required locations and their replacement date hasn’t expired.

If you are unsure about the date of existing alarms, the replacement date should be listed on the alarm.  If there is no replacement date on the alarm, the alarm is more than eight years old, or you don’t know how old the alarm is, you will need to replace it with a photoelectric smoke alarm to be certain you are complying with regulations.

Where to place Alarm

There must be at least one working smoke alarm within three metres of a “sleeping” door.  If you have a multi-storey or multi-level home, there must be at least one smoke alarm on each level or storey, regardless of whether anyone is sleeping on that level.

Who Is Responsible For Smoke Alarms?

Under the new regulations both landlords and tenants have responsibilities to keep smoke alarms working.  Landlords/Property Managers must make sure the smoke alarms:

  • are always in good working order
  • are working at the start of each new tenancy, including having working batteries.

If there are older-style smoke alarms with replaceable batteries then tenants must replace expired batteries during their tenancy.

Tenants must not damage, remove or disconnect a smoke alarm and that includes removing the batteries, unless it is to immediately replace expired batteries.

Tenants must let the landlord know if there are any problems with the smoke alarms as soon as possible.  Landlords have the right to enter a rental home to comply with insulation requirements after 24 hours’ notice between the hours of 8 am and 7 pm.

The cost of not meeting your obligations

A landlord who fails to comply with smoke alarm obligations is committing an unlawful act and may be liable for a penalty of up to $4,000, while a tenant who fails to comply with their responsibilities may be liable for a penalty of up to $3,000.

If you have any further queries please do not hesitate to contact us.

Government Set To Amend The Residential Tenancy Act

Dr Nick Smith photo

Building and Housing Minister Dr Nick Smith has announced that the Government is considering changes to the Residential Tenancy Act over when property damage costs can be reclaimed from tenants.

Dr Smith was quoted as saying “This review has been prompted by recent court decisions and Tenancy Tribunal rulings, which have sparked confusion over how the Residential Tenancy Act (1986) and the Property Law Act (2007) interact. This is resulting in uncertainty for landlords and tenants, and is affecting the effective functioning of the Tenancy Tribunal.”

This announcement follows pressure from the NZ Property Investors Federation, which has argued the current law is making it nearly impossible for landlords to claim costs for accidental damage caused by tenants.

In a recent decision the Tenancy Tribunal ruled a woman should pay nearly $1000 to their landlord for damage to carpets and curtains after she left five cats shut in a room in her Wellington rental. The NZ Property Investors Federation has praised the decision, saying “it is a positive move in the aftermath of the Holler and Rouse v Osaki case, in which the Court of Appeal ruled in April a tenant did not have to pay for damage caused after leaving a pot of oil on the stove which started a fire.”

Dr Smith said the “The issue is tenant damage to a property through carelessness or negligence. The latest court rulings mean landlords cannot recover the costs of this damage where they have insurance, including for their costs such as the excess. The problem with this approach is that it reduces the incentive for tenants to take good care of the property they rent. It also reduces the landlord’s incentive to have insurance as it lessens tenants’ responsibilities.

“My concern about this new interpretation is that it will add to the overall costs of the residential sector, driving up insurance costs and rents. However, we do not wish to return to the situation where tenants may be sued by their landlord’s insurance company for hundreds of thousands of dollars, such as with an accidental house fire.

“The proposal I am considering is that tenants would be liable for damage caused by carelessness or negligence up to the value of their landlord’s insurance excess but not exceeding four weeks’ rent, which is aligned with the standard tenancy bond. A different amount could be mutually agreed if specifically provided for in the tenancy agreement and would enable the tenant, if they wished, to take out their own insurance.

“The tenant would remain fully liable for damage caused intentionally or caused by a criminal act, with no limitation. The landlord would remain liable for fair wear and tear, and any damage caused to the property by an event beyond the tenant’s control, such as a storm or an earthquake.”

Dr Smith has asked the Ministry of Business, Innovation and Employment to do targeted consultation with tenant and landlord organisations, and the insurance sector, on possible changes to the Act.

“New Zealand has 450,000 tenanted properties, and both tenants and landlords need certainty about their rights and responsibilities. I am looking for a practical solution that will work for both tenants and landlords.”