Source: Radio New Zealand
RNZ
A “very small dent” or black mark on a wall. A Raro spill on the carpet. A broken mop and bucket.
These are some of the issues that have divided landlords and tenants who have appeared before the Tenancy Tribunal in the past month, working out what is “wear and tear” and what counts as “damage” to a rental property.
Tenancy Services says fair wear and tear refers to the gradual deterioration of things that are used regularly by people living in a property. Tenants are not responsible for this provided they are using the property, or the chattels provided, normally.
But tenants are responsible for intentional or careless damage.
“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.”
It’s an issue that can cause a lot of consternation.
In one case heard last month, a landlord sought compensation for the $28.82 cost of replacing a mop and bucket, among more expensive items.
The adjudicator said the evidence did not prove the damage to the mop and bucket was more than normal wear and tear.
But in another, a tenant’s former partner spilled Raro on the carpet and the adjudicator was “satisfied that the damage was caused carelessly”.
Last month, a landlord who argued the walls had been damaged was told one area of damage looked to be a “very small dent or black mark” and fair wear and tear.
Another landlord was told that there was not enough evidence that the tenant caused damage by causing chips on a granite bench top or pin holes to her walls.
Cassie Metcalfe, of iRentProperty, said there was confusion among landlords and tenants about how the rules might apply.
“When we think of what’s reasonable, different people will have different interpretations of that.
“There’s a lot of things to consider. One is the number of occupants in the house, the length of the tenancy, the condition of things when the tenants first moved in. I think it takes all parties to apply a level of fairness and reasonableness to come to an agreement. There’s no clear cut line unfortunately.”
She said landlords should make sure their inspections were done to a good standard and records kept. Tenants should report issues.
“You want to make sure these are documented, photographed wherever possible. If there is wear and tear at the end of the tenancy this could end up going to the tribunal where the mediator or adjudicator is making a decision and they can rely on the evidence you have.”
Sarina Gibbon, director of Tenancy Advisory, agreed people entered tenancies with different expectations.
She said wear and tear could be thought of as “time doing its thing” while damage was “someone not doing their job”.
“When I reflect on talking to landlords and tenants it’s always that expectation if you’re on the landlord side of the equation that you expect the property to be left in a pristine condition – that the tenant should take extra care as if they own the property. Let’s be honest, we’ve all hired a car before, we know how we treat a hire car … it’s really about the relationship rather than nitpicking the little things.”
She said having a bit of room to move meant tenants and landlords had to engage with common sense and be pragmatic.
“In a way it is good that wear and tear is not strictly defined – I’m not convinced that it would serve the benefit of the sector to have it strictly defined but I understand that from a day to day it does create some frustration.
“When people are trying to nitpick a tenant for $30 damage I would say the problem isn’t the $30 problem, your biggest problem is that it is not a productive relationship.”
She said landlords were often caught out by betterment. They cannot expect to be put back into a position that is better than they were in before the damage occurred.
“The tribunal is consistently good at accounting for betterment when it is ordering compensation. If the tenant had damaged something the tribunal would say – let’s say we’re talking about carpet … the tribunal will account for the fact that it is 10-year-old carpet, you’re not going to get replacement value.
“This isn’t an insurance policy, this is about restoring the landlord back to the position the landlord would have been in if the damage had never occurred. I don’t think people go into the process expecting that they get betterment, they don’t consciously think about it because think they ‘I have to put in a new carpet so the tenant should pay for the carpet – what they don’t account for is the carpet had deteriorated for 10 years.”
NZ Property Investors Federation spokesman Matt Ball said that was a bigger problem.
“On the face of it, this seems like fair principle, however the practical application of it sometimes results in significant financial harm to the landlord. For example, you may have a perfectly good five-year-old dishwasher that has been fully depreciated, with a book value of zero. The tenant can literally destroy this appliance and the landlord cannot claim any compensation, even though the appliance may have had many years of useful service left.
“The reason for this unfairness is that depreciation isn’t a measure of the item’s actual value. Depreciation is an agreed way a business owner can offset the cost of assets against income over time. It is never a full recovery of the cost of the asset, so if the asset is damaged or destroyed, the landlord is left out of pocket. In the same way that insurance policies often have an agreed value for items covered, it would be good if the law was changed to allow the Tenancy Tribunal to set an agreed value for destroyed or damaged assets so that landlords aren’t financially disadvantaged when a tenant causes actual damage.”
He pointed to a case last year in which a landlord said insurance had covered a claim up to $15,000 for meth contamination but the cost had been $18,000 more.
The adjudicator said that after three years, things like linen, bedding, crockery and cutlery were deemed to have no value for tax purposes. The adjudicator said when things were taken out of the claim that had no residual value, there was $10,836 in damaged goods – below the insurer’s payout.
“What strikes me in this case is that the landlord is left worse off, even though, as the adjudicator states in their ruling, ‘the landlord should be returned to the position they would have been in had the tenant not breached their obligations, and should not be better or worse off’,” Ball said.
Sign up for Money with Susan Edmunds , a weekly newsletter covering all the things that affect how we make, spend and invest money.
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand