Are tenants accountable for the damage they cause to the property, and to what extent
It depends whether the damage is ‘intentional’ or ‘careless’. The Residential Tenancies Amendment Act 2019, sets out to clarify exactly this question. But its not without complication:
Intentional damage is not just limited to the amount of the landlords excess. If a tenant ‘trashes’ a property and you can prove that they intentionally damaged the property (eg holes smashed in walls, meth, and the like) then you or your insurer can hold the tenant responsible for the total cost of the damage. Contrast this with a tenant leaving a house in a poor state caused by careless damage (eg pets in the home, damaged carpets, damaged walls) then the recently enacted Residential Tenancies Amendment Act means that the tenant is liable per careless damage event to the extent of the landlords excess or 4 weeks rent (whichever is the lesser). So this means that the tenant has responsibility for careless damage on a per event basis not per tenancy basis. Regular property inspections and communication with tenants helps to identify ‘events’. If you leave it to the end of the tenancy to hold the tenant responsible then you might come up short.
Trying to get more relief, as a landlord, by increasing your rental property insurance excess may backfire as the excess for accidental damage such as a burst water pipe, electrical fire or storm damage is your responsibility – so you will end up paying the higher excess too. And to add further complication to this I also believe that the RTAA’s approach to ‘careless damage’ is ambiguous and open to interpretation, meaning that it’s not necessarily a given that all tenant related damage is the responsibility of the tenant (eg tenant accidentally spills wine on the carpet; careless or accidental?). We will have to wait for Government guidance or a Tenancy Tribunal decision to provide us with some much needed clarity.
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Initio provides rental property insurance for landlords. It provides cover for accidental, careless and intentional damage. To learn more about the cover and to get a quick landlord insurance quote click here