Renters causing careless damage could be up for a month's rent

Flatmates in a rental property
Photo credit: Getty

Tenants must now pay for burnt benchtops, stained carpet and other careless damage caused to a rental property, using contents insurance or from their own back pocket.

From 30 July 2019, the Residential Tenancies Amendment Act, makes tenants and their guests liable for up to four weeks' rent, or the cost of the landlord's insurance excess (whichever is lower), for careless damage caused to a rental property. 

Jennifer Sykes, Housing and Tenancy Services at the Ministry of Business, Information and Employment said that new tenants will be aware of their responsibility for careless damage, as from 27 August, landlords are required to provide insurance information on tenancy agreements, including the excess amount of relevant policies.

"The statement [about the landlord's insurance] must also inform the tenant that a copy of the insurance policy is available upon request. 

For existing tenancy agreements, tenants can ask their landlords for the insurance information," Sykes said.

A recent survey conducted by AA Insurance has found that although 92 percent of homeowners have contents insurance, a third of kiwi tenants don't. 

The insurer confirmed that last year, the number of tenant claims were 5 percent higher than those from homeowners, yet young renters are less likely to be insured.

Aaron Dickinson, head of product confirmed that under the new rules, tenants are liable for damage caused unintentionally out of carelessness and that although contents insurance isn't required as part of a tenancy agreement, many people aren't aware of the huge costs if they damage someone's property.

"Uninsured tenants can be left vulnerable to hundreds, sometimes thousands of dollars of debt if they are liable for damaging someone else's property," Dickinson said.

Under the new rules, an example of careless damage is where a tenant takes a hot pot off the stove and places it on the benchtop, causing a permanent mark. Another might be spilling red wine on white carpet.

Although in these situations, there's no intention to cause damage, damage to property has occurred which needs to be repaired. The tenant is liable for this cost.

Dickinson said that tenants aren't required to pay for damage that's unavoidable, such as a fall due to medical reasons, a storm or a leaky pipe.

"[If the] accidental damage is not due to a careless act by the tenant and is unavoidable, [the tenant] is not responsible for making any payment towards the damage," Dickinson explained.

As in the past, tenants remain liable for the full cost of any intentional or malicious damage, and it's unlikely their contents insurance will cover it.