The Residential Tenancies Amendment Bill (No 2) received its Royal Assent on 30th July 2019 bringing about significant changes for landlords to pay attention to. One such change concerns careless
damages caused by tenants at rental properties.

Note that this commentary relates only to careless damages caused by tenants at rental properties.

1. Background

Prior to 2016, tenants were liable for the cost of the damage.

Between 2016 and 2019, as a result of a Court of Appeal decision (Holler v Osaki [2016] NZCA 130),
tenants were given the benefit of the landlord’s insurance and absolved of any liability for the cost of the damage.

2. The Amendment
2.1. Capped liability

The RTAA 2019 reverses the effects of Holler somewhat by placing a capped liability onto the tenant for careless damages. From 27th August 2019 onwards
the tenant becomes liable for the cost of the damage up to, the lower of, four weeks’ rent or the landlord’s insurance excess. Tenants on income-related
rents will be liable for, the lower or, four weeks’ market rent or the insurance excess.

A trickle-down effect of this liability is a strict requirement for the landlord to disclose details of any insurance policies on the property.

2.2. Disclosure requirements

From 27th August 2019

  • All new tenancies
    • must include an insurance disclosure statement stating either
      • That the premises are not insured; or
      • The amount of policy excess that is relevant to the tenant’s liability for destruction of or damage to the premises as well as a separate
        statement advising the tenant that a copy of the insurance policy...