This week the Government introduced the Residential Tenancies Amendment Bill (2) to Parliament.
There are three main parts to this Bill that are worth noting by landlords:
Tenants liability for damage
Since Holler v Osaki, tenants are no longer liable for
damages they unintentionally cause to a rental property. This Bill addresses the inherent inequitable outcome Holler has cost landlords. In
its current form, the Bill has the effect of making tenants liable for unintentional damages caused by them or their guests but caps the liability
at either the landlord’s insurance excess (on a per incident basis) or four weeks rent, whichever is lower. Because liability is measured on
a per incident basis, there could be confusion down the line if insurance companies and the Tenancy Tribunal differ in their opinion as to the number
of incidents of damage when examining a claim. Secondly, using weekly rent as a monetising unit to reflect liability could cause a geographical
imbalance as to tenant’s liability as, presumably, Auckland tenants would be (monetarily) more liable than someone who rents in Northland.
The Bill reaffirms the Holler doctrine that insurance companies do not have the right of subrogation (i.e. to recover cost) against tenants.
Which means passage of this Bill is not likely to affect the insurance industry’s position that Holler has the effect of increasing its overall cost (which will expectedly be passed on to landlords).
The Bill also makes it unlawful for landlords to recover more from tenants permitted by the (eventual) Act. Quantum of awardable damage is set at
$1,000. Note also that awardable damage for failure to meet a work order is increased from $3,000 to $4,000.
APIA...
