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The latest article form Allen Realty Ltd, Property Managers sheds some clarity and advice on how to tackle damage/issues left at the end of a tenancy.
More articles can be found on the Allens site www.allenrealty.co.nz (landlords section) but this article is posted below.
Tenant Damage or Wear & Tear/Depreciation – How do you Know?
Fair wear and & tear is the gradual deterioration of aspects of a property which has resulted NATURALLY or from AGE. Allen Realty property managers inspect all properties periodically and then at the expiry of a tenancy to identify fair wear and tear and/or damage. Every specific issue is investigated on its individual merits and there is no ‘across the board’ policy. Most issues are easy to identify which category the damage falls in to. However, if your property manager is not confident on the exact cause we will make a recommendation to the owner and then take instructions as to what the property owners decides is an appropriate amount for the tenant to be charged PRIOR to all bonds refunded.
Stains on carpet/lino/nets/curtains and damages to walls are NOT generally considered wear and tear and are usually tenant damage. Cracks in paintwork can sometimes be caused by tenants but are usually caused by movement in walls/ceilings which can occur naturally in all properties. Cracked tiles require more investigation as this could be caused by tenants or an uneven surface or poor grouting and installation. When carpet is beginning to bubble slightly, show loose threads or discolour the age of the carpet is taken in to consideration and often if it exceeds a certain age then wear and tear can be diagnosed as a fault or contributor.
Some issues can be identified as being caused by both wear and tear and tenant damage. For example if damage is started as a result of age but then accelerated by the tenant. In this case the tenant may be responsible for a contribution towards the cost of remedying an issue. Other issues like faint oil stains on garage floors require more investigation as some level of discoloration may be expected over time. The most important issue is what steps the tenant has taken over the life of the tenancy and at the expiry of the tenancy to limit or reduce the problem.
If a maintenance problem has occurred and the tenant has not communicated this to a landlord then the tenant may also be held responsible for the acceleration of the damage. Issues such as mold and moisture can also be a difficult one. If a landlord identifies mold on walls, ceilings, nets or curtains that has caused discolouration or damage to the surfaces then this is usually NOT caused by the tenant even though it may have been accelerated by the tenant not cleaning the surfaces regularly. This problem should not be left until the termination of a tenancy as a tenant needs to be educated throughout the life of the tenancy on how to reduce and combat this problem.
If a landlord fails to effectively do this then they too have contributed towards the damage. Tenants need to be educated on opening windows and cleaning surfaces regularly to avoid this problem and property owners need to provide adequate insulation and ventilation. If they fail to do this then it is difficult if not impossible to chase tenants for this damage (tenants would be responsible for cleaning the surfaces but not necessarily the damage if mould has eaten in to surfaces).
Cleaning issues require a similar approach. It goes without saying that if a tenant fails to keep a property clean and tidy throughout the life of a tenancy then the property will degrade a lot quicker. This is NOT fair wear and tear and landlords should not wait until the end of a tenancy to address this issue. Regular inspections and tenant education is again the key to avoiding this issue. The Residential Tenancies Act is relatively vague on condition and requires properties to be reasonably clean and tidy. For this reason all Allen Realty tenants are required to sign a ‘Tenant Cleanliness Statement’, attached to the agreement which outlines specific obligations in a bid to educate tenants so all parties are on the same page with regards to presentation.
During the regular inspections tenants may need further direction (the most common is the use of fly spray and common requests to wipe ceilings) if properties are not up to standard and if problems do persist then we will take steps to terminate tenancies rather then let potential damage occur. If damage identified at the end of a tenancy is due to long term neglect then tenants should be charged but like moisture problems landlords need to take some responsibility for the lack of proactive management.
It is worth noting that a property manager and most property owners will ALLWAYS consider the history of the tenancy when judging what is fair wear and tear/tenant damage. For example, if a tenant has been at a property for years, has paid all rents/water bills in advance, has left the property absolutely immaculate inside and out but a small scratch is identified in the wall at the bottom of the stairs (common areas for damage when moving in or out of a property) the property manager may recommend to the owner that the tenant is not charged. However, if the owner requests we charge the tenant then we will oblige if the cost is reasonable.
Landlords need to be aware of common Tenancy Tribunal practises with regards to wear and tear and depreciation. It is common for adjudicators to enquire about the age and value of chattels and paintwork and proof of remedial work when considering claims for damages vs. wear and tear. Accountants often depreciate chattels using a percentage of the value and age and the Tenancy Tribunal does the same. They may not order the tenant to reimburse the complete cost of fixing damage to as aspect of the property that is years old and not brand new. Landlords must appear to be reasonable with their claims. If a landlord applies with an unreasonable claim then they may lose the benefit of the doubt. If a landlord is unreasonable and tenant proves that the rest of the tenancy has run smoothly then a tenant may receive the benefit of the doubt instead. Be reasonable in your negotiations and do not try to profit. Also bear in mind that if you rent a property to a family of 8 and at the expiry of a tenancy the Tribunal may rule that the landlord must expect slightly more wear and tear then if they had rented to a party of 4. When negotiating all issues need to be taken in to consideration.
When preparing for Tribunal hearings you will require quotes/invoices/invoices/inspection reports and pictures. If you turn up with photos and quotes then you may not receive the cost of the work unless it has actually been done. The tenancy Tribunal is not in the habit of awarding to the landlord when work has not even been completed to remedy the issue. So best practise is to identify issues, identify the course, request a quote to repair, and then negotiate with the tenant in order to mediate an appropriate settlement. You may even offer sweeteners if the tenant reimburses you in the next 48 hours. As you are dealing with people and their emotions the successful outcome always depends on the process being completed the right way.
An experienced property manager can usually identify the difference between damage and wear and tear and negotiate with tenants successfully with no emotion. This can be a difficult and time consuming process for private owners who are busy and more emotionally attached. This is one of the benefits of having a property manager and effective communication between you and your manager is the key to the successful outcome. At the expiry of each tenancy your property manager should report on any damage and the suggestions for reimbursement/compensation so there are no surprises down the line for the property owner.
Allen Realty Ltd offers a competitively priced property management and letting service that will take the hassle away from property investors and improves the performance of your property or portfolio. Our comprehensive service is customised to suit individual client’s requirements. For more information on our services including landlords rights and obligations visit www.allenrealty.co.nz
Simon Allen
Allen Realty Ltd
April 2010
More articles can be found on the Allens site www.allenrealty.co.nz (landlords section) but this article is posted below.
Tenant Damage or Wear & Tear/Depreciation – How do you Know?
Fair wear and & tear is the gradual deterioration of aspects of a property which has resulted NATURALLY or from AGE. Allen Realty property managers inspect all properties periodically and then at the expiry of a tenancy to identify fair wear and tear and/or damage. Every specific issue is investigated on its individual merits and there is no ‘across the board’ policy. Most issues are easy to identify which category the damage falls in to. However, if your property manager is not confident on the exact cause we will make a recommendation to the owner and then take instructions as to what the property owners decides is an appropriate amount for the tenant to be charged PRIOR to all bonds refunded.
Stains on carpet/lino/nets/curtains and damages to walls are NOT generally considered wear and tear and are usually tenant damage. Cracks in paintwork can sometimes be caused by tenants but are usually caused by movement in walls/ceilings which can occur naturally in all properties. Cracked tiles require more investigation as this could be caused by tenants or an uneven surface or poor grouting and installation. When carpet is beginning to bubble slightly, show loose threads or discolour the age of the carpet is taken in to consideration and often if it exceeds a certain age then wear and tear can be diagnosed as a fault or contributor.
Some issues can be identified as being caused by both wear and tear and tenant damage. For example if damage is started as a result of age but then accelerated by the tenant. In this case the tenant may be responsible for a contribution towards the cost of remedying an issue. Other issues like faint oil stains on garage floors require more investigation as some level of discoloration may be expected over time. The most important issue is what steps the tenant has taken over the life of the tenancy and at the expiry of the tenancy to limit or reduce the problem.
If a maintenance problem has occurred and the tenant has not communicated this to a landlord then the tenant may also be held responsible for the acceleration of the damage. Issues such as mold and moisture can also be a difficult one. If a landlord identifies mold on walls, ceilings, nets or curtains that has caused discolouration or damage to the surfaces then this is usually NOT caused by the tenant even though it may have been accelerated by the tenant not cleaning the surfaces regularly. This problem should not be left until the termination of a tenancy as a tenant needs to be educated throughout the life of the tenancy on how to reduce and combat this problem.
If a landlord fails to effectively do this then they too have contributed towards the damage. Tenants need to be educated on opening windows and cleaning surfaces regularly to avoid this problem and property owners need to provide adequate insulation and ventilation. If they fail to do this then it is difficult if not impossible to chase tenants for this damage (tenants would be responsible for cleaning the surfaces but not necessarily the damage if mould has eaten in to surfaces).
Cleaning issues require a similar approach. It goes without saying that if a tenant fails to keep a property clean and tidy throughout the life of a tenancy then the property will degrade a lot quicker. This is NOT fair wear and tear and landlords should not wait until the end of a tenancy to address this issue. Regular inspections and tenant education is again the key to avoiding this issue. The Residential Tenancies Act is relatively vague on condition and requires properties to be reasonably clean and tidy. For this reason all Allen Realty tenants are required to sign a ‘Tenant Cleanliness Statement’, attached to the agreement which outlines specific obligations in a bid to educate tenants so all parties are on the same page with regards to presentation.
During the regular inspections tenants may need further direction (the most common is the use of fly spray and common requests to wipe ceilings) if properties are not up to standard and if problems do persist then we will take steps to terminate tenancies rather then let potential damage occur. If damage identified at the end of a tenancy is due to long term neglect then tenants should be charged but like moisture problems landlords need to take some responsibility for the lack of proactive management.
It is worth noting that a property manager and most property owners will ALLWAYS consider the history of the tenancy when judging what is fair wear and tear/tenant damage. For example, if a tenant has been at a property for years, has paid all rents/water bills in advance, has left the property absolutely immaculate inside and out but a small scratch is identified in the wall at the bottom of the stairs (common areas for damage when moving in or out of a property) the property manager may recommend to the owner that the tenant is not charged. However, if the owner requests we charge the tenant then we will oblige if the cost is reasonable.
Landlords need to be aware of common Tenancy Tribunal practises with regards to wear and tear and depreciation. It is common for adjudicators to enquire about the age and value of chattels and paintwork and proof of remedial work when considering claims for damages vs. wear and tear. Accountants often depreciate chattels using a percentage of the value and age and the Tenancy Tribunal does the same. They may not order the tenant to reimburse the complete cost of fixing damage to as aspect of the property that is years old and not brand new. Landlords must appear to be reasonable with their claims. If a landlord applies with an unreasonable claim then they may lose the benefit of the doubt. If a landlord is unreasonable and tenant proves that the rest of the tenancy has run smoothly then a tenant may receive the benefit of the doubt instead. Be reasonable in your negotiations and do not try to profit. Also bear in mind that if you rent a property to a family of 8 and at the expiry of a tenancy the Tribunal may rule that the landlord must expect slightly more wear and tear then if they had rented to a party of 4. When negotiating all issues need to be taken in to consideration.
When preparing for Tribunal hearings you will require quotes/invoices/invoices/inspection reports and pictures. If you turn up with photos and quotes then you may not receive the cost of the work unless it has actually been done. The tenancy Tribunal is not in the habit of awarding to the landlord when work has not even been completed to remedy the issue. So best practise is to identify issues, identify the course, request a quote to repair, and then negotiate with the tenant in order to mediate an appropriate settlement. You may even offer sweeteners if the tenant reimburses you in the next 48 hours. As you are dealing with people and their emotions the successful outcome always depends on the process being completed the right way.
An experienced property manager can usually identify the difference between damage and wear and tear and negotiate with tenants successfully with no emotion. This can be a difficult and time consuming process for private owners who are busy and more emotionally attached. This is one of the benefits of having a property manager and effective communication between you and your manager is the key to the successful outcome. At the expiry of each tenancy your property manager should report on any damage and the suggestions for reimbursement/compensation so there are no surprises down the line for the property owner.
Allen Realty Ltd offers a competitively priced property management and letting service that will take the hassle away from property investors and improves the performance of your property or portfolio. Our comprehensive service is customised to suit individual client’s requirements. For more information on our services including landlords rights and obligations visit www.allenrealty.co.nz
Simon Allen
Allen Realty Ltd
April 2010
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