New Tenancy Laws Receive Mixed Responses

Tenants are now personally liable for any accidental damage they inflict on a rental property.

Tenancy reforms have seen renters lose their ability to rely on their landlord’s insurance. The approved legislative changes aim to provide property owners with greater protection against damage caused by careless tenants, while also encouraging renters to act responsibly.

However, the financial liability of tenants is limited. If an individual accidentally causes damage to a rental property, they will be required to pay either their landlord’s excess insurance costs or four weeks’ rent – whichever of these costs is lower in their distinct circumstances.

A 2009 landmark court case brought the imminent need for tenancy law updates into light, where the owners of a rental property had their house carelessly burned down by tenants. Tieko Osaki, the tenant, was heating a pot of oil of the stove that caught fire, burning down the property she rented with her husband.

However, after extensive court proceedings it was determined that, because the landlord had insurance, the tenants were not liable for the owner’s insurance excess. For this same reason, they were also not required to pay damages. While $216,000 of the costs incurred were covered under the landlord’s AMI insurance policy, the final verdict is believed to have placed too much burden on rental property owners.

The New Tenancy Laws

The tenancy reform sees the liability of renters become existent and reasonable in cases of accidental damage to a property. Tenants will be held accountable for their actions but, with limited liability, they will not be forced to experience severe financial hardship.

Landlords will also need to comply with new legislative requirements. For instance, owners must now share whether they are insured, and for how much, with tenants in their rental agreement. The specific details of their insurance policy need to be made available on request and, if they do fail to deliver this information to tenants, they may be fined $500.

In addition to this, tenancy laws surrounding the rental of garages as houses were amended. Prior to these recent legal modifications, illegal dwellings were not covered by the Residential Tenancies Act. This meant that, if tenants living in unconsented spaces wanted to prosecute their landlord, they were incapable of doing so. The tenancy reform gives all tenants the opportunity to take judicial action against their landlord, regardless of whether the rental property is lawful.

If you have any queries with regards to how the new tenancy laws could affect your insurances, please contact your insurance and/or legal advisor.


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