Can tenants damage their rental and still get their bond back?

ANALYSIS: Under the regulations governing rental properties in New Zealand, tenants are required to cover the repair costs incurred by careless or intentional damage, but they don’t need to pay for fair wear and tear.

But what is fair wear and tear? As the co-owner of a property management company, I know that this is one of the biggest questions in the rental market, from both landlords and tenants.

Fair wear and tear is one of the murkiest – and most argued about – parts of the tenancy system, with landlords often seeking a tighter definition than tenants. That’s why we have the Tenancy Tribunal, whose cases typically centre on competing interpretations of "fair".

What does fair wear and tear look like?

Here’s a property where the side of the stairwell has been damaged. Some of the paint has come off the corner of the wall. This damage wasn’t there when the tenant moved in. Is it fair wear and tear? Or should the tenant have to pay for the damage? The Tenancy Tribunal would likely call that fair.

A damaged stairwell - who's responsible for covering the cost of the repairs? Photo / Supplied

If an area is on a stairwell or a high-traffic area (like in front of a couch), it will be used more frequently and will be more susceptible to wear and tear.

In a case like this, the tribunal would also consider the tenants' opinions. If the tenant said the stairway was too narrow to move their furniture up and down (and that’s why there was damage), then the tribunal would likely side with the tenants and expect the landlord to cover the repair costs.

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The tribunal will also consider how long the tenants have been in the property - the longer the stay, the more wear and tear is expected. For example, if the tenant had used a hook to hang pictures on the walls, any damage (within a reasonable level) could be viewed as fair.

The situation and setup of the house also matter. Let’s say the tenant lives in a townhouse. They have a small lawn at the back of their property, but there’s no external access.

So the tenant has to drag a lawn mower through the house to mow it. If the lawn dies or is poorly mowed, the Tenancy Tribunal would likely call that fair wear and tear, but if there was external access, they might change their mind.

Dishwasher depreciation – what landlords don’t know?

There can also be times when a tenant has damaged an appliance, but they still don’t have to pay. That’s because of depreciation.

Dishwashers and appliances typically only last for 6.67 years. So after that, its value has been fully depreciated. If a tenant damages an old dishwasher, a landlord might not be able to take anything out of their bond because it has no book value. The cost of replacement is therefore on the landlord.

Opes Partners economist Ed McKnight: "Fair wear and tear is one of the murkiest – and most argued about – parts of the tenancy system." Photo / Fiona Goodall

What isn't fair wear and tear?

In the example below, the curtains are coming away from the railing. Is that fair? Probably not. In this case, it would be OK for a landlord to take some of the tenant's bond to cover the damage.

Fair wear and tear? Curtains hang haphazardly off a rail. Photo / Supplied

Would a landlord be able to charge a tenant over this poor attempt at painting? Photo / Supplied

What about this tenant’s paint job in the pic above? It looks like they marked up the wall and tried to cover it up. That would not be considered fair wear and tear. So the landlord could probably take some of the bond to put it right.

Because this is such a grey area, it is worth talking about so both tenants and landlords have a sense of when it’s fair to take some money out of the bond.

In the end, "fair" doesn’t mean what you think it means; it means what the tribunal says it means.

- Ed McKnight is the economist at property investment company Opes Partners