REINZ slams Damage Insurance Bill

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The Residential Tenancies (Damage Insurance) Amendment Bill currently under consideration by the Social Services Select Committee, will cause more problems than it will solve, according to the Real Estate Institute of New Zealand (REINZ). REINZ’s Select Committee submission says the Bill could make some people unable to secure tenancy of any property. The Institute also says the Bill contravenes the ‘user pays’ principal by requiring landlords to pay an insurance premium that only benefits tenants.

Thursday, August 10th 2006, 12:00AM

by The Landlord

REINZ national president Howard Morley says REINZ acknowledges the proposed legislation may well be well intended, but there are better ways to address the problem. “These alternatives have not been pursued, and we have no doubt the Bill, if enacted, will prove counterproductive.”

The Bill’s intent is to address a perceived unfairness in the current Residential Tenancies Act 1986 by introducing protection for tenants against personal liability for major damage to premises they didn’t cause. Tenants are currently jointly and severally liable to the landlord for damage to premises. This can mean damage caused by one tenant’s negligence can result in substantial liability being incurred by other innocent tenants.

“REINZ believes an excellent alternative would be to require tenants to take out insurance. We understand tenants’ liability insurance is available for under $100 a year,” says Morley.

REINZ says naming individual tenants in the landlord’s policy has implications for both tenants and landlords where tenants with dubious insurance histories are involved. Landlords could find it difficult getting insurance cover in the event a tenant was to make a fraudulent or malicious claim.

“As well, disclosure of tenants’ names and their insurance histories could create difficulties for ‘blacklisted’ tenants to ever secure a tenancy in New Zealand,” Morley says.

REINZ also recommended to the Select Committee there was a need for a programme to educate tenants on the wisdom of taking out a contents policy that includes personal liability. Tenancy Services could send tenants information and also post it on the Tenancy Services website. The Institute could also provide advice to its members on an appropriate clause to include in tenancy agreements.

REINZ believes the Select Committee should seek withdrawal of the Bill, and forward alternatives raised by submitters to officials conducting the review of the Residential Tenancies Act.

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