29 March 2006 NEWS RELEASE From Andrew King, Executive Member of the New Zealand Property Investors Federation Late last night the Residential Tenancies (Damage Insurance) Amendment Bill had its first reading in Parliament. The NZ Property Investors Federation (NZPIF) is opposed to the Bill and is disappointed that landlord groups were not consulted in its development. We are also dismayed that there are now three legislative initiatives before Parliament that involve amendments to the Residential Tenancies Act. The aim of the Bill is to protect tenants in group-flatting situations from being financially disadvantaged should their flatmates cause damage to the rental property. As an example, should a flatmate?s careless use of a cigarette cause the house to burn down, the landlords insurance protects the landlord, but the Insurance company can seek compensation for the damage from all the tenants. As tenants are joint and severally liable (meaning the consequences following the actions of one flatmate apply to the other flatmates) for damage to the rental property, flatmates who had no involvement in the damage may find themselves liable for the cost. The MP introducing the new Bill, Labour?s Maryan Street, is attempting to protect flatmates from the liability of other flatmates. If passed, the new Bill would make it compulsory for landlords to provide this insurance for their tenants, however the NZPIF Executive has several issues with the Bill. They are also concerned that if passed, this Bill could stimulate further legislation making it compulsory for landlords to insure their tenants against rental defaults. The main argument against the Bill is that it protects tenants, so landlords should not be involved at all. If Government wants tenants to have insurance, they could make it compulsory for them to have at least Third Party Cover to protect their flatmates against their own poor behaviour. This insurance would then follow them around which could see an increase in personal responsibility as tenants who couldn?t get insurance could get accommodation. If passed in its present form, the Bill would see vacating tenants making a claim leading to higher premiums for the next set of tenants. This would occur through loss of any no-claims bonus and could see new tenants being disadvantaged through the actions of past tenants. Many of the practical problems the Bill would introduce could lead to high levels of litigation, as tenants would easily try and blame other tenants and/or visitors to escape any personal responsibility. Many group flatting situations can involve individual tenants coming and going without the landlords? knowledge. Will the Bill allow remaining tenants to simply blame a departed tenant for causing damage to the property in an attempt to escape their own responsibilities? If so, insurance companies could insist that the landlord not only find the departed tenant but then prove that they were the ones who caused the damage in the first place. Tenants could also blame visitors to the property, which could raise issues of who they were visiting and who is liable. These potential situations would make renting to groups a high-risk undertaking and could lead to groups finding it difficult to secure rental accommodation. This Bill would lead to an insurance policy that tenants may not need or want, paid for by a third party who is not covered by the insurance, which raises many practical problems for how it will work in practice. For further information, call: Andrew King Phone: 09-815 8642 Fax: 09-815 8648 e.mail: Andrew@PropertyInvestor.Info www.NZPIF.org.nz
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