Fair wear and tear or tenant-inflicted damage: What’s the difference?

Expert Advice with Shannon Davis 12/5/2016
 

I once knew of a young tenant who was the epitome of an A-grade tenant. He paid his rent on time, rarely asked for any repairs or maintenance, kept the house in good condition and was overall very pleasant to deal with.
 
Things continued in this manner for several years, until one day, it slowly began to change.
 
First he was a week late with the rent; the following month, he was two weeks late. Then he wasn’t home as pre-arranged for an inspection, and when the property manager entered the premises, she discovered the place was a tip.
 
Not only were there dirty dishes, rubbish and clothes strewn all over the place, but the actually property was in pretty rough condition as well, with marks on the walls, stains on the carpet and even a door hanging off its frame in one bedroom.
 
What had happened?
The tenant had gone through a relationship breakdown; his long-term girlfriend had moved on and moved out, and he wasn’t coping very well in her absence.
 
The landlord was compassionate at first, even paying for a cleaner to give the property a robust once-over to help his tenant get back on his feet; it took two cleaners an entire day and half a dozen garbage bags to restore order!
 
Eventually, a few months later, the tenant moved on and this landlord was left with a slight dilemma. When he walked through the property after the tenant had moved out, he wasn’t very impressed – it was in much worse condition that it had been when his former resident had moved in.
 
But, five years had passed.
 
How much of the damage and spills on the carpets, to the benchtops and on the walls could be considered wear and tear, and how much could be considered malicious damage on behalf of the tenant?
 
He came to me for advice: 
Should he attempt to keep his tenants’ entire bond to help with the repairs? Or should he accept that he’d had a star tenant for 4 and a half out of 5 years, and chalk the expenses up to wear and tear upgrades?
 
Legislation in most states indicates that a rental property must be vacated in ‘reasonably clean’ condition, which is fairly open to interpretation: your version of reasonably clean could be very different to mine.
 
So what is a landlord to do?
This was my advice to my client:
 
1. Ask your property manager for advice.
They are involved in these types of situations every day, and will be able to offer their professional advice as to whether the repairs are actually wear and tear, or worth pursuing recovery costs for.

2. Consider the age of the fixtures and fittings.
Let’s say the damage in question relates to stains and marks on the carpet. Was the carpet brand new when the tenant moved in five years ago? If so, then it’s probably quite reasonable to make a claim to have them repaired. However, if the carpets were already aged when your tenant moved in, you may want to consider replacing them as part of your responsibilities as a landlord anyway. The ATO deems the life of a carpet to be 10 years, so this is a good gauge to use as a guideline.
 
3. Liaise with your landlord insurer.
If some of the repairs are deemed to have been caused by tenancy negligence, you may be able to make a claim on your insurance policy. If you’re unsure, call them for advice to find out what your options are.
 
This is truly one of the areas of property management that causes the biggest divides between tenants and landlords, because people have very different opinions about what constitutes fair wear and tear, and what is claimable against the tenant’s bond.
 
Ultimately, there is no clear-cut ‘right’ and ‘wrong’, but my advice is to keep solid records, including photos taken at the beginning and end of every tenancy.
 
My motto is always to plan for worst but expect the best, and this falls right into that category. With a solid paper trail and photographic support in your pocket, if you ever do decide to go down the path of seeking recovery costs, at least you’ll have enough evidence to back up your claim.
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Shannon Davis is Director of Metropole Property Strategists in Brisbane and as a successful property investor and licensed estate agent, his years of industry experience helps his clients maximize the performance of their investment properties. 
He is a regular commentator for Michael Yardney’s Property Update.


Read more Expert Advice from Shannon here!
 
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
 


 

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