This is a very timely question, and our thoughts are with those impacted by the flooding and Cyclone Gabrielle.

According to industry peak body, Real Estate Institute of New Zealand, property owners are responsible for maintaining a property in a reasonable condition and fixing any damage to the property caused by a natural disaster.

In the case of flooding, the landlord is responsible for ensuring necessary repairs are carried out if the property remains habitable as well as the cost associated with hiring machinery to dry the property if there has been water damage. This could include the hiring of equipment to dry the home and any electricity charges incurred by the tenants.

Property owners should seek advice from their insurer about cover that may be in place to assist with the costs. At the same time, Property Managers should work with the landlord to understand the level of insurance cover they have and determine the next step in the process.

What happens if the property is damaged but liveable? 

If the property is still liveable but has unusable rooms and spaces, the rent should be reduced until the completion of the repairs. There is no prescribed formula for this reduction, and you and the tenant must come to a written mutual agreement.

It’s essential to keep in mind factors such as the overall liveability of the property, the safety of the occupants, how extensive the repairs are and the amount of time the repairs will take when assessing the rent reduction. All evidence of the damage must be recorded, including photographs and videos, should this be needed for insurance purposes or any potential Tenancy Tribunal dispute, advises the REINZ.

The rent reduction should begin when the property is destroyed and damaged and not at the time when a notice of the reduction is presented to the tenant. 

All obligations under the Residential Tenancies Act remain, and owners must give 24 hours’ notice to the tenant to inspect the property or allow assessors on site, unless the entry is due to an emergency, or you have obtained the tenant’s consent to enter.

For more information about responding to flood damage to an investment property, contact your local Raine & Horne office.