The damage to a ruined carpet in this Foxton rental home was a direct result of a breach of the tenancy agreement. So why won't the tenant have to foot the bill?

A tenant who let her dogs urinate throughout a house – despite a no-pets policy – doesn't have to pay to replace the ruined carpets.

Landlords are pointing to the contentious Tenancy Tribunal ruling against a Horowhenua property owner as a concrete example of their concerns about a change in rules.

The Foxton house at the centre of the dispute stank of animal urine and the contamination was such that the carpets had to be replaced, according to a cleaning business.

Warwick Smith Some of the pee-stained carpet removed from the house.

A property management company agreed there was a strong, "unbearable" smell of urine.

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Although the tribunal accepted the tenant, Amanda Stewart, breached the tenancy agreement, it had not been established she intended to damage the carpet.

But Tekoa Trust property manager David Russ said the damage was a direct result of Stewart breaking the agreement.

"We believe the tenant had dogs confined in the house that had defecated and urinated on the carpets. The damage was gross and putrid and was impossible to be remedied and the carpet had to be replaced."

In April, the Court of Appeal ruled in favour of a couple who were pursued by the landlord's insurer for the cost of a house fire, caused by an untended pot on the stove.

The court sided with the renters, Kenji and Tieko Osaki, and last month the tribunal put out a practice note to help clarify how the ruling would be applied.

Scotney Williams, a director of tenancy services firm Tenancy.co.nz, said the previous understanding was that tenants had to pay for damage they caused, even if it was accidental.

The Osaki practice note stated that if tenants showed on the balance of probabilities the damage was unintentional and the landlord was insured, the tenant would not have to pay up.

Russ said Tekoa Trust's insurance company informed him each identifiable instance of damage caused by the dogs' waste would count as a separate claim, as would each room.

There was a $500 excess, and with at least 10 noticeable spots in each room, the total excess would have worked out to $25,000, making a claim pointless, he said.

"This whole thing is unworkable. Our insurance premiums are going to lift if we have to keep making [unrecoverable] claims on these kinds of damages."

Fitzherbert Rowe associate Liam Hehir said landlords should carefully review their insurance policies.

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