Question: My tenanted property has suffered water damage due to flooding. My tenants will have to move out, at least for a period of time, for repairs to be undertaken. How do I deal with this situation to be fair to my tenants and myself?
Answer:
Tenanted properties which are otherwise in perfectly habitable condition can suddenly become partly or wholly uninhabitable; for example, due to the recent flooding, but also this may occur at any time due to other causes such as fires.
This can put landlords in a very difficult position, especially if you are reliant on rent payments to cover a mortgage. Can you still collect rent? Must you find and provide alternative accommodation? Does your insurance cover this eventuality? What are your total legal obligations?
Ideally, every residential tenancy agreement should have a clause which says that rent, or fair proportion of it, is not payable if the property becomes uninhabitable, unless the damage has been caused by the actions of the tenant.
Also, there needs to be a clause giving either party the right to terminate the tenancy at short notice if the property is likely to be uninhabitable for any length of time.
Landlords / agents should ensure that there is adequate insurance cover for this sort of situation. Most landlord policies will provide for loss of rent payment whilst a property is affected, or for a certain specified period of time, and some will pay for affected tenants to be re-housed.
Landlords should check their policies on these points – it may well be worthwhile paying a little more in premiums to ensure you are adequately covered, and premiums are tax deductible.
However, due to the increasing incidence of flooding, and especially where a property is known to be at risk, it is likely that insurance companies will be increasingly reluctant to provide full cover in these situations.
In the case of an obligation to provide alternative or temporary accommodation, this is something of a “gray area”. On the one hand there’s an assumption that the landlord has taken on the responsibility to house the tenant/s for the duration of their tenancy, as long as they fulfill the tenancy conditions. On the other hand landlords cannot be held responsible for an “Act of God”.
Force majeure (French for “greater force”) is a common clause which should be included in all rental agreements and contracts, which essentially frees one or both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties intervenes.
Tom Entwistle, Editor, LandlordZONE
