Landlords sometimes push back when we explain that the law makes an allowance for fair wear and tear. It isn't a loophole that lets tenants damage a property. It recognises that a home is there to be lived in, and that floor coverings, walls, doors and window furnishings wear with normal use, just as they do in your own home.
Wear and tear, or damage?
Fair wear and tear is the deterioration that comes from ordinary use and the passing of time. Damage is harm caused by an accident, carelessness or neglect.
- Wear and tear: carpet worn in the hallway, curtains faded by the sun, small marks around light switches, paint that has dulled with age.
- Damage: holes in walls, burns or stains in the carpet, a broken window, pet damage, a garden left to die.
A landlord can't claim against the bond for wear and tear. Damage beyond it can be claimed.
How it's measured: the condition reports
At the start of a tenancy, the ingoing condition report records the state of every room, with photos. At the end, the exit condition report is compared with it. The question isn't whether the property looks the same as the day the tenant moved in, because after a few years it won't. It's whether anything has changed beyond what ordinary use would explain, allowing for how long the tenant lived there.
That's why the ingoing report matters so much. A careful report with clear photos settles most disagreements before they start.
Bond claims and disputes
In NSW, the bond is held by NSW Fair Trading, not by the landlord or the agent, and claims are made through Rental Bonds Online. If the tenant agrees with a claim, the bond is paid out as agreed. If they don't, either side can apply to the NSW Civil and Administrative Tribunal, which decides how the bond is split. Most disputes come down to the two condition reports, so the better the reports, the simpler the outcome.
The trap is letting it slide
The trap with wear and tear is complacency. The older a property gets and the less it's maintained, the more it wears, and the harder it becomes to attract good tenants. That can start a cycle where the property slips further each year.
It's much easier to keep a well-maintained home in good condition than to bring a run-down one back. A common rule of thumb in property management is that a rental should have a minor refresh every seven to ten years: a coat of paint, new floor coverings or a sand and polish of the boards, and new window furnishings. By year seven the property has had seven years of fair wear and tear and is probably starting to look tired. Leave it, and by year ten you may have a property that house-proud tenants won't choose.
Plan for it
Our advice is to put a little aside each year, so the money is there when the property needs some attention. Money spent maintaining a rental property is usually tax deductible, though larger improvements can be treated differently, so ask your accountant how it applies to you.
A well-kept home attracts good tenants and keeps them. They look after it, and they're prepared to pay more for a better home.
