Lockdown loss of rental

A landlord complained when lockdown triggered a loss of rental income of $2,000. he was further upset when his insurer declined his claim.

Loss of rental during lockdown

Tenants who left during lockdown left landlord out of pocket

A landlord, whose rental was left empty when his tenants moved out during lockdown, lost $2,000 in rental payments. He was upset when his insurer refused to pay his claim.

Mr F couldn’t find new tenants when his existing tenants moved out during Auckland’s Level 4 lockdown. He made a claim for the loss, saying his tenants didn’t give the required period of notice, as COVID-19 restrictions on residential movements were in place. The insurer declined the claim. Unhappy with that decision, Mr F made a complaint to the Insurance & Financial Services Ombudsman (“IFSO”).

Mr F said he lost $560 per week rent from 28 August 2021 until the new tenancy started on 8 October 2021. He claimed that, even though the previous tenants had given a month’s notice, the COVID-19 Level 4 restrictions didn’t allow tenants to leave except in specific conditions. He said the tenants had nullified the correct notice period by moving out. He lost rent because he couldn’t get new tenants during the lockdown.

The lockdown had begun on at 11.59pm on 17 August 2021, and the tenants had given a month’s notice they would vacate the house on 26 August 2021.

To give clarity to landlords and tenants, on 29 October 2021, the Government passed the COVID-19 Response (Management Measures) Legislation Bill. The Act stated that, while a COVID-19 tenancies order was in place, no tenancy in that area could break a lease, unless it was by the tenant. This applied to notice given before the date of the COVID-19 tenancies order.

The IFSO, Karen Stevens, found that because the Bill was passed after Mr F’s tenants had given notice, it did not apply in this case. She also found that the COVID-19 Level 4 restrictions did not nullify the required notice provided correctly by the tenant.

The IFSO found the cause of Mr F’s loss was not the tenant vacating without giving the required notice; rather, it was the COVID-19 restrictions, which meant it was difficult for Mr F to get a new tenant at that time. She also found that, unfortunately, Mr F’s insurance policy did not provide a loss of rent benefit in this situation.

Ms Stevens believes other landlords and tenants will have been caught short during lockdowns. This complaint highlighted that the COVID-19 Response Legislation Bill overrides existing tenancy agreements and puts new measures in place.

Complaint No: 00221527

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