Villas & Vacations - in the AlgarveVilla Club Ltd

Sociedade de Mediacao Imobiliaria Lda (AMI 715)
Worried about Rental Damages?
Nothing in life is risk-free, but there is much we can do to safeguard your interests.

When considering renting, many owners express concern over whether they will be reimbursed for any damages. This is a truly difficult subject as everyone will have their own interpretation as to what is a 'fair' solution. We often find that the owner's viewpoint differs substantially from that of the client and this is hardly surprising - there's money at stake! At Villas & Vacations we try to put the owner's point of view first and charge the clients whatever is fair. However, in all fairness, we also have to be flexible and, if the client has any valid arguments, to take these into account.

What's the difference between 'wear and tear' and 'damage'?

For example, a sofa is sat upon by a many people and the fabric ultimately splits. Does the last person to sit on the sofa have to pay for it to be re-upholstered? Of course not! Any item which is used over a long period of time will eventually wear out. The wearing out process occurs in stages, but all items in daily use will eventually require repair or replacement. The degradation of the item is expected to correspond with its usage and this is therefore 'wear and tear'.

Contrast the previous example with a person who drops and breaks a vase. Whilst this was an unfortunate accident, in principle the person dropping it is clearly responsible for the reasonable value of its loss. Reasonable, in this context, means perhaps up to the value of say £50. It would not extend to the value of a genuine 'ming' vase worth many thousands! Understandably, a visitor to any house may not appreciate the extraordinary value of such an item unless it is specifically pointed out to him. Even then, in all fairness, such an item should be locked away and insured.

In our experience the owner has a tendency to see all degradation as 'damage'. Conversely, the client sees damages to items of lower value as 'fair wear and tear' and damages of higher value something that should be insured. In reality, each circumstance is different and ideally we try to find a reasonable solution.

How do we protect an Owner's property against damage?

Simply owning a property carries an inherent risk, irrespective as to whether it is rented or not. For example, statistically speaking, an unoccupied property has more chance of being broken into, vandalised or suffering serious flood damage. Therefore we cannot promise owners that no damage will ever occur to properties during rental periods. What we can do however is try to minimise the risks by doing the following:

  • We collect a damage deposit from the client, usually in the form of a signed credit card. However, even a signed credit card does not mean we can simply charge the client with whatever we wish. Charges must be fully justifiable and, if they are not, then the client could still refuse to accept them.
  • We warn clients that if they cause any damage, they will have to pay for it. We have observed that after being warned, clients do also tend to be careful.
  • We try to provide instructions to clients on how to properly use equipment. In some cases, owners have equipment which is very difficult to operate and this can lead to confusion and possibly misuse. This is not always the clients' fault and owners have to make some allowances for clients being unfamiliar with their property.
  • With properties that we manage, we regularly inspect the property and we try to bring any damage to the client's attention. This is important. Other managing agents sometimes only report damage after the client has left. This is a big mistake and can severely reduce the chances of obtaining compensation.

 

What kind of problems can arise?

Here are some examples of what has happened in the past.

Type of Damage The Facts Owner Says Client Says What we agreed...
Cigarette burn A cigarette burn appeared on a bedside rug. Clear negligence of the client. It was only an accident... The client must pay for a replacement rug. If the rug had been large and expensive we would have tried to find a way to repair it at the client's expense.
Broken chair Client sits down and chair collapses. Client must pay for a new chair because he must have sat down improperly. The chair must have been loose or in an unsafe condition. If asked to pay, he will counterclaim for an hurting his back. The chair was very old, creaky and loose. The damage should be considered 'wear and tear'. The chair was re-glued and screwed back together at a modest cost to the owner.
Broken lamp The lamp was on a table at the side of a curtained window. The wind blew the curtain which overturned and broke the lamp. The damage occurred whilst the client was in occupation so he is responsible. Furthermore, it is part of a set of three lamps which cannot be purchased individually. Therefore a new set of 3 lamps must be paid for by client. It was not my fault the lamp had been placed in such a dangerous position - it was an accident waiting to happen. I will not pay for one lamp, let alone three! The owner should be covered by insurance. The client was asked to pay for one lamp and we bought a replacement as close as possible to the original.
Scratched table A small scratch appeared. No one knows how or when. The client must buy a replacement table. He does not remember making any scratch and he believes it was already there when he arrived. It is possible that the scratch was there before the client arrived. However, as the scratch was very small it was considered as 'wear and tear'. The scratch was treated with a specialist product at small cost to the owner.
Blocked drain A tree root blocked the drain. The blockage occurred during the client's occupation - he will have to pay to have it unblocked. The drains were blocked and I couldn't use the bathroom. I want a refund of my rental paid. The tree root was removed by a specialist contractor at the cost of the owner. As the drain problem was resolved within 1 day, no refund was paid to the client.
Broken shutter The rental client has tried to open an electrically operated shutter manually and caused it to jam. The client was operating the shutter wrongly and has caused damage for which he should pay. I have never seen this type of shutter before and there was no clear way to operate them, it is not my fault that no one told me how it worked. It was an easy mistake to make. The owner's managing agent (not us on this occasion) should have left clear information on how the shutters are operated. As the cost of repairing the shutter was only small we accepted the client's argument that he had not been negligent. We encouraged the managing agent to ensure that clients should be informed as to how equipment should be operated.

Are there any guidelines to minimise my risks?

The advice we give to owners is as follows:

  • Make sure that clients are made aware of any possible pitfalls in using your house. For example, not to press the button on the TV which resets the channels as then a specialist engineer must then be called to reprogram them. Or, as already mentioned, make sure that clients are aware not to attempt to open electric shutters manually.
  • Ensure that adequate written instructions are readily available for a client to read. If there are no instructions, many people will press every button to try and make something work.
  • Try to install simple but reliable equipment. There is no point in making sophisticated equipment available to clients if it will take them a week learning how to use it - it is just asking for trouble.
  • Make sure that housekeeping personnel are trained to raise the alarm as soon as any damage is spotted. It is important to point out damage to the client at the earliest opportunity. It weakens your case considerably if a client has left the property before the damage is reported, although on some occasions this is inevitable.
  • Ensure that valuable or sentimental items are locked away. If you cannot easily replace an item, it makes sense to keep it as safe as possible or, at the very least insured.
  • Try to buy 'practical' furniture and fittings. There is no point in having an expensive Wedgewood dinner service or a snow-white sofa. It is simply impractical and, if there is any damage, we have to bear in mind the practicality of the items in question. With regard to sofas, it is an important safeguard to have loose coverings fitted which can be removed for cleaning.
  • Have a regular inventory done. Whilst it will not be possible to do a complete inventory check every time the occupancy changes, at least it is a basis point of reference for what was actually in the property at a given time.

Can owners insure themselves against accidental damage?

We have not heard of a policy which provides 'blanket coverage' for accidental damage to household contents in Portugal. Specifically named items can be covered, but this is only practical if they are particularly expensive. Even then, it is questionable if a table with a small scratch would be replaced by another brand new one at the insurers cost. Insurers take the same view as most other people, household items are subject to minor damage as they are being used on a day to day basis. Eventually, the accummulated degradation of the item from use will necessitate its replacement.

So what's the bottom line?

One of the truisms of life is: one's own children, dirt and damage are reasonably OK - it is only other peoples' which are totally unacceptable!

Whether you rent your property or not, your contents will deteriorate from use and one cannot expect to rent out a property for an entire year and then find everything exactly the same. 'Wear and tear' is inevitable and we ask owners to assume that the value of contents will degrade by say 5% to 10% per annum. Obviously, soft furnishings will suffer the most and we estimate on average that sofa coverings should last for approx. 4 years (depending on the colour) and curtains double that. Furniture generally will inevitably take the odd knock or even scratch but should still remain in reasonable condition for approx. 10 years. Note that in practice, owners that fully occupy their properties degrade them at a similar rate to rental clients. Indeed, it may be surprising to owners that in our experience the worst culprits are their own friends and non-paying guests. It is no coincidence that these are generally the same people that do not pay any damage deposit...

Villas & Vacations can help to safeguard your investment by ensuring the 'guidelines' above are implemented and use our best endeavours for the owner to be reasonably reimbursed for damages. However, if for any reason reimbursement is not possible, the potential for loss or damage always remains at the owner's risk.

Nothing in life is risk-free, but there is much we can do to safeguard your interests.

The good news is that rental clients seldom cause significant damage. It is perhaps only say 1 in 300 clients will damage anything significantly. In general we are able to successfully recover 100% of the claim in approx. 4 out of 5 cases. Other cases are inevitably a compromise. Fortunately, when viewed against the corresponding rental income, the risk of unrecoverable damage is almost inconsequential.

 

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Portugal Sales Agency: Villas & Vacations Sociedade de Mediacao Imobiliaria Lda (AMI 715)