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Lets pretend that there was a hole in the backyard, when the tenants moved in. What about stairs, or any other obstacle on the property? Giving in to a ridiculous claim like this, will only invite more bs claims. Before long, every time grandma visits, the tenants are gonna end up with...

Find a new PM, someone that is shocked at what is going on. After the new PM, get some new tenants aswell. And of course, the new PM can make sure the house and garden is brought back up to scratch, or the old tenants don't get thier bond. I hope you can get that electricity money back...