Because the Mending cantrip doesn't receive enough love and because I think PCs need more RP options, like searching for and paying artisans for services, I put a homebrew rule into my homebrew campaign. Would love to hear feedback and possible pitfalls or exploits I might be missing.

Equipment Damage: While your character may be tough the equipment they carry is definitely not. Any creature with equipment, and for intents and purposes this usually only applies to player characters, that receives a Critical Hit or went to 0 HP or received ½ their base Max HP in a single attack will, after the battle is resolved, have their AC lowered by 1 until that damage is repaired, this doesn’t apply to those who didn’t have armor to begin with. In addition, an item carried shall be chosen randomly to receive an appropriate amount of the triggering damage type as adjudicated by the DM.

I like the underlying thought but I'm not sure your proposal would make the game more interesting, which always needs to be a factor in our decisions.

I RP arriving in town more than the average folks.  I describe going to the stable and turning over my horse to the stable master and discussing the care of my horse.  I describe making arrangements to stay at an Inn.  I often search around town for someone to make a piece of clothing (my characters are a bit of a clothes horse).  I also poke around to see what sort of shops there are.  If I remember taking any tough hits, I would check in with a blacksmith or leather worker and ask for some fix-ups.

Maybe your rule could assess a GP cost for routine maintenance for a set portion of your equipment, and if it is not paid, there is a %age change the piece of equipment "breaks" and is ruled unusable until fixed.  The equipment subject to this would include all armor and all weapons typically in use.  It could include some ancillary equipment like backpacks, belts and clothing.  I wouldn't consider applying this to tents, bedrolls, mess kits and other stuff inside your pack.

If this doesn't work for you, I can understand.  I encourage you to look how you can develop this concept.

I like the idea but the execution might need working on. The system is not neccesarily bad in itself but the problem is that instead of adding something fun to the game it might just turn into extra book keeping. Crits and heavy hits happen fairly often (side note, it's weird that a Dwarf barbarian has stuff that doesn't break as easily as a gnome wizard, I'd remove the "1/2 their base max HP" part) so after a while it will probably feel more a chore than something fun an interesting that adds to the game.

Personally, I would just use it as a bit of extra flavour when the DM wants to change things up. Maybe introduce an extra level of hardship if they're out in the desert and someone's water container breaks, stuff like that.

If you look at video games, few people site equipment breakage and repair as being a fun aspect of a game.  On a tabletop game, it's just one more thing you've got to keep track of.

Also, why does this just effect AC?  Many classes don't even wear armor, do they still lose AC somehow?

I already took that into account "this doesn’t apply to those who didn’t have armor to begin with"

Quote from Lostwhilefishing >>

I like the idea but the execution might need working on. The system is not neccesarily bad in itself but the problem is that instead of adding something fun to the game it might just turn into extra book keeping. Crits and heavy hits happen fairly often (side note, it's weird that a Dwarf barbarian has stuff that doesn't break as easily as a gnome wizard, I'd remove the "1/2 their base max HP" part) so after a while it will probably feel more a chore than something fun an interesting that adds to the game.

Personally, I would just use it as a bit of extra flavour when the DM wants to change things up. Maybe introduce an extra level of hardship if they're out in the desert and someone's water container breaks, stuff like that.

 You're right about the 1/2 HP thing, I just lifted the rule from the Gritty Realism in the DMG.

I get that most think this an extra bookkeeping step, but since I'm the one who would have to do it that point is moot. Perhaps it was my natural gut reaction, as a DM, to a Wizard covered in magical rice paper origami swans doesn't have those items burn up in a Fireball because....well....the rules aren't really clear on that and the cognitive disconnect really got to me after awhile.

The first rule for playing games is that everyone needs to have fun.  There's no point in playing a game otherwise.

Anyone who has ever been involved in raising a child, or has been a child, knows that punishment is not fun, not when getting it, nor when giving it.

For D&D in particular, player characters are people who are out doing dangerous things in dangerous places, far away from help of any kind.  Damage to their gear can put them in even more danger, even trivial items could become important.  There are already rules for damage from spells.  If equipment can be damaged it will say so, items held, carried, or worn rarely are harmed unless it so specifies.  A simple coil of rope is often carried, outside the backpack, and could easily be damaged by anything.  Finding out about that half way up a cliff isn't really going to be any fun at all.

Armor was brought up as an example.  There are characters who are pretty much dependent on it.  The players build their characters around it.  What fun is there in having armor take damage?  You want people to roleplay more and have fun.  Armor takes a while to take off, and even longer to put back on again.  It might be needed in a hurry in the kinds of places players send their characters.  Monsters can show up at any time with little warning.  Will it be fun for the players if the main tank has to take 10 minutes to put on their armor in the middle of the night?  That's a long time when combat rounds are 6 seconds long.

Not all player characters wear armor.  In fact none of them really need it, no matter now much they may want it.  A Wizard can't wear armor.  What they have to have is their spellbook.  Those are essential, and typically quite fragile.  Comparatively large, bulky, and heavy, spellbooks need to be handled with care.  Why should only the warrior types be punished?  I can't think of a type of character that doesn't need something subject to taking damage.  Even Monks sometimes need weapons.  You can't coat your hands in silver to fight with werewolves.

Let well enough alone and leave the players to roleplay to their hearts content.  If you must, use Inspiration to reward roleplay you think is adding to everyone's fun.  You can even let the players themselves award it to the player who made things more fun.

Quote from Geann >>

The first rule for playing games is that everyone needs to have fun.  There's no point in playing a game otherwise.

Anyone who has ever been involved in raising a child, or has been a child, knows that punishment is not fun, not when getting it, nor when giving it.

For D&D in particular, player characters are people who are out doing dangerous things in dangerous places, far away from help of any kind.  Damage to their gear can put them in even more danger, even trivial items could become important.  There are already rules for damage from spells.  If equipment can be damaged it will say so, items held, carried, or worn rarely are harmed unless it so specifies.  A simple coil of rope is often carried, outside the backpack, and could easily be damaged by anything.  Finding out about that half way up a cliff isn't really going to be any fun at all.

Armor was brought up as an example.  There are characters who are pretty much dependent on it.  The players build their characters around it.  What fun is there in having armor take damage?  You want people to roleplay more and have fun.  Armor takes a while to take off, and even longer to put back on again.  It might be needed in a hurry in the kinds of places players send their characters.  Monsters can show up at any time with little warning.  Will it be fun for the players if the main tank has to take 10 minutes to put on their armor in the middle of the night?  That's a long time when combat rounds are 6 seconds long.

Not all player characters wear armor.  In fact none of them really need it, no matter now much they may want it.  A Wizard can't wear armor.  What they have to have is their spellbook.  Those are essential, and typically quite fragile.  Comparatively large, bulky, and heavy, spellbooks need to be handled with care.  Why should only the warrior types be punished?  I can't think of a type of character that doesn't need something subject to taking damage.  Even Monks sometimes need weapons.  You can't coat your hands in silver to fight with werewolves.

Let well enough alone and leave the players to roleplay to their hearts content.  If you must, use Inspiration to reward roleplay you think is adding to everyone's fun.  You can even let the players themselves award it to the player who made things more fun.

 I'm not asking opinions on what is or isn't perceived as "fun", everyone is different and I guarantee my players are going to be different to other people's (I'm the youngest at 57 years old). What I was asking for was obvious "mechanical" or "exploitable" flaws in my formula

Quote from Yhniwyadw >>

I get that most think this an extra bookkeeping step, but since I'm the one who would have to do it that point is moot. Perhaps it was my natural gut reaction, as a DM, to a Wizard covered in magical rice paper origami swans doesn't have those items burn up in a Fireball because....well....the rules aren't really clear on that and the cognitive disconnect really got to me after awhile.

 Well, no. It would also be the players who will have to go "alright, Lisa's full plate got wrecked as well a Steve's spell book. That means that we have to spend what? Ten minutes? Thirty? On mending before we can go on? Can we do a short rest meanwhile? Who has mending? Do we have time to do this or should we keep following the bad guy? Can we do one of them? DM, can I cast mending while walking?" And so on. For me, that adds nothing to the game. Even if it is just the DM having to keep track, waiting for the DM doing an extra thing isn't very interesting either. 

If you have problems with origami covered wizards, that might be a different situation. Again, personally, I would save this for special occassions where it makes narrative sense and actually adds something to the game.

The formula is simple enough to not be exploitable.  Primarily because it's in the DM's brain for the most part.  If you're simply doling out item damage semi-randomly whenever somebody takes a mollycobbling and your players are fine with it, then you're good to go.

You may want to consider using the idea more narratively, however.  Having equipment be damaged by moments of high tension, such as when a character is surprised by a dungeon trap or when they're struck by a foe's most powerful blow, makes more intuitive sense than simply assigning a formulaic threshold and letting that dictate what happens.  The formula can be a solid start point, but don't be afraid to overrule it. 

I would also warn your players you're doing this well ahead of time, so they have time to prepare.  The rule is exceptionally punitive to wizards, whose spellbooks are absolutely critical to their class and also ridiculously fragile.  You may want to allow wizards to purchase some homebrew items to reinforce their spellbooks, or make things like the Enduring Spellbook more available to any wizard players you have.