You need to examine the paint chips to make sure it isn't lead paint or you could have a real serious problem on your hands.
Do as aart suggests before it gets to be any worse of a habit. Some chickens have a more pathological drive to pick at stuff, including each others feathers. If your chickens are cooped up all the time, they are going to resort to this sort of behavior even more, and it won't get better.
You need to convince your mate that it's inviting all sorts of problems keeping the chickens confined in a small space. If he doesn't like the idea of sacrificing the landscaping, then it would be a good investment to build a nice roomy run with lots of stumps and perches and other "furniture" to keep the chickens amused and occupied.
I have taken empty feed sacks and stuffed them with straw, and then stapled them closed. The chickens not only love to lounge on them, but a few of them have taken to using them as surrogate feather picking objects. So far, those chickens that have been picking at the cushions haven't gone back to picking each other or other stuff that isn't good for them.