Tag: Landlord Insurance

5 Steps You Can Take to Avoid Rent Arrears

5 Steps You Can Take to Avoid Rent Arrears

One of the biggest factors in determining how successful and profitable you can be as a landlord is the reliability of your tenants. If your tenants are failing to pay rent on time, it can really take a toll on your overall profits and potentially cost you time and money down the track. Managing your finances can become quite difficult if you have part of your expected income that simply isn’t coming in. Rent arrears – or overdue rent – therefore should be avoided at all costs. Let’s take a look at a few of the steps you can take as a landlord to ensure this doesn’t become a problem.

 

Take time to screen tenants

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Don’t underestimate the importance of screening for a suitable tenant that is not only reliable and in a stable position financially, but may be willing to stay for the long term. This is the ideal situation for you, so take the time to find someone that fits the bill; it can save you a lot of heartache down the line. Of course, it’s helpful to check their rent and job history, their salary and contacting the references they have supplied. But it’s well worth meeting with them and getting to know them as a person too.

For more information on how to properly screen potential tenants, please refer our previous post on the topic.

 

Invest in quality landlord insurance

 

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Given the risk involved on your part, landlord insurance is imperative. Not only does this cover you for things like negligence, liability and damage to contents of the property, but it can cover you in cases where your income is lost as a result of the tenant either not paying or being unable to pay for any number of reasons.

Of course, the level of cover depends on your insurance policy, but many insurance brokers will provide income protection as standard. Good landlord insurance is something of a safety net in case things go pear shaped, but ideally, you’d avoid having to use the safety net in the first place. See the coverage of our landlord insurance policy.

 

Maintain a positive relationship

Resentment between landlords and tenants can build in some cases, for any number of reasons. Ideally, you want to establish a mutually respectful, communicative and transparent relationship. Getting in touch every so often is a good way to do this and makes it more likely that the tenant will feel comfortable sharing any changes to their situation with you as early as possible. If they are failing under financial stress, for instance, you’re better off knowing as soon as possible.

 

Uphold your end of the bargain as a landlord

As mentioned, if you expect your tenant to be reliable and prompt with their payments, you have to be willing to do right by them too. If you are negligent and put things off for repairs, or if you are just generally unreliable and fail to respond to the concerns of your tenant, resentment can build and this may lead to problems down the track and eventually late payments.

 

Stay on top of rental payments

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Get into the habit of checking your bank account on the day rent is paid to make sure that it has come in on time. If you aren’t doing so regularly, you run the risk of having to chase up rent weeks or even months afterwards, which just further complicates the situation and can be very stressful. If you notice that rent hasn’t been paid on the day, a friendly reminder message is a good way to get to the bottom of the situation.

For more advice managing a rental property or to discuss landlord insurance quotes, speak to the team of experts at SGUA today.

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Why Do Landlords Need Rental Property Insurance?

Why Do Landlords Need Rental Property Insurance?

As with all investments, owning a rental property is never going to be a risk-free activity. If you were to google “tenant from hell” you would find an endless supply of horror stories from tenants who just don’t pay the rent, to the full-scale trashing of properties, there are more than enough to disturb any landlord’s sleep. For every risk, there is an insurance and when it comes to investment properties, there are no ways around it – insurance is absolutely essential. Having a comprehensive insurance policy in place can help protect you against financial loss brought about by damage to your property or loss of income from unpaid rent. This article will go into a few of the reasons why rental property insurance is so essential.

Protecting your Property Against Damage

Unfortunately, things do go wrong from time to time, accidents happen and a recent spate of natural disasters in Australia has seen many properties severely damaged by fire or flood. Damage can also arise from a range of events such as storms, burst pipes, theft, impact, fusion and more. Tenants are immediately and automatically released from their obligations if the property becomes uninhabitable. On top of costly repair bills, the resultant loss of rental income can quickly become a financial issue for the landlord. A comprehensive landlord insurance policy will include all these covers so you can have peace of mind.

When Good Tenants Go Bad?

Even the best of tenants can have their circumstances change suddenly, job loss, illness, a death in the family, and marital breakdowns can all contribute to a tenant defaulting on their rent payments. Problems with tenants don’t always just stop at unpaid rent. Angry tenants have been known to cause a lot of damage to property, leaving behind smashed windows, holes punched in doors and walls and worse. Landlord insurance or rental property insurance can cover you for a range of circumstances where the tenant fails to pay rent such as hardship orders, court evictions and absconding tenants and the best policies also provide protection for both Malicious and Deliberate damage caused by tenants.

Being Sued can be Expensive

In 2013, a tenant in Victoria received a $300,000 legal liability compensation payment after sustaining serious injuries as a result of the balustrade collapsing on the balcony of his rented property. This claim highlights how vital it is to have legal liability insurance in place from day one of renting out your property. This cover ensures you for death or bodily injury to other people or damage to other people’s property and pays for damages awarded to the claimant, the landlord’s legal fees in defending the claim and even the claimant’s legal costs if the landlord is at fault.

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The levels of cover offered and any excess you need to pay if you make a claim can vary greatly between different Landlord insurance providers. It’s important that you read the policy wording and if you are unsure, seek clarification from your insurer on what you are covered for and more importantly, what you are not covered for. If you’re looking for a rental property insurance quote or you’re after a little more information on the subject, please feel free to contact SGUA today for an obligation-free chat.

What Your Rental Property Needs To Meet The Standard

What Your Rental Property Needs To Meet The Standard

If you own a property that you’re looking to rent out to tenants, there are a number of basic requirements that you need to consider. Obviously, having the property in reasonable condition is important and can help you fetch a higher income on the property. Some requirements have a legal component, meaning you have to ensure the property reaches a standard such that the tenant is safe and enjoys a certain standard of living.

Another consideration is the changes to the Real Estate Market. With tight competition in the rental business, it makes sense to have an edge over the rest. Take also into account, what is now classed as ‘the average’ living conditions compared to what they were 10-20 years ago.

Maintaining your investment property in good condition, providing desirable features and insuring against unexpected events are things you can do to ensure that your asset continues to grow in value. Below is a list of suggestions you may wish to consider:

Efficiency

 

There is a growing need on the part of homeowners to ensure their homes are as energy efficient as possible. In fact, there are strict requirements for new homes being built that they reach a certain standard of efficiency. Similarly, landlords’ responsibilities in these areas are becoming more robust and in the future, homes that have efficiency problems or fail to reach a certain threshold may not be able to be rented out.

Homes with solar panels and low voltage lighting are increasingly being viewed very favourably by prospective tenants.
It is the landlord’s responsibility to maintain the energy efficient structure of the house including the insulation. Wear and tear on the walls or roof can need to be dealt with and all installations and utilities including gas, water and electricity need to be functioning at a reasonable level.

Air Conditioning

With the hot summer days approaching that Australia is famous for, air conditioning is one thing that prospective Tenants will appreciate in their rental property. When considering such an investment, look not only for the quality of products but also the quality of installation and after sales care.

Storage

Most Tenants have rented before, and quite possibly experienced their share of moving around. When you move around, you tend to collect odd bits and pieces. Safe and secure storage, therefore, would be a valuable asset to your Tenants and something they might look for in their new rental. Storage could range from a garden shed, patio, storage shed, spacious garage, hooks for hanging in a garage, under-floor storage areas, as well as attics and ceiling storage.

Security

 

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There are also basic security standards that need to be upheld at your property. These exist not only to ensure that the property is less likely to have intruders but to protect tenants as well from basic hazards.
The minimum requirements include, but are not limited to, the following:

  • Having a front door that can be deadlocked, and all other doors to be lockable
  • Windows that are lockable from the inside or have a fly-screen
  • For a residential house that is not part of a larger strata building, it is the landlord’s responsibility to ensure there is a light of some description near the main entry.
  • Balconies should only be able to be accessible from inside the premises
  • Smoke alarms should be fully functional and less than 10 years old

Modern Kitchen

The kitchen is often the hub of a home. Many Tenants would appreciate having a modern kitchen. So, the next time you think of updating the house, consider the kitchen. There are a lot of cost-effective solutions for updating the look and feel of a kitchen. Look at simple DIY projects to gain interesting ideas on what to do.

 

Clean and Sanitary Bathroom

A lot of Tenants are particular with their rental’s bathroom. A malfunctioning flush is not appealing to tenants. Neither is a toilet with broken tiles or a stained sink. If possible, give the bathroom a fresh coat of paint or for a quick facelift, consider updating some of your existing fittings such as new tapware, a mirrored storage cabinet or a new light fixture.

 

Landlord Insurance

 

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Strictly speaking, having a comprehensive landlord insurance policy isn’t only a legal requirement, but it is highly recommended that you insure your investment for your own good.
There are two main things a good insurance policy is designed to cover; negligence on your part that leads to you being liable for compensation to your tenant, and the tenant not upholding their contractual obligations and you being out-of-pocket as a result.

Of course, it’s important to keep in mind that excessive negligence on your part can invalidate the insurance policy. If for example, you have misrepresented the property in the official documentation or failed to deliver on your legal responsibilities as a landlord, the insurance policy may not cover your should there be any problems in the future.

The requirements of a landlord can be quite complicated and it is wise to have a landlord protection insurance professional in your corner and looking out for your interests. For more information about rental property insurance, please contact SGUA today or refer to our website.

5 Reasons You May Be Refused Landlord Insurance

5 Reasons You May Be Refused Landlord Insurance

If you are renting a property out to tenants, whether it be a holiday home, an apartment or a long term house rental, it’s important that you take out an insurance policy to protect you against any misfortunate circumstances that may arise. These may include issues with the tenant, accidental damage caused involuntarily or maliciously, legal liability and a host of other situations that cover your investment and look after your interests.

Unfortunately, the nature of the business is such that insurance brokers cannot always provide cover, and there are cases in which you may be denied insurance given that you present too much a risk. There are various reasons an underwriter may choose to deny you insurance, let’s take a look at the most common among them.

1. There Is No Tenant

If the rental property is empty with no clear signs that a tenant will soon move in, insurance companies will be more reluctant to offer you an insurance policy – in fact, many will have this stipulated in the fine print. In denying an insurance claim, underwriters are essentially saying that the risk that you and your property represent is too great. For one thing, taking out an insurance policy without a tenant may be considered suspicious – given that it provides less of a benefit to the landlord. Also, complications may arise due to the fact certain insurance policies will cover circumstances in which the rental property is tenantless.

2. The Building Has Been Constructed In An Unconventional Way

Most landlord insurance policies will require the building is constructed ‘by the book’, so to speak. This usually means that it has conventional framing, with a tiled or slanted roof and brick/stone walls. Some policies won’t be offered on homes that have completely flat roofs, given that they are more likely to have problems with leaking and other issues.

3. Your Property Is A Sublet

Subletting situations can be a bit of a red flag for landlord insurance companies. If you are either the landlord of a group of flats that are being rented out by the tenants to others, or you are a tenant wanting to sublet your apartment, it’s going to be difficult to be approved for standard landlord insurance packages.

4. You Are Doing Renovations

If you’re having major renovation work doing on the house, flat or apartment, it’s unlikely you’ll receive a policy until after they are finished. This makes sense given that if the building is being radically changed, the terms that are agreed upon may no longer be relevant and may work against the underwriter. Small renovations are often acceptable, depending on the details of the specific package.

5. Your Tenant Arrangement Is Informal

Unsurprisingly, the necessary forms and paperwork need to be produced confirming the arrangement that you have in place with your tenant. You’re significantly less likely to be able to get a landlord insurance in which there is no formal agreement – which can be common when the agreement is between family members, close friends, etc. Luckily, in these cases there may be more trust between the parties and landlord insurance may not be as necessary.

6. Property Not Managed By A Professional Property Agent

Most landlord insurance policies require the appointment of a professional property agent to manage your rental property. When the tenant breaches the conditions of the rental agreement the landlord or his appointed agent needs to know their way around the various relevant sections of the legislation. Many of these pieces of legislation demand an immediate or timeous response and action. If you do not follow the regulations your cover will be affected as well as you not obtaining the right result.

We’ve discussed a few of the reasons you may be denied a landlord building insurance package – but as always it will depend on your specific situation and the company you’re dealing with. For more information on these matters, don’t hesitate to contact St George Underwriting Agency today.