Five things every landlord needs to know

There are lots of things landlords need to know about investing in, owning and managing a rental property – from market dynamics to financing to day-to-day matters like maintenance and inspections. And how some aspects of property management can impact your landlord insurance cover. We explain…  

From an insurance perspective, here are five important things landlords need to know. 

Know your responsibilities 

Being a landlord involves more than just buying an investment property and collecting the rent. There are lots of responsibilities and obligations associated with being a rental provider. Chief amongst these is the obligation to provide a safe and habitable premises for your tenants. This means there are responsibilities in regard to maintaining the building and its surrounds (e.g. garden). It means making sure installations like gas, water and electricity are in good working order; ensuring that the premises is free of health hazards like rising damp, mould or pests (unless the presence of these is from the actions or inaction of your tenants); and undertaking repairs in a timely manner. Landlords must also ensure all legislated requirements are met – and that includes things like safety and security measures including smoke alarms, and making sure emergency and urgent repairs are achieved within legislated timeframes.   

Insurance implications: If a landlord fails to meet their obligations, then their insurance can be jeopardised. Not only must you meet your duty of care to your tenants, you also have obligations under your insurance cover to do things like reasonably maintain the premises.  

Know the law 

As a landlord, you must comply with applicable legislation when it comes to any matter relating to residential tenancy. These matters include things like lawful eviction, raising rents, tenant rights, and landlord obligations. Depending on the type and location of the property, there could be several relevant pieces of legislation that apply. In addition to the state or territory residential tenancy legislation, other laws that could apply include those relating to strata property, health and safety, or building standards. Recently, a number of jurisdictions have amended (or are proposing to amend) their residential tenancy legislation. Changes include new provisions for domestic violence survivors, the introduction of minimum standards, bans on rent bidding, making it easier to rent with pets, and allowing minor modifications. There is an obligation to be aware of your responsibilities – ignorance of the law is no defence. 

Insurance implications: Breaking the laws may not only see you having to face the courts but also puts your landlord insurance at risk. Your insurance cover is contingent on you fulfilling your legal obligations and acting lawfully. If you don’t, you may find any claim you make impacted or even find that you’ve voided your cover all together. 

Know how to screen tenants 

There is a strong argument for putting the effort into getting the right tenants into the rental in the first place, to reduce the risk of problems occurring at the property later on. Of course, some risks are not tenant-related, like damage from fire, flood, storm, impact or burglary, but many are. Think rental losses from tenants absconding or facing financial hardship; damage caused by tenants, their kids, pets or guests; or tenants stealing fixtures and fittings. This is why properly screening or vetting prospective tenants is vital. It’s not fool-proof obviously – sometimes even the best tenants can find themselves in situations that can end up costing the landlord – but it’s a good start. 

Insurance implications: Effectively screening prospective tenants helps reduce the risk of needing to claim on your insurance for tenant-related issues like loss of rent or malicious damage. Be sure to keep the evidence of your checks on your tenants as these may be needed to support a claim. 

Know how to keep good records 

Owning a rental property is a bit like owning a business – and you need to keep track of financial matters for both the tax office and in case you need to make a claim on your insurance. It’s also wise to keep records in relation to interactions with tenants and property managers in case you ever have to appear before the tribunal or court over a tenancy matter (like eviction). You need to find a system, whether its digital or hardcopy-based, to keep track of things like tax invoices, receipts, rental payments, valuations, and correspondence (written and verbal) with tenants, property managers or any supplier (like a handyperson or cleaner). 

Insurance implications: If you need to make a claim on your insurance, you will need to provide supporting evidence. Having excellent records makes this much easier. If you can’t produce the documentation needed, you may find your claim is reduced or even denied. 

Know how to protect your investment 

And last, but certainly by no means least, is knowing the value of landlord insurance. Having cover is a financial safety net in case something goes wrong at the property (due to an insured event). But the cover is only effective if you’ve chosen the right policy. You need to choose a policy that suits the type of property you own and how it is leased (standard leasing or short-term). It’s also vital that you understand the policy you have – the inclusions and exclusions, and the terms and conditions. It’s important to remember that an insurance policy can only respond to a covered insured event and only within the scope of the policy wording. If you have any questions about the policy, like what events are covered, under what circumstances and for how much, always check with the insurance provider.     

Word to the wise 

It is suggested that landlords engage the services of a professional property manager. A property manager will ensure that landlords are aware of their responsibilities. They are also up to date with tenancy laws and will perform tasks like screening tenants, serving the appropriate (and relevant) notices according to state legislation, and keeping records on your behalf. NOTE: It’s also a requirement that the rental is professionally managed to be able to be covered by an EBM RentCover policy. 

Landlord insurance is an important investment to protect your rental. So, it pays to make sure you safeguard your cover by ensuring your property is managed well. If you have any queries about EBM RentCover policies, please get in touch with a member of our Expert Care team – 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.