New year, new risks - what to watch for in 2026

The start of the new year is a great time to take stock and make plans for the year ahead. For landlords, it can be an ideal chance to review their investment property portfolio and its management, look at their investment goals, and plan ahead to help realise those goals or simply stay on top of what is happening in the market.

Part of this planning process can be looking at recurring and emerging risks, and how to address them. Here are five risks to be on the look-out for in 2026 – and how they can impact landlord insurance.

Rising costs

Operating costs for investment property owners are at record highs. Inflation is driving up prices for maintenance, repairs, replacements, upgrades, and services, while property management fees, rates, taxes, and insurance are also rising. Although cash rates were cut three times in 2025, the RBA is unlikely to reduce them further in the new year, and future adjustments may be upward. Landlords should budget for these increases and ensure they maintain their premises to meet insurance obligations. Failing to do so could jeopardise cover. Construction costs are also climbing, affecting repair and reinstatement expenses. Landlords are responsible for nominating adequate sums insured for buildings and contents. Regularly reviewing and adjusting these sums ensures they reflect current replacement and rebuilding costs.

Rental affordability

Cost-of-living pressures continue to bite, and many renters are doing it tough. Rents continue to rise (rent inflation was 4.2 per cent in September), with expectations this trend will continue in 2026 with rents tipped to hit record highs. Tenants are devoting more than a third of their incomes (33.4 per cent) to paying rent, with around half (48 per cent) struggling to make payments. With mounting cost pressures, the risk of rent arrears increases. Landlords need to ensure they keep on top of missed, late and partial rent payments as they need to act swiftly (and within legislated procedures) to reduce the risk of arrears spiralling. Insurers also limit the number of weeks they will pay for loss of rent due to rent arrears, so being tardy in following up payment issues can result in landlords losing rent they cannot recoup from their insurance.

Buying and selling rule changes

Investor loans hit a record high in September 2025, rising 13.6% in number and 17.6% in value, making up around 40% of all new loans. Investor confidence remains strong, with 30% of surveyed respondents planning to buy an investment property in 2026. Investors should note a few key changes: APRA is limiting high debt-to-income ratio loans, which will mainly affect investors, and additional measures may follow. From 1 July 2026, real estate agents will fall under anti-money laundering regulations, requiring identity verification and other compliance checks for buyers and sellers.

Changes to legislation

In recent years, state and territory governments have been regularly reviewing residential tenancy legislation and other related laws, with 2025 seeing changes come into effect in almost every jurisdiction. Some of the key changes related to banning rent bidding, ending ‘no grounds’ evictions, making it easier to rent with pets, limiting the number of times rent can be increased, extending notice periods, allowing minor modifications, introducing minimum standards, and support for survivors of domestic violence. In 2026, more changes are slated to come into effect in NSW, SA and Tasmania, with the likelihood of further amendments across jurisdictions to be initiated if the last year or so serves as any indication.  Changes to legislation can have an impact on rental property management and insurance. Landlords and agents need to keep abreast of changes to ensure compliance with applicable laws, as acting lawfully is a requirement of insurance cover.

Market trends

The property market is constantly evolving, with some trends passing quickly and others having lasting effects, including on insurance. In 2026, market dynamics are likely to be shaped by government initiatives such as the Federal Help to Buy and First Home Guarantee schemes, as well as state programs like Build-to-Rent and home building initiatives, supporting the goal of 1.2 million new homes by mid-2029. These measures may increase competition for affordable homes while easing pressure on the rental market, though current vacancy rates remain low at around 1%. Renter preferences are also evolving, including energy efficiency, sustainability, city vs regional living, multigenerational homes, share housing, liveability, walkability, pet-friendly properties, public transport access, WFH setups, and granny flats. Landlords who stay informed on these trends can better understand demand and competition in their rental markets. Some trends may also affect insurance eligibility. For example, shared housing with multiple lease agreements may not be covered under standard landlord insurance. Landlords should consider the insurance implications of adopting new property types or rental arrangements.

The property market is always a bit of a rollercoaster ride, and 2026 looks to be no different! Take some time at the start of the new year to plan for what may lie ahead. A rental property is a major investment, so it pays for landlords to monitor the market and have plans in place to address risks. One excellent risk mitigation strategy is to ensure that the rental is well protected with the right landlord insurance. To find out more about EBM RentCover’s policy options, please get in touch.