4 Extremely Common Tenant Problems To Be Aware of as a Landlord
Promoted by Allianz
When you first purchase an investment property, it's easy to think of rent as a passive income stream that simply takes care of itself.
It doesn't take long however to realize that your rent is dependent on tenant payments – and your new tenants might not be as reliable as you hope. Most tenants comply with their obligations, and are respectful of their landlord's property. If you're planning to be a landlord long term, however, there are four tenant problems you're almost certain to face. Fortunately, Landlord Insurance could offer a mix of options that may be able to cover you cover you against some or all these risks, so if the day comes you won't be left empty handed!
- Tenants Leave Without Telling You
Contractually, nearly every tenant is required to give notice before they end their lease at a property. Sometimes, however, they just don't. Tenants can leave with short - or no - notice for a variety of reasons ranging from relationship breakdowns, to visa or migration issues.
When tenants leave in a hurry, it's extremely difficult to retrieve the rent you will lose while preparing the property for occupation and finding new tenants to take their place. Fortunately, rent default options available in landlord insurance policies may cover you for up to six weeks while you search for a replacement tenant, and could help to reduce your out of pocket losses.
- Tenants Stop Paying Their Rent
This is the big one. Failure by tenants to pay their rent is more common than you think. In fact, claims for rent make up more than 40% of all applications to Australian tenancy tribunals. In 2015 - 2016, these claims numbered .
By the time you're able to replace your non-paying tenants with new tenants, you may have lost more rent than you can recoup from a bond. Landlord rent default insurance is generally available as an optional cover that could protect you from loss of rent for a period up to 6 weeks, or until payment recommences, whichever occurs first.
- Tenant Theft and Malicious Damage
Most tenants, even those who fail to pay their rent, aren't actively seeking to shortchange you. There are some tenants however, who intentionally steal or maliciously damage your property and any furnishings you may have left within it. These tenants are the stuff of nightmares.
Malicious damage from such tenants can easily cost thousands of dollars to rectify. Most landlord insurance policies may cover you for malicious damage, not only by your tenants but your tenants’ guests as well.
Theft by tenant cover, for building and landlord contents, is generally available as an option you can add to your policy, to cover loss or damage from stealing.
- Tenant Hardship
There are times when, your tenants will be unable to pay their rent or continue with their lease. If your tenant is experiencing hardship, they can apply to a tenancy tribunal or other governmental authority to be released from their rental contract. Unfortunately, terminations of this kind also leave you out of pocket while you look for new tenants to take their place. Luckily, insurance against rental default may cover situations of tenant hardship, even where you have notice that your tenant is seeking a termination order. Allianz Landlords insurance actually covers you for six weeks loss of rent while you search for a replacement tenant.
Disclaimer
Allianz Landlords Insurance is issued by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL 234708. We do not provide advice based on any consideration of your objectives, financial situation or needs. Terms, conditions, limits and exclusions apply. Before making a decision please consider the product disclosure statement available here.
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