Christmas Spending Leaves Landlords Out-Of-Pocket
While Christmas is a time for celebration, it can also leave landlords thousands of dollars out-of-pocket.
The festive season is expensive for many Australians and tenants can – and often do – put gift giving and Christmas spending ahead of paying their rent and utility bills.
However, property managers can ensure the best outcomes for their insured landlords by keeping an eye on tenants who fall into rental arrears and maximising the chance of a loss of rent claim being payable.
As Australia’s leading landlord insurer, Terri Scheer’s data shows that loss of rent is the greatest financial risk for landlords, with a noticeable increase in loss of rent claims between December and March most years.
An appropriate level of landlord insurance can offer owners the peace of mind that their investment will be protected in the unfortunate event that their tenant defaults. However, property managers must ensure that prescribed notices are served on time for tenants who end up behind on their rent.
We often hear that tenants argue they didn’t make a rental payment as they thought their property manager was on leave or the office was closed.
If a property management office is closing for the Christmas break, it’s important to have a clear system in place, and communicate it with tenants, so they understand how to make rental payments during the festive period.
Property managers should also ensure they or their colleagues are monitoring for rental arrears and serving prescribed notices during this time.
Without timely notices, landlords can only claim loss of rent payments for the period of time after appropriate notices have been served.
Communication is key and it’s important that property managers stay in touch with their landlords and tenants to ensure everyone is aware of the rental payment schedule during the Christmas period.
Inconsistent rent flow or loss of rent can put significant financial pressure on landlords and leave them out of pocket once mortgage and other costs are paid.
With this in mind, investment property owners should not be complacent when it comes to protecting their rental income.
A specifically designed landlord insurance policy is the first step towards minimising any potential loss in the case of lost rent, damage by tenants or legal liability.
If a tenant misses a few weeks of rental payments, a landlord can suddenly be out of pocket by $1,000 or more.
Many property managers want to ensure their landlords have good insurance policies in place as it can simplify their job down the track should the landlord need to make a claim.
However, property managers should first check their authority to distribute or refer before dealing in insurance.[1]
Note:
[1] A distributor is able to deal in insurance on behalf of their property owner. This enables the distributor to speak with the insurer, place cover, amend cover and cancel a policy. Property management businesses can become distributors with Terri Scheer. For property managers who are not distributors they can still inform their property owner of the existence of landlord insurance in the form of a brochure. The property owner must complete and sign the application form and send it directly to us by email. Alternatively, they can apply online through the Terri Scheer website.