By Sarah Barton, Terri Scheer Distribution Channel Manager Terri Scheer hopes that you have been…
By Sarah Barton, Terri Scheer Distribution Channel Manager
Landlord risk management has never been more important as the cost of living puts pressure on household budgets and tenants’ ability to pay the rent.
As the cost of living rises, landlords may be more exposed to the risk of tenants defaulting or being unable to meet their rental payments.
Many property investors rely on that steady flow of rental income to meet their own financial responsibilities including the loan repayments on their investment.
Terri Scheer provides the following key steps that landlords can take to help protect their investment income in the current environment.
Terri Scheer advocating for property managers
Terri Scheer values the contribution that you, as property manager, make in helping landlords to reduce the risk of running into issues with tenants.
We are pleased to support the property management industry by advocating, educating and encouraging landlords to appoint a property manager.
When communicating with landlords, Terri Scheer promotes the role of property managers in conducting regular property inspections, undertaking thorough reference checks on new tenants and assisting landlords to meet the requirements in the event they need to make an insurance claim.
Conduct thorough reference checks on new tenants
Attracting a suitable tenant from the outset should be a priority.
Landlords or their property manager need to specifically look for issues related to missed or late payments.
If landlords are hoping to retain a tenant in the long-term, thorough checks of references during the screening process should take place to uncover any red flags.
Undertake regular property inspections
Property damage can be a sign of a tenant under pressure. Routine inspections are the best way to ensure a tenant is taking care of the property and allow property managers to identify any maintenance requiring attention.
It’s important for landlords to have oversight of a rental’s state so that maintenance or damage issues can be dealt with straight away, and avoid any unexpected surprises at the end of a lease.
Give careful consideration to rent reviews
Figures from CoreLogic’s Quarterly Rental Review for Q2 2022 show the highest annual growth in rental values since December 2008.1https://www.corelogic.com.au/news-research/news/2022/residential-rents-hit-record-highs-as-national-vacancy-rates-plummet
The national rental index increased 0.9% in the month to June and 2.9% over the June quarter, a 30 basis point increase on the three months to March. Dwelling rents are 9.1% higher across the capital cities and up 10.8% in regional areas compared to June 2021.
While a rent review in the current environment may be warranted, increasing the rent for existing tenants always requires a careful balance.
A tenant who is punctual with their payment and takes care of the property may be worth the landlord holding onto.
The stability a good tenant provides may outweigh an increase in rental income and the costs involved to re-let the property.
Purchase landlord insurance
Even the best tenant can struggle with cost of living pressures or suffer financial hardship and struggle to pay the rent.
Insurance can provide peace of mind as a safety net to ease a landlord’s concerns about receiving regular rental payment.
It’s always a good idea for landlords to read over the policy wording they are interested in, before they make a purchase decision.
For example, different insurers will have varying conditions and definitions for loss of rent cover.
Not all policies include cover for loss of rent if the tenant absconds or dies, if they leave the property unable to be tenanted while repairs to damage are made, or if access to the rented property is prevented due to an insured event occurring.
Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Terri Scheer. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy. The Target Market Determination is also available.
The information is intended to be of a general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon it – please make your own enquiries. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.