Case Study 1
Mr and Mrs B owned a 3 x 2 property in Darch, leased to a lady and her son. After an event free 6 months of a 12 month tenancy, the lady suddenly stopped receiving child support from her former partner. Knowing she was going to go into arrears with her rent and invoices, she notified she would like to break lease. Successfully releasing the property was top priority for both the owner and tenant and this was done in as short a time as possible. Due to the fact that the tenant is still responsible for the rent until the new lease begins, the arrears had built up and by the time the Final Bond was completed, there was a debt of approximately $3,200 in rent plus some accidental damage costs – an amount in excess of the bond. Rather than claim on his insurance, the owner decided to take the tenant to court to recover the money.
Court took 3 weeks to set a date. Fortunately for the owner the court ruled in his favour and served that the tenant owed the full amount to the owner. Unfortunately for the owner, repeated attempts to get hold of the tenant via the forwarding details given, deemed fruitless and the money is still outstanding. Had the owner had insurance that covered loss of rent plus accidental damage, it is likely that the insurance claim could have been finalised in less than 3 weeks and the full amount awarded including costs to relet the property.
Case Study 2
Miss F owned a 2 x 2 in Padbury with a professional couple sharing. Unbeknown to the team, because the rent had continued to be paid and no notification had been given in writing, the relationship broke down after only 2 months into the 6 month tenancy. At the next inspection, the Portfolio Manager noticed a significant difference in the presentation and maintenance of the property. This was noted on the written inspection report and communicated to the owner. Three weeks after that the rent arrears started and the Portfolio Manager attempted to make contact but to no avail. After repeated attempts, the Portfolio Manager went to the property and found it was empty.
The tenant had absconded. When the Portfolio Manager entered the property to carry out the Final Bond, she found it in complete disarray and reported to the owner the alleged malicious and accidental damage found. Hundreds of photos were taken to support the evidence. The owner decided to claim on her insurance for the damage and quotes from contractors were secured. Fortunately, the owner had specialist landlord insurance and after submitting the evidence, photographs and quotes, the owner was awarded her full claim in less than 1 month, including the loss of rent whilst the property was repaired and cleaned and up the day new occupants moved into the property.
Just as you would insure your car, your home, your belongings and your health to financially protect yourself against unforeseen financial events, the same is necessary when owning a rental property. The cost of insurance is not worth the risk of loss.
If you would like to know more about safeguarding your investment property, and in particular specialist landlord insurance, please contact me, Paula Alsford on (08) 9307 0999.