How To Avoid The Loss Of Rental Income

One of the most important factors in being a landlord is doing everything possible to ensure that your tenants do not fall behind on their rent. For many new landlords, losing rental income can mean the loss of mortgage payments and possibly more. Luckily, there are ways you can protect yourself and ensure that your chance of having to deal with the loss of rental income is kept at a minimum. 

Ensuring that your tenants are financially sound is a great place to start, and there are a few ways to confirm that the people renting your property to are able to keep up with payments. First, as a private landlord, you can try a credit check with your tenants’ permission to see how well a possible tenant deals with repayments over long periods of time. While a credit check may not tell you the whole story, it will alert you to any unusual activity that you can talk over with your tenant which may also give an idea about what type of landlord insurance policy you require for your safety.

Knowing If Your tenants Can Afford The Rent

Asking for proof of income is the first step in seeing if the tenant can afford to rent the property. Requesting the tenant to note down their regular payments and bills will give you an insight into how well the landlord and tenant relationship will span out financially.

Always check the day that your rent payment is due on your bank account, and set up an alert with your bank to notify you of any payments being made on that day. Check throughout the day to ensure that a payment hasn’t simply just been delayed due to unforeseen circumstances, and allow the tenant the full business day to make the payment. 

If a payment hasn’t been made, first check with your bank that there are no delays for payments, or that the payment is currently processing, and simply notify your tenant that the rent due date has passed. A simple text might be all it takes to alert the tenant of the due date. 

If this is a regular occurrence, where your tenant is often late with a payment, talk to the tenant about arranging with their bank an automatic payment to leave their bank on a specified date.

Employ A Property Manager To Engage With Your Tenants

 

If you own a number of properties, it may be worth your while to hire a property manager who specialises in tenant liaison and will deal directly with the tenants and notify you of any issues that need to be dealt with.

If a tenant has not made payment by an agreed time frame then as a landlord you have a number of options to speed up the process and mitigate any losses you may encounter if the tenant refuses or is unable to pay. 

You should issue a notice of non-payment of rent and rent arrears if the tenant has not paid rent after 7 days (or 5 days for a caravan property). This notice is a “Notice to remedy breach” which gives the tenants 7 days to pay the arrears (or 5 days in a caravan park). If the tenant pays the arrears within this time frame, the tenant is able to continue the original tenancy agreement as normal.

Issuing Official Notices

If the tenant doesn’t pay the due monies within the allotted time frame, the landlord can then send the tenant a “Notice to leave”, which gives the tenant a minimum of 7 days to vacate the property (or 5 days in a caravan park).

If the tenant then pays the arrears within this 7 day period, the tenant can apply in writing and request that they remain at the property, which is up to the discretion of the landlord to allow the tenancy to continue, and accept in writing.

Get Help From Your Local Authority

If the tenant doesn’t pay the monies due and doesn’t leave the property, then the landlord can lodge an “urgent application” with the local authority, such as VCAT in Victoria, for a warrant of possession to enforce the tenant to vacate the property. Similarly, you can also opt for rental property insurance to protect yourself from tenant’s arrears.

Staying on good terms with your tenant is the best way to ensure rent is paid in full and on time, but if things go wrong, and rent arrears start to accrue, following these steps will allow you to deal professionally with your tenants, whilst keeping you on the right side of the law, and hopefully recuperating your rental income in full with minimal losses.

Speak to the expert team at SGUA for more information.

Why Do I need Landlords Insurance?

If you have decided to rent out a residential property you should consider landlord insurance.  Standard home insurance policies are often inadequate to cover you for situations which may arise from owning a rental property. Landlord insurance is designed to protect your investment against the unique risks associated with renting the property to tenants.

Malicious, Intentional, Deliberate Damage

One of the biggest expenses an Owner may face if not insured is caused by Tenants who maliciously damage the property.  This damage can be extensive and can be spread through the entire house.  Then there are tenants who put up numerous hooks on the walls and those that paint walls & make alterations without permission and whilst not vindictive can be costly to put right.

We provide up to $60,000 of cover – Excess free

Accidental Damage

While the majority of tenants don’t set out to cause damage, accidents do happen, just like they happen in your own home. Accidental damage is defined as a sudden unexpected event which is unforeseen and unintentional.

You are covered for up to $60,000 – $250 excess per event (capped at two)

Legal Liability

As an owner of an investment, you are exposed to the possibility of personal injury claims.  The abundance of “No Win – No Fee” legal services, has made making a claim easier.  Whether you are found liable or not, the costs associated with defending against the claim can be significant  

Our policy covers you for up to $20 million in liability cover, which includes the payment of damage awards, as well as lawyer fees and costs incurred against lawsuits.

Rent Default

Your Property Manager is a trained professional who actively seeks to place trustworthy tenants in your property.  However, even with the best of care, things can go wrong.  Tenant’s situations can change.   Events such as illness, loss of a job and marital breakdowns can cause even the best of tenants to struggle to meet their obligations.

We cover up to 15 weeks of rent for any tenant rent default situation including absconding tenants, failure to pay rent, tenant hardship, the death of a sole tenant and more – all completely excess free.

Loss of Rent

Recent natural disasters in Australia have highlighted the need for this type of cover.  Many properties have been severely damaged in recent times by fire or flood. Damage can also arise from a range of events such as Fire, storm, burst pipes and more. Tenants are immediately and automatically released from their obligations if the property becomes uninhabitable. The loss of rental income can quickly become a financial issue for the landlord.

Where an insured property is damaged by an insured event to the point where it is uninhabitable, we cover the loss of rent for up to 52 weeks with up to $60,000 of Landlord’s Contents Cover.

With the annual cost of the policy being less than a week’s rent and also qualifying as a tax-deductible expense, it makes perfect sense to ensure that your investment property is protected.

Landlord insurance can be compared to car insurance – would you hand the keys to your car to a complete stranger without it?  Don’t hand the keys to your investment property to a stranger without having some protection in place. 

St. George Underwriting Agency has been specialising in providing Landlord insurance for nearly 25 years, providing protection against financial loss.  For more information about how we can help protect your property, call our friendly team today or visit our website to learn more about landlord insurance.