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I’m interested in organising landlord insurance for my investment property. How do I choose between providers and what should I look out for? How do I know if I’m covered for all eventualities? Do you have any recommendations for providers or products?
Firstly, congratulations on choosing to obtain landlord insurance – it’s something I recommend to every one of my clients. There is a vast array of providers and products out there but it is certainly worth it for your peace of mind. My first piece of advice is that you should do your own research and not leave it up to anybody else. Read any product disclosure statements (PDS) yourself and ask individual providers any questions you may have. By doing your own research, not only will you grow your own understanding of your different options, but you can ensure your cover meets your requirements. Before making a decision, take the time to speak to people who are or have been in a similar position, such as other landlords you know or your property manager. Have they ever made a claim through this company; how good/bad was their experience? What type of policy do they think provides the best cover and price? Are there any key things to watch out for or to consider when choosing a policy or claiming? Put simply, the more information you have the more informed your decision will be. Remember, there are a range of companies in the market, providing an array of different policies to suit a variety of landlord needs. Unfortunately some cover the bare minimum whilst charging a significant excess, whilst some others cover everything a landlord needs with a small or no excess. Again, the more time you invest in growing your knowledge of the market, the better informed your decision will be. Once you have done your research and you have chosen your provider and product, you can either organise it yourself or work through your property manager.
SELLING A PROPERTY WHEN TENANTED
I would like to sell my property in the next six months but my tenants signed a new lease in January. How will this affect the new owner? What are my rights and responsibilities? Can I terminate the contract without penalty and, if so, how soon can I do this without incurring any penalties?
This is a challenging question, particularly if the new owner does not want to keep your current tenants in the property, but let’s look at your options. If you list the property within the first two months of the tenant signing the new lease, then they are entitled to give 14 days’ notice of termination without penalty. It’s important to realise that the tenant’s lease overrides any contract, so the tenancy agreement cannot be terminated within the fixed term unless an agreement is negotiated between landlord and tenant.
In some cases, you may be lucky and the new owner may be happy to have your existing tenants. If this is the case, the need to negotiate an end to the tenancy is removed and the agreement continues through the new owner – meaning the property can be listed and sold without penalty. If you are in the unfortunate situation where you cannot end the lease and your buyer does not want your existing tenants, the property can only be listed upon the ending of the lease and when the tenancy has been terminated. When you have decided to sell the property and have them vacate, you are required to give the tenant 30 days’ notice prior to the end of the fixed term of their agreement (the final day must be on or after the last day of the fixed term). When listed, if you want to undertake inspections of your tenanted property, you must give the tenant 24 hours’ prior notice that you will be conducting an inspection. If access to the property is unavailable, you are allowed to use the property spare keys for access should the tenant not be present.
WARNING SIGNS SOMETHING IS GOING WRONG
I’m concerned that my tenants are having a difficult time financially and that it may not just be a temporary setback for them. I’m happy to allow them to stay in my property as long as they agree to pay their arrears, but I worry that this situation may not be satisfactorily resolved. How can I be sure they will be in a position to meet their obligations?
This is a difficult situation, as you certainly don’t want your kindness taken advantage of by your tenants. Whilst there is no clear solution to your problem, there are a few steps you can take to guide your way forward. Firstly, check your tenant’s references. These may include an employer, friend or relative who can shed some light on your tenant’s financial situation. An employer will hopefully be able to tell you more about their current employment situation, a good indicator regarding their financial status.
Most importantly, as a landlord you should always have a good handle on your tenant’s payment record and this can give you the insight you need – this is also a key part of every arrears procedure. While you may never know the extent of your tenant’s financial burden, a quick review of their payment record should tell you if it is their first hiccup or if a pattern is emerging. If this isn’t the one of many missed payments, you can assume that something has affected your tenant’s ability to pay this time, but it would be wise to keep an eye on subsequent payments too.
The best course of action is to make a payment arrangement with your tenant by speaking with them in person. This should clarify if the current tenancy agreement is sustainable for them, so ask them to be realistic and detailed in their responses regarding income and any issues they are facing. This will help you make a more informed decision when it comes to creating a payment arrangement with them – there’s no point in creating unrealistic expectations that they will never meet. Once you have made your arrangement, you must closely monitor your tenant’s payments to ensure they are meeting their commitment. If they fail to do so or you are seeing significant fluctuations in their ability to pay month to month, you may need to consider terminating the tenancy for your own peace of mind.