DID YOU KNOW... Loss of rent makes up around two-thirds of landlord insurance claims at EBM RentCover? In fact, we have paid out more than $6.5 million in the past 12 months for rental arrears alone.
When a tenant defaults or absconds, breaks lease or experiences hardship, a specialised landlord insurance policy proves a wise investment. At EBM RentCover, we help landlords avoid the financial and emotional stress that comes with being out of pocket, by offering up to six or 52 weeks cover for loss of rent (through our RentCover Ultra and RentCover Platinum policies).
While landlord insurance is a great safety net, the old saying goes, “prevention is better than cure”. So, here are eight tips to help minimise the risk of rental arrears:
1. Screen tenants
Background checks on prospective tenants are crucial – consult industry databases, call up referees, speak to previous landlords and agents, and verify employment and income.
2. Be vigilant
Once a tenant has moved in, conduct regular property inspections and look for any red flags that may suggest absconding or defaults are on the horizon. Maintain an up-to-date log of tenant contacts, including details of a relative to contact if you can’t reach the tenant.
3. Maintain good rapport and a positive working relationship
Disgruntled tenants are more likely to break their rental agreements, abscond or default on rent. On the other hand, happy tenants are more likely to pay their rent on time, stay in the property longer and look after it as if it was their own.
4. Communicate with the tenant
Open and transparent communication with tenants can often mean they notify you of payment difficulties. Knowing there is a problem means you have the opportunity to set up a plan for managing the arrears and help keep everyone happy.
5. Set a formal routine
Clearly explain the rent payment procedure to tenants so there is no grey area from the outset. Adopt a zero tolerance policy for rent arrears and nip late payments in the bud early before they turn into a chronic situation.
6. Put systems in place
Monitor and act on arrears daily. A documented plan of addressing arrears should include timeframes for action (e.g. phone calls, letters, formal notices, tribunal/legal proceedings) and take into account the legislative requirements.
7. Show some compassion
There are circumstances that can legitimately impact a tenant’s ability to pay. If they are a tenant you’d prefer to keep in the property, consider whether anything can be done to help.
8. Take rectification steps
If you need to evict the tenant and seek restitution, you must follow legislative procedures. If an insurance claim for rental loss is made, it’s important the eviction process has taken place. Eviction usually takes weeks, so landlords and agents need to act quickly in rent default cases to limit the financial impost endured before claiming and to meet their obligation under the policy to prevent further loss.
Neither landlord nor agent would rent a property to a tenant expecting they’ll default on their payments, but sometimes life and circumstances beyond anyone’s control can derail even the best intentions. Landlords and agents can feel confident that, with the right insurance cover, you have the protection you need, when you need it the most.
Looking for cover? Check out the EBM RentCover range of products to find suitable protection for your property.
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