With international travel resuming, an influx of students is on the syllabus. And with it, a rising demand for student accommodation. But before landlords stroll into the quad offering rentals, it’s wise to get a handle on the insurance situation.
COVID-19 turned the education sector on its head. Across the globe schools closed and students took to online learning. With borders shut, Australia’s international student market was hard hit. Many students already studying at tertiary institutions around the country returned home, while those set to start or resume studies in Australia had to change their plans.
But with most borders re-opening in late December 2021 (WA excepted), fully vaccinated international students and temporary graduate visa holders can return to study in Australia.
The return of both international and interstate students is opening opportunities for landlords to tap into the student market. Owners with suitable property close to universities and VET facilities, in both city and regional areas, have the option of renting to students.
But, as with any letting scenario, there are key matters to consider when renting to students. An important one is understanding what type of accommodation is being provided as there are different rules and regulations – and insurance implications.
Example #1 – sole occupancy/share house
When an occupant pays rent and has control over the premises, then they are considered a tenant (under the various RTAs) and subject to the rights and responsibilities outlined in the legislation.
The landlord may choose to lease the property to one or more students, but so long as there is only one lease (there can be multiple students named on that one lease, each responsible for paying rent and other obligations under the tenancy agreement), then a landlord insurance policy like RentCover Ultra or Platinum may be suitable.
However, if the landlord chooses to rent out each bedroom in their property under separate leases, then multiple insurance policies would be required as landlord insurance policies are typically taken out on a per tenancy basis. However, few landlord insurers would be willing to offer cover for such a letting scenario, due to its complexity and issues surrounding liability for issues such as rent default or damage, particularly as tenants share common areas.
Example #2 – boarding/lodging/rooming house
When an occupant pays a fee for accommodation but does not have control over the premises (even though they may have access to parts of the property other than their room), they are considered boarders/lodgers. They are not covered by the RTA and subject to different rights and responsibilities than tenants (depending on the applicable legislation).
In general, landlord insurers, including EBM RentCover, exclude cover for boarding houses.
To sum it up…
If a landlord is in the student accommodation stream, it is important they and their agent understand the insurance options.
When it comes to landlord insurance policies the formula is simply:
1 property + 1 lease (with all tenants named on it) = 1 landlord insurance policy
Where there are multiple leases for the one property, it gets complicated, requiring multiple insurance policies. In this case, a standard landlord insurance policy is unlikely to be an option as insurers may not be willing to cover the risks involved in having multiple policies on the one premises. Owners should seek the advice of an insurance broker (like our colleagues at EBM) to obtain the right cover. And agents should check the cover on the property as they could be held vicariously liable if the correct insurance cover is not in place.
If you have any further questions, feel free to chat to the EBM RentCover team on 1800 661 662.
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