This article was originally published on 31/12/2019 and was reviewed and updated accordingly on the above date.
Hands up if you always make resolutions for the New Year? Now keep your hand up if you manage to keep them…
Despite best intentions, most of our resolutions go by the wayside. But this year, why not make resolutions about the investment property you own or manage? Here are four New Year resolutions for landlords and PMs you can actually keep – and reap the benefits all year long.
Resolution one: I will review my insurance cover
Although the landlord insurance policy may not be due for renewal, the New Year is an opportune time to check the cover is up-to-date:
Make sure you have the right policy in the first place
If you don’t already have comprehensive landlord insurance cover, and are relying on a standard home and contents policy, it’s time to look at the options. Landlord insurance covers a range of insured events and includes financial protection for tenant-related issues like lost rent or damage. It’s also important to have a landlord insurance policy designed for the way you lease your investment property. E.g. different policies are needed for fixed-term tenancies and short-term leases.
Keep your insurer in the loop
If there have been any material changes to the investment property, such as being vacant, renovated or changes to the way it is leased, make sure you chat to your insurer.
Refresh your understanding of the policy
It’s a good idea to check the inclusions and exclusions of the policy so you know what it will and won’t cover and under what circumstances. Don’t assume (remember what ASSUME stands for… in case you don’t, when you assume, you run the risk of making an ‘ass’ of ‘u’ and ‘me’)! This is because changes can be made to policies and if you just auto-renew without making sure the policy still meets the needs of the property you could come unstuck.
Review the sum insured to make sure your cover is adequate
The sum insured for the building should be based on current rebuilding costs, not purchase price or market value. For contents, check if your policy is based on new-for-old or if the insurer uses depreciation – then work out the replacement cost and base the sum insured figure on that calculation. What does all this mean? Read this.
Give tenants a heads up
Remind tenants they need their own renters’ contents insurance because the landlord policy does not cover their possessions. Protection for belongings from theft or damage by fire, storm or flood, as well as liability cover, helps to safeguard their finances if they suffer a loss.
Resolution two: I will up my duty of care
As a landlord and PM, you have a duty of care to tenants and anyone else legally on the premises. This means you have to take reasonable care to avoid foreseeable harm to another person on the property. At a practical level this means you need to ensure an investment property is safe, for example by:
- ensuring installations such as gas, electricity and heating are working;
- ensuring appliances provided are installed and maintained safely;
- treating potentially health-threatening issues such as mould;
- maintaining the structure and exterior of the home.
When you organise the annual property inspections, why not include a general inspection to check on the safety and security of the premises. If improvements are needed, get in touch with your trusted tradies to arrange for the necessary repairs or upgrades.
Resolution three: I will keep on top of repairs and maintenance
Repairs, urgent and otherwise, need to be attended to in a timely manner. Make sure you and your property manager know and adhere to your obligations under the law.
Also, adequately maintaining the property is a requirement in practically all building insurance policies and failing to do so could jeopardise cover. So keep on top of regular upkeep with an effective scheduling system – it will not only keep tenants on-side, but also safeguard the property’s insurance cover. It can also be very cost-effective to tackle minor repairs and maintenance before they become major issues.
Resolution four: I will get my paperwork in order
Getting organised is a constant New Year resolution, but when it comes to an investment property it is one that can pay dividends. As you’ll have the insurance papers out (see Resolution 1), dig a bit deeper into the file (or folder on your computer) to check all relevant paperwork for the rental property, like:
- contracts for services like property maintenance, cleaning, lawn mowing etc. – are they up for renewal?
- utility contracts – are you getting the best deal?
- tenancy agreement – how long is left on the lease? Will you need to entice the incumbent tenant to stay or is it time for them to move on?
- emergency/disaster plan – if you don’t already have one, create one; review the current plan to make sure it is still appropriate for the risks at the investment property and what you would do if the rental was affected by fire, flooding or a natural disaster. Check you’ve got insurance that covers the risks and also that you have an adequate emergency fund to tap if necessary.
Start the New Year as you mean to go on and take charge of your investment property by following these four resolutions. And while you can’t be certain your investment will perform the way you hope, you can be certain EBM RentCover will be there to help.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 961 017 if you have any questions.
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