Insurance insights

Who pays tenant relocation costs if a rental becomes uninhabitable?

When a rental property becomes uninhabitable due to events like fire, flood, storm or damage, tenants may need to move out while repairs are completed. A common question is: who pays the relocation costs – the landlord or the tenant?

The answer depends on the circumstances, the tenancy legislation in your state or territory, and the agreement reached between landlord and tenant.

Option 1: End the tenancy

If a property is severely damaged and no longer fit to live in, residential tenancy laws generally allow either party to end the tenancy without penalty.
In this situation:

• The tenancy ends and the tenant vacates the property.
• The landlord can undertake repairs and re-let the property when it is ready.
• In most cases, landlords are not legally required to arrange or pay for alternative accommodation or relocation costs for the tenant.

Of course, some landlords may choose to help as a gesture of goodwill, but this is typically a personal decision rather than a legal obligation.

Option 2: Temporarily relocate the tenant

If repairs are expected to be completed within a reasonable timeframe, landlords and tenants may prefer to keep the tenancy in place and arrange a temporary relocation.

Under this arrangement:

• The tenancy agreement continues.
• The tenant moves out while repairs are completed.
• The tenant returns once the property is habitable again.

Who pays the relocation costs?

This is often the first question landlords and tenants ask when a temporary relocation is required.

In most cases, tenancy legislation does not automatically make the landlord responsible for paying relocation costs. Responsibility for expenses will depend on the circumstances, the applicable legislation, and any agreement reached between the landlord and tenant.

Because requirements differ across states, it’s important to understand your legal obligations before making arrangements or committing to any costs.

Rent during the relocation

Another important consideration is rent.

Depending on the circumstances and applicable legislation:

• Tenants may be entitled to a rent reduction.
• Rent may be suspended while the property cannot be occupied.
• Compensation arrangements may apply.

Are costs covered by landlord insurance?

Generally, tenant relocation costs are not covered under landlord insurance policies, including EBM RentCover policies.

This means costs such as temporary accommodation, moving expenses, storage fees and transport costs are generally not covered if a landlord chooses to assist a tenant.

However, if the property is damaged by an insured event and becomes uninhabitable, landlord insurance may cover loss of rent while the property is being repaired, subject to the policy terms and conditions.

NOTE: If a landlord voluntarily waives or reduces rent, that decision is generally not considered an insurable loss and cannot usually be claimed under landlord insurance.

What about tenant insurance?

While landlord insurance generally doesn’t cover relocation costs, some tenant contents insurance policies may include cover for temporary accommodation and related expenses following an insured event.

Put agreements in writing

If a landlord and tenant agree on relocation arrangements, costs, rent adjustments or accommodation, it’s best to document the agreement in writing. If an agreement cannot be reached, assistance may be available through the relevant tenancy tribunal or court in your state or territory.

Check your legal obligations

Before ending a tenancy or arranging a temporary relocation, landlords should review the applicable residential tenancy legislation and seek advice if required. They should also consider the financial and insurance implications of any assistance they choose to provide.

Need help understanding your EBM RentCover policy? Contact our team on 1800 661 662.

*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 here, contact 1800 661 662 if you have any questions.