Tales of woe from the west highlight value of insurance
Twofold increase in tenants absconding without paying rent adds to landlord burden.
In a telling sign about the state of the rental market in Western Australia, landlords are being forced into court at an unprecedented rate to recoup losses as tenants flee without paying their rent or for damage.
An investigation by The West Australian newspaper has revealed that around 130 tenants are disappearing from rental homes every week without leaving a forwarding address to settle bond and damage issues.
In a six-week period, 86 landlords sought the return of bond money after their tenants absconded. Each week a further 45 landlords claimed arrears and damages that exceeded the bond.
In the corresponding six-week period in 2015, 61 public notices were posted and 35 claimed arrears. The poor economic outlook, glut of rental properties and burgeoning ‘ice’ epidemic have all been cited as reasons for the increase.
One Perth property agent told the paper he had been in court 20 times on behalf of clients in the past eight months. The tenants had “done a runner” knowing they would not get any bond back and not wanting to be liable for repair bills.
The woeful situation in Perth serves as a warning for landlords across the land (where vacancy rates are rising in most capitals) and highlights the value of comprehensive landlord insurance.
While damage to a rental may be covered by building insurance, the loss of rent, legal costs and professional services fees (for property managers’ time) associated with seeking restitution won’t be. Even if the landlord has their bond returned (which is usually the equivalent of four weeks’ rent), there’s a good chance the sum won’t cover damage costs, costs associated with recouping the bond or lost rental income suffered.
For a nominal amount (sometimes less than a week’s rental income – and it’s generally tax deductible), a landlord can be covered for the financial costs associated with bad tenants (unpaid rent, accidental and/or malicious damage, theft, broken leases, legal costs). Talk to us about the right policy.