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RentCover Report – we’ve got you covered

Welcome to the August edition of The RentCover Report.

In this issue, we look at the thousands of insurance claims paid on investment properties over the 2013-14 financial year – including a property ruined by mould after taps were left running for a week.

EBM Insurance Brokers’ RentCover division is one of a handful of brokers permitted for many years to assess most claims in-house, without referring the matter back to the insurer, making claims quicker and easier for our clients.

We would like to thank the many property owners and managers who trust us to protect their valuable investments.

I hope you enjoy this edition and look forward to bringing you more insights in the future.

Sharon Fox-Slater General Manager, RentCover

News in brief...

Agency’s hyper-local docos promotion Many real estate agencies use a hyper-local marketing approach in their blogs or Facebook pages – with the aim of positioning themselves as experts on their area. Wilson Property Agents in Sydney has taken the approach a step further with a three-part mini-documentary about Hyde Park. How many tenants does it take to change a lightbulb? Here’s an idea, courtesy of Peninsula Property Management Group in Victoria – an online problem shooting checklist for common maintenance issues, with suggestions about how tenants can fix some problems for themselves. Melbourne Property Managers goes one step further, not only offering tips but linking to a YouTube video showing how to change a lightbulb (yes, really)! Workers earning $180K eligible for government bond loan The cost of housing in Western Australia’s Pilbara is so high that some workers earning up to $180,000 a year in the town of Port Hedland can still qualify for loans from the WA State Government to cover the bond in its Osprey Village development. Negative gearing under the spotlight The Murray Financial System Inquiry has nominated reform of negative gearing and capital gains tax as priorities for its forthcoming tax white paper. It said the current system “encourages leveraged and speculative investment – particularly in housing”. A murder in the neighbourhood Murders reduce the value of nearby homes, but do not affect rents, according to research by the University of Technology, Sydney.

August 2014

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RentCover pays $12m in claims

RentCover settled 4,200 claims totaling more than $12 million in the 2013-14 financial year. Claims paid ranged from comparatively modest sums for tenancy tribunal application fees to hundreds of thousands of dollars for total property losses. Common claims included loss of rent, often combined with malicious damage by tenants angry at being forced to leave. While relatively small in number, there was also a record 15 claims for costs associated with cleaning up clandestine drug laboratories – leading to a combined total forensic clean-up bill of more than $350,000 for the year, or an average of more than $23,000 per property. RentCover General Manager Sharon Fox-Slater said drug laboratory claims usually included substantial payouts for rent lost while testing and cleaning was carried out. “We take the approach that legitimate claims should be paid, and paid quickly. We pay most claims within 24 hours of receiving all of the required paperwork,” she said.

Mould-write off among this year’s most unusual claims

A Victorian investment property where every tap was left running for a week suffered such severe mould that RentCover declared it a total write-off. The claim was among the more unusual of the 2013-14 financial year. The tenants had moved out of the property in an outer western suburb of Melbourne in April without notice. When a property manager visited a week later, sinks were overflowing – every tap had been left running, with plugs still in place. The property was covered with mould and there were high levels of moisture in the air. RentCover General Managers Sharon Fox-Slater, said it was the worst case of mould damage she had come across in 20 years working in landlord insurance.

*NB mould is an exclusion however this claim was considered/paid given the proximate and identifiable cause.

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15 safety tips for property managers A recent incident in which a Queensland agent was robbed at gunpoint during an open for inspection has turned the spotlight on security in the real estate industry. While real estate is a relatively safe industry, agents and property managers often work alone and outside standard business hours. There are no guarantees but property managers and their employers can take steps to reduce their safety risks.

Keep your voice calm and try to keep your emotions at bay. If you’re threatened, your main aim is to get out of the property safely – not to win an argument.

Make sure your office knows where you are and when you should be back.

Develop an office-wide code sentence which can alert colleagues in the event a staff member needs help but is unable to say so directly.

Don’t accept rent in cash as it makes your office a potential robbery target.

Make sure keys are labelled in a fashion that doesn’t give away the property address.

Don’t assume tenants are your only potential security threats – landlords can be highly attached to their property and may react angrily if problems occur.

Always record identification before allowing prospective tenants to inspect a vacant property.

Stand sideways when you’re unlocking a front door so you can see movement behind you.

Arrive early before viewings so you can inspect the property to check that it’s safe.

Know the signs of a potential drug laboratory. Leave immediately and call police if you see them.

Drug laboratory danger signs include burned or dead vegetation from “cooking” or burning waste outdoors; kitty litter used to soak up spills; tubing and containers; tenants who block access to certain rooms; smells; sealed windows; and comings and goings at odd times.

Park your car so it can’t be blocked by another vehicle.

Let prospective tenants through the door ahead of you, and stay between them and the door, so that your escape route remains clear.

Consider making concerns about how a tenant is keeping the property known in writing after the inspection if you’re worried about how the tenant will react face-to-face.

If you have any reason to believe an inspection will be particularly challenging or confrontational, take a colleague along for back-up – listen to your intuition.

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The pros and cons of outsourcing

A wide range of property management tasks can be outsourced – but that doesn’t necessarily mean they should. The theory is that by outsourcing tasks such as maintenance and repairs, trust accounting, database reviews and inspections, and smoke alarm checks, property managers can handle more properties and focus on communicating with their landlords. In addition, you can effectively outsource some risk and liability by making another company responsible for aspects of property management – as long as your outsourcing partners are appropriately qualified and insured. There is, however, risk involved. A poor choice of outsourcing partner could see overall service quality fall. Agencies lose control of aspects of their service. Gaps in communication can also result in tasks being missed. In assessing a potential outsourcing partner, it’s important to understand how their systems work and how they source, manage and train their staff – as well as checking on things like their licences and insurance cover.

Property spruikers warned

Property spruikers operating in three states have been sent letters warning them to stick to the facts – or face penalties of up to $1.1 million for misleading consumers. A letter from WA Commissioner for Consumer Protection, Anne Driscoll, raised particular concern about the accuracy of information provided in seminars associated with the sale of real estate or investment education programs. The letters, also sent by Victorian and NSW authorities, also warn spruikers to comply with requirements to provide information on the right to terminate within the applicable cooling-off period. RentCover General Manager, Sharon Fox-Slater, encouraged investors to seek out independent legal and financial advice, to do their own research and to resist pressure to sign anything on the spot. “Property is not an asset to invest in without due diligence. It can be very rewarding, but it’s a long term investment not a path to overnight wealth,” she said. “The sums involved are large – and investors need to spend the time to research any prospective purchase carefully.”

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Unexpected interview lands Steven a role with EBM

Client Services Consultant Steven de Santa-ana has quite a tale to tell about how he came to work for EBM’s RentCover division four years ago. The then-newlywed had been made redundant from his previous role at a call centre, along with his wife, Rachel. Both of them applied to work at RentCover but he turned down an interview as he’d already found another job. “My wife got an interview, and I drove her. She was so enthusiastic about RentCover that she persuaded me to reconsider the offer of an interview, which still stood. I went in on the spot, still wearing my tracksuit and T-shirt, and the rest is history.” The pair both worked at RentCover until his wife resigned to become a full-time mum to their daughter, now two. Steven enjoys working with EBM handling general inquiries and working particularly closely with a group that guides investors through property purchasing, and an agency which refers many tenants to TenantCover contents insurance. “I think it’s good for property managers to refer both tenants and landlords. It helps to cover the duty of care they owe both parties. If everyone has some form of insurance, it’s easier to recover if something goes wrong,” he said. Time off is all about family for Steven – he and his wife are expecting another child in January, and he’s renovating their home in readiness. Their three cats will be moved from the third bedroom to the laundry to make way for the baby, leaving the question of where to move the five rabbits currently occupying the laundry. Five? There’s a story behind that too. The pair rescued a stray rabbit from the street they believed to be male – until it had a litter of its own.

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