Can a landlord claim unpaid rent due to Coronavirus?

An important part of successful property investment has always been having appropriate insurance cover. These insurance policies are for the actual bricks and mortar property, but also for landlord’s specifically for such things as damage to the property as well as rental defaults or unpaid rent.

We have always encouraged our lessor clients to have landlord insurance as an added safeguard to protect their assets as well as some affordable peace of mind given most policies only cost a few hundred dollars per year.

With the coronavirus crisis impacting both tenants and landlords in equal measures, existing landlord insurance policies may be of assistance to some owners.

However, it will depend on the terms and conditions of the policy, which are different, depending on the insurer as well as the level of cover.

One issue that has come to light is that some landlord insurers have said that a tenant not paying rent due to job loss or reduction of hours from the coronavirus may not be covered under the rental default provision.

However, one of the nation’s largest suppliers of landlord insurance, AON, has said that cover may be available with existing policies for rental defaults based on the hardship provision.

It is vital that landlord’s check the terms of their policies as well as contact their insurer’s to discuss their individual cases if needed.
Landlord insurance

The lack of insurance consistency as well as clear residential tenancy guidelines is clearly causing angst amongst the landlords who will struggle to meet their mortgage repayments without rent coming in and potentially without being able to make a claim on their insurance policies.

That said, we are seeing tenants and landlords being respectful of each other’s situation and working collaboratively to find a short-term solution that is agreeable to both parties every day.

We manage thousands of properties across Southeast Queensland on behalf of our landlords, with only a small fraction of these tenancies needing assistance with their rent payments because of the coronavirus crisis thus far.

Part of the reason for the low numbers is no doubt due to the myriad government financial support packages available, such as the JobKeeper wage subsidy, as well as the Queensland rental grant that was announced last week.

We’ve been helping tenants who have indicated they are suffering financial distress due to the coronavirus find a suitable solution, including temporary rent reductions or payment plans, with their landlords over recent weeks.

Likewise, we have been assisting landlords who also may have lost their job or had their hours significantly reduced.

There is no doubt that there has been mixed messages at both a Federal and State level about residential tenancies, which is why a common sense approach is the best strategy – and is one that we’re happy to report is working.