When you purchase a rental property you have certain obligations that you must meet, whether you have tenants or not. Things like; paying council tax, interest costs on your loan (if you have one), paying tax and of course paying property landlord insurance. The last one is probably the only one out of the list that you would actually pay if you had a choice to only pay one.
The hardest thing about finding an insurance provider is that each policy is so long and complicated that most investors don’t read all the fine print and trust the insurance company that everything is correct. Always check your terms and conditions in the policy as sometimes it isn’t exactly what you are after. It’s always worth double checking. Every now and then your provider will update or change some of their policies, it’s important to check these changes as well.
Things to note at the moment with your insurance provider is that whether you manage your own property or have someone manage the property for you, they are changing their inspection frequency to every three months. Some old policies would have stated you must inspect the property every 4 or 6 months to be eligible for certain claims etc. But with an ever increasing issue with meth and other tenant problems affecting more and more landlord’s, insurance providers are changing their policy to limit the amount of claims they have to pay-out. Hence the introduction of property inspections every 3 months.
Check list for inspections you should follow whether you manage your own property and if you don’t check what procedures your property manager has in place:
- Inspect your property every 3 months
- Take photos inside and out including each room
- Note any damage or anything that needs attention
- Write up a report and document it
- Have a separate folder for each property you own to keep good records
- If you cannot get into a certain part of the property note this down and arrange a time within the next week to gain access that’s suitable to both parties.
Excess is always a hard one to know whether you should have high or low excess. This all depends on your circumstances. If you have a large portfolio and a team of trade’s people who can fix it cheaply and affectively or whether you are a first time investor and you just don’t have the time to fix it let alone find someone who can.
With the new law changes that have come into place with the well documented case of Holler & Rouse versus Osaki & Anor over intentional or negligent damage http://www.apia.org.nz/apia-blog/holler-v-osaki-and-how-it-will-affect-landlords . It’s important to know that you can’t have the tenant pay for the damage or excess fee if you cannot prove they damaged the property on purpose.
For example: The tenant drops something heavy on to the porcelain bathroom basin and breaks the basin. Whether this was accidental or not you can’t prove who is at fault so you file a claim with your insurance provider. They access the damage and a replacement is arrange and fixed. In the mean time you have to pay the excess on your policy. You would normally have the tenant to pay the excess fee but this is not the case anymore. Get yourself comprehensive insurance or talk to your insurance provider to find out more.