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One in 10 real estate professionals lodge claims every year against their insurance and this alarming trend is growing rapidly, according to a leading property inspection company.
Founder of PropertySafe Phil Oakes told Residential Property Manager that property managers’ responsibilities in managing the safety of their tenants had changed significantly over the past decade.
“Whereas the previous inspections that agents did were just for the condition of the property, now it’s really about the safety," he said.
“Agents aren’t really aware of the dangers and the issues of mismanaging claims – not following through with reports by tenants and not really observing the issues.
“Claims are a composition of personal injury claims and mismanagement claims, and they’ve certainly grown.”
Common claims were for what Mr Oakes described as ‘slip and trip’ hazards, such as uneven pavements or a change in floor levels and slippery floor tiles.
For property managers, there were major ramifications if known or unknown issues resulted in tenant injury.
“The major ramifications for the property managers are that the claims can significantly exceed their cover from professional indemnity insurance, which would place their business at risk. But more important is the risk to their reputation,” Mr Oakes said.
“A lot of agents are unaware they’ve got a duty of care to the tenant. Every agent understands the duty of care to the landlord, but a significant number don’t understand the duty of care or ramifications to the tenant."
He added that the risk was increased as property managers did not have the training or the devices for in-depth inspections.
Mr Oakes said his service, PropertySafe, could protect agents by reducing potential risks on a rental home.
“By using PropertySafe, homes are totally checked by inspectors for any risk issues and a report that indentifies any risks and makes recommendations based on the urgency of the issue is delivered to the client,” he said.
The minimisation of risk would also deliver higher rental returns and enhance the reputation of a property manager, Mr Oakes said.
“If your property does get inspected and it's safe-certified, it’ll be more desirable to tenants, so the returns for the investor and the agent will also be increased,” he said.
