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Christmas is a time for gift giving and celebration. However, sometimes the festive season leaves many landlords thousands of dollars out of pocket.
Loss of rent is the greatest financial risk for landlords and Christmas is to blame, according to Australia’s leading landlord insurance provider Terri Scheer.
The insurer’s figures show that 34% of claim types paid during the FY15/16 were for loss of rental income.
Last financial year, from December to March there was a 26% increase in loss of rent claims.
Insurance executive manager, Carolyn Parrella, said tenants often put gift giving and Christmas spending ahead of paying their rent and utility bills.
“Money is tight and their rental payments fall to the wayside,” she said.
“It takes two to three months for this to show as the eviction process needs to take place prior to a claim being lodged. Unfortunately, this can put significant financial pressure on the landlord and leave them out of pocket once the mortgage and other costs are paid.”
Ms Parrella added that the school calendar also prompted a spike in loss of rent claims in the new year.
She said anecdotal evidence indicates that many families break their rental agreement, abscond and move to different suburbs for the new school year.
To mitigate the risk she advises keeping close links with tenants.
“By maintaining a strong, positive relationship between tenant and landlord, the tenant may be more inclined to advise if they are looking to relocate,” said Ms Parrella.
“This can give the landlord an opportunity to proactively seek a replacement tenant and reduce the amount of time their property is untenanted.
“It also goes to show that landlords should not be complacent when it comes to protecting their rental income.”
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