New tenancy legislation was passed on 30 July 2019 which will affect landlords and tenants, with these changes taking effect on 27 August 2019. The bill amends the Residential Tenancies Act 1986 (RTA) and addresses tenant liability for damage, unlawful residential premises and contamination of rental properties.
From 27 August 2019, a landlord must include information about the insurance for the premises in every new Tenancy Agreement. If they do not, this is deemed to be an unlawful act and they can face a penalty of up to $500. The information must stipulate whether or not the property is insured and if so, what the excess amount is. This statement must also advise a tenant that a copy of the insurance policy is available for them to review upon request. For existing tenancies, insurance information and/or a policy document must be provided within a reasonable time frame if requested.
Harcourts Udy Realty recommend an insurance excess for landlords of no more than four weeks’ rent. If an insurance excess is higher, then the landlord is effectively ‘self-insuring’ for the difference, as a tenant’s liability will only extend to four weeks rent. They also recommend that landlords provide their property manager with a copy of their insurance policy. They should also redact any personal information from an insurance policy before sending to a tenant or property manager. Landlords should consider insuring against malicious or intentional damage, and a policy such as this may also cover loss of rent.
What a landlord can expect from a Harcourts Property Manager:
A request for a copy of the insurance policy. Insurance information to be recorded on all new Tenancy Agreements from 27 August 2019. A Variation of Tenancy is prepared for future rent increases so that the four weeks rent is calculated on new rent and not limited to the lesser amount.They will educate tenants that the landlord’s insurance may cover damage they cause, but they should inform the landlord as soon as an incident occurs, rather than wait until the end of the tenancy. This awareness for tenants may help prevent insurance companies from claiming multiple excesses for multiple events at an end of a tenancy, when the Act limits a tenant’s liability to four weeks rent or insurance excess, whichever is lower.