RentCover Report we ve got you covered

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May 2014

RentCover Report – we’ve got you covered

Welcome to the May edition of The RentCover Report!

In the last year, RentCover policies have paid out about $14 million in claims – or almost $270,000 a week!

Our reputation for excellent service on claims is one of EBM RentCover’s points of difference, along with the wide range of things we cover which many other policies exclude.

Does your business have a clear point of difference over its competitors?

Unlike most insurers, RentCover processes most claims ourselves instead of going back to the policy underwriter – and we pride ourselves on being efficient about paying promptly and being responsive. Most claims are paid within a day or two of receiving completed paperwork but you can also ask about “interim” payments to help with cash flow, particularly in complex cases where it’s taking a bit longer to finalise.

In this issue, we examine how a clear point of difference can give a property management business the jump on its competitors and how innovative agencies are relying on more than just price to distinguish themselves in the market. We also look at ways property managers can make leasing advertisements more attractive and check out some of the interesting and controversial tribunal decisions that have recently been handed down.

I hope you enjoy this edition and look forward to bringing you more insights in coming months. Sharon Fox-Slater

General Manager, RentCover

News in brief…

As more tenants rely exclusively on their mobile phones, some phone companies are removing unused landline connections and then expecting landlords to pay to have them reinstated. One investor reported incorporating a special condition in their leases requiring tenants to maintain a landline.

EBM has joined Club Red, an Australian Red Cross Blood Service initiative that makes it easy for businesses and groups to give blood. A courtesy shuttle bus picked up our five donors and dropped them back at the office two hours later. Each donation is expected to save three lives. Congratulations to our Assistant Account Manager Sophie Hall, who was inspired to donate what she calls “life-saving/love giving awesome juice” when her friend was diagnosed


Property investors believe Brisbane is the state capital currently offering the best investment prospects, according to a recent survey. Almost half of the investors surveyed nominated Brissie, with Sydney running a distant second being nominated by 17 per cent.

According to the crystal ball of Australian Property Monitors’ Senior Economist, Dr Andrew Wilson, attached dwellings are coming into their own with median rents for units in Sydney expected to catch up

with houses “sooner rather than later”.

Cardboard boxes have been cleverly and painstakingly transformed into an animated city to promote Heart for the Homeless, with creative agency The Lume spending 900 hours making a promotional stop-animation video. Heart for the Homeless enables people to donate unwanted household goods online, connecting them with a partner charity which picks up the items. EBM is a founding sponsor of Heart for the Homeless.

More informative advertisements

Like everyone else, tenants value their time – and having to personally inspect potential properties is


That means rental listings need to give tenants all the information they need to qualify whether the property is suitable before they hop into the car.

And yet, so many listings fall short – to the detriment of the property’s owner.

Not only is a poorly-listed property likely to take longer to rent, it may also impact the quality tenant who applies. After all, who is more likely to go out and inspect a property after seeing one photo in the listing – a great tenant or a desperate tenant?

Common failings include:

Lack of photos – you need clear, in-focus photos of the front of the house, outdoor living area if any, bathroom, kitchen and living areas at a minimum.

No information about layout – ideally, include a floor plan. If not, layout needs to be described in words. An elderly tenant might want to know if there’s a bedroom on the ground floor. A tenant with young children might want to know if the back yard is visible from the kitchen. A security-conscious tenant might wonder if the garage directly opens into the property or if you need to go outside to access it.

No detail on the facilities of an apartment complex – if living in this apartment is going to give a tenant access to a pool, gym or communal BBQ area, then that’s useful information to convey. Unnecessary abbreviations – when you’re advertising on the internet, you’re not paying by the word, so why not make life easy for potential tenants by spelling it out instead of using acronyms like LUG (lock up garage) or BIR (built in robes)?

Missing information – tenants should be able to tell whether the property can accommodate pets or smokers without having to contact the property manager.

A requirement that the tenant contacts the property manager to ascertain inspection times – many tenants don’t think it’s worth the effort, while some fear being put on mailing lists as a result of making contact.


In the courts

Here, we take a look at some recent tribunal cases around Australia – and think about the lessons they offer.

Mould warrants compensation

The problem of mould is being taken seriously by the New South Wales Consumer, Trader and Tenancy Tribunal, as three recent cases demonstrate.

A tenant and his family moved out after only

two nights in a newly-leased property. They testified that mould had caused respiratory problems and skin rashes, which cleared up when they moved out. The tribunal found the property was not fit for habitation, and ordered a refund of their bond and rent paid in advance. As well as the mould, the tenant complained of rodents, food left in the property, a dirty bathroom and debris under and outside the property.

Landlords who failed to insulate a tin ceiling in an extension were ordered to compensate their tenants $5,400 – or $200 a month for the 27 months spent in the property. The tenants testified they had consistently complained about the roof, with condensation dripping on their furniture, heat of up to 50 degrees in summer and noise during rain so loud it was impossible to have a conversation or watch TV. The landlords claimed they could not afford $2000 in repair costs, but the tribunal found this was irrelevant. The tribunal awarded some costs of repairing damage against the tenant, however they did not award the full amount quoted as the work in the quotes had not been performed.

Tenants were awarded more than $3000 in compensation for a five-month period in which insufficient work was done to prevent or clean up mould. The couple had a one-year-old baby who was particularly prone to health issues, and they frequently complained about the mould. The property manager passed on their concerns to the landlord, and some efforts were made to combat the problem – but these were ineffective. The tribunal also awarded the tenants more than $800 for damage to a change table, furniture and mattress.

Too many breaches without eviction backfires

A real estate agency, which issued the tenant in a $1500-a-week luxury penthouse with eight breaches for arrears, is not allowed to terminate the lease, according to a ruling from the Queensland Civil and Administrative Tribunal (QCAT).

“There’s a common misconception in the industry... Eight breach notices are not more deserving of action than two (required for termination),” the tribunal found.

“If... the lessor allows the breach behaviour to continue past two breaches then the tenant may have a legitimate expectation that the lessor will conduct business this way and that the lessor will tolerate minor breaches.”

However, the tribunal noted that the tenant was now clearly on notice that the rent was expected to be paid promptly “and his failure to do so may not have such a happy outcome for him in the future”.

No signed tenancy agreement, no deal

A Queensland real estate agency has been ordered to refund bond and advance rent taken from prospective tenants who later decided not to sign a tenancy agreement.

The agency argued that a verbal contract was in place, and noted that they had stopped advertising and opening the property, claiming that the tenants had effectively broken the lease.


QCAT found that it was obvious that there was an initial intention to enter into a lease but it never eventuated.

In the absence of a signed lease, the bond and rent in advance could only be “characterised as a holding deposit”, QCAT ruled.

“If (the agency) proceeded on the assumption that this tenancy was signed, sealed and delivered, when it was not, then that was done at its own risk.”

Estimates insufficient for gas charge

A Victorian tenant has been found not liable for gas charges relating to a hot water service shared by the entire complex.

The Victorian Civil and Administrative Tribunal was not satisfied that an individual meter existed for hot water to the tenant’s home, which did not have its own hot water storage tank.

Even if a separate meter existed, the amount of gas use attributed to the tenant would, at best, be an estimate – and, as such, could not be legally charged to the tenant.

How to compete for tenants when vacancy rates are high

Fuelled by low interest rates, home lending to property investors is at a record high – leading to the prospect of increased competition

between landlords hoping to attract tenants.

Here are 10 tips for landlords and property managers in a high-vacancy-rate scenario:

1. If the vacant property lacks a dishwasher, heating, cooling, an outdoor entertaining area or adequate storage, adding these popular items could get it rented out faster. A fresh coat of paint can also work wonders.

2. Many advertisements for rental properties are not appealing – with poor photos, no floor plan and a cursory description that fails to appeal to tenants’ emotion as well as their wallets. If you commission a floor plan and professional photos – which can have virtual “furniture” added for scale – you can use them every time your property is vacant. Make sure the text in the

advertisement sells tenants on the experience of living in the property, not just the number of bedrooms.

3. Some agencies are starting to experiment with using video in advertisements, which could be worth a try.

4. Australians are a nation of pet lovers. If you allow pets, you’ve got a far wider pool of prospective occupants – and much less competition as many landlords won’t allow pets.

5. When properties are in plentiful supply, prospective tenants can afford to only attend open house inspections that are at a convenient time for them – make sure the property is open for inspection at least twice a week, including on the weekend.

6. Get feedback from prospective tenants at the opens. Are they interested? If not, why? Is it something you can address?

7. Be flexible in the length of the lease – some tenants want the certainty of a two-year lease, others may only need six months.

8. If you do drop the rent to get a tenant, don’t forget to be extra vigilant when it comes to subsequent regular rent rises – moving is a hassle and most tenants are prepared to pay extra to avoid it.

9. Don’t lower your standards too far – it’s better to have no tenant than a tenant who is always late with the rent or leaves your property trashed.

10. If your property is vacant for an extended period of time, it is important to notify your landlord insurance provider to discuss the implications and make sure you remain covered.

11. Consider changing your approach – would the property be more in demand if it were furnished, or available for short-term let?


What’s your point of difference?

Many property investors choose property managers based on price alone – in particular the percentage of rent charged as a management fee – to the chagrin of property managers.

It is possible to get landlords to pay more if you can clearly explain what your agency will do for them that your competitors won’t - or what marketers would call your “point of difference”.

Landlords will hear similar touchy-feely claims from

many of the agencies they investigate about how carefully tenants are selected and screened, how much the agency “cares” etc. – so you need to find a more concrete point of difference that offers real benefit to your potential customers.

What sort of things might form a point of difference? Here are some examples from around the nation. A Perth agent compensates property investors $100 if they do not return phone calls or emails the same business day, refunds the last 90 days’ management fee if any issue brought to their

attention is not rectified immediately and a quality tenant “guarantee” – no leasing fee for a new tenant if the previous one they recommended had to be evicted.

A nationwide property management brand points to differences including the use of time and date-stamped video for routine inspections and in advertisements, and that their property managers are mostly also property investors themselves and long-term owner operators. A Melbourne agent has senior managers who are Registered Building Practitioners to provide better advice on maintenance and builder defect corrections.

In Tasmania, an agent boasts their long-standing Principal is available 24-hours-a-day, seven days a week, and that they call for tenders for all maintenance work annually to ensure the best possible rates for work.

A Sydney agent offers a rental guarantee to investors who already own property – rent 365 days a year, regardless of whether the property is between tenants.

In Brisbane an agent offers a free 60 day trial, and includes a program of preventative maintenance and annual building, plumbing and termite inspections.


Luisa kicks goals

Luisa Scibilia’s passion for soccer led her to the love of her life and, indirectly, to her career with EBM Insurance Brokers. She was still in high school in Melbourne when she developed a long-distance relationship with a fellow fan on an online soccer forum – who happened to live on the other side of Australia, in Perth.

After graduating from school, Luisa worked in admin for another broker for a year to save money to move to Perth, where she spent the next four years working at EBM’s headquarters with the management team.

Just over a year ago, Luisa and her now-husband moved back to Luisa’s hometown of Melbourne, and Luisa transferred to the RentCover Division, where she works as an Account Manager. Her role includes both overseeing staff and being hands-on: “I enjoy being able to help people, whether it’s a client or a staff member.”

Apart from following Manchester United and Hawthorn, Luisa is enjoying spending more time with her family – and planning an epic two-month holiday in Europe.

Needless to say, the trip will include stops based around soccer match schedules and ticket availability: “We’re both sports fanatics. We love our sport and love soccer.”

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