Here’s a guide on how to protect your investment property from damage, the difference between everyday wear and tear and other damage, and what to do when damage occurs.
How to protect property from damage by tenants
When it comes to safeguarding your property from potential tenant damage, preparation is key. Start by ensuring your property is in top condition before tenants move in. This means conducting thorough inspections and addressing any existing maintenance issues.
Prepare your property
Present an attractive property
Presenting an attractive, clean, and well-maintained property can not only help attract better tenants, it can also set the standard for how you expect it to be maintained. Tenants may be more inclined to take good care of a well-presented property than one in a state of disrepair. A well-presented property may also draw more applicants, increasing the chances of securing tenants who are likely to pay their rent on time and stay in the property longer.
Screening tenants
One of the most simple and effective ways to prevent property damage is by thoroughly screening potential tenants. Verify their employment and rental history and check references by speaking with their previous landlords or property managers. This can help ensure you select responsible tenants who are more likely to treat your property with care. If a previous landlord is unwilling to provide a reference, this is a huge red flag.
See also: How to properly screen a tenant
Engage professional help
Working with a property manager
A rental property requires a significant amount of time and commitment. Tasks at hand can include conducting regular inspections and attending to maintenance requests. Appointing a property manager to help carry out these responsibilities on your behalf could save you considerable time and ensure your rental property is being looked after by a professional.
Property managers have experience in screening tenants. Moreover, they often have access to databases listing tenants who have previously defaulted on rental payments, maliciously damaged other properties, or been evicted due to misconduct. They can also liaise with previous landlords or property managers on your behalf to investigate any other past issues.
See also: How to find a good property manager
The importance of regular inspections
A property manager can also conduct regular inspections so any damage or maintenance issues can be quickly identified. Regular property inspections are also a good way to ensure the lease agreement is being met and that a tenant is taking adequate care of the property.
Property inspections are commonly carried out before a new tenant enters the property, every three months while the tenant is occupying the property, and once more after the tenant has vacated the property.
Take out landlord insurance
A good landlord insurance policy should protect landlords from costs borne from accidental and malicious property damage. It may also provide cover for loss of rental income if a property can’t be tenanted while damage is being repaired.
Be sure to compare policies to find insurance that matches your needs. For example, only a few landlord insurers cover short-term rentals so, if your property is on the short stay market, make sure you have the right type of policy. Other insurers may not cover damage from pets. Make sure you read the fine print of any policy you’re considering taking out.
Property damage by tenants vs wear and tear: What’s the difference?
This question can be the source of conflict between tenants and landlords, so here is the rundown:
Damage
Damage is a direct result of the actions of tenants and outside of the normal aging of the property. Below are the different types of damage, as categorised by insurers:
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Accidental damage
Occurs as a result of unexpected events or accidents, such as spills on carpets or burn marks in kitchens. -
Intentional damage
Isn’t motivated by malice but, nonetheless, serves to alter the property’s original state, such as an unapproved paint job or putting picture hooks in walls. -
Malicious
Malicious property damage is that resulting from a tenant damaging the property on purpose, such as deliberately breaking windows or punching holes in walls, whether motivated by vindictiveness or other willful actions.
Tenants are generally liable for repairs related to damage they, or their guests, directly cause.
Wear and tear
Fair wear and tear refers to the natural and inevitable deterioration of a property that occurs through normal, everyday use. Examples include fraying or furniture indentations in carpets, minor cracks in walls from building movement, faded curtains, and worn sliding tracks for doors and windows.
The cost of repairing fair wear and tear is the landlord’s responsibility and is not covered by landlord insurance.
Handling property damage
Assess the damage and identify who is responsible for repairs
When damage occurs, the first step is to examine its extent. If it's normal wear and tear, the property owner typically bears the repair cost. But if it’s intentional or negligent damage, the tenant may be held responsible.
This is where an entry condition inspection report comes into play. If a tenant is claiming the damage didn’t occur during their tenancy, be sure to check the report to see if the damage had been noted when the tenant moved in.
There can also be times when damage is neither malicious nor fair wear and tear. Examples of this include structural repairs, electrical wiring issues, damage from natural disasters, or plumbing problems. As a landlord, it is your responsibility to rectify such issues.
Review the lease agreement
If you’re ever in doubt, refer back to your lease agreement. This should clearly outline what constitutes damage versus wear and tear. Your lease agreement should guide your actions and also help avoid any disputes.
Organise the repair
Once responsibility has been established, promptly arrange for repairs.
You will need to check if there are any state or territory-specific guidelines on how repairs should be handled. A property manager can manage this process for you to ensure you comply with laws and guidelines; otherwise, you will need to do your own research on how to proceed.
If the damage is to be paid for by the tenants, make sure to provide them with a copy of quotes and receipts to verify how much was spent should the cost of repairs need to be deducted from their bond.
Notify the tenant
Communication is crucial. Once the repairs have been organised, you will need to provide notice to the tenant regarding access to the property.
If the repair is urgent, you can generally give 24-48 hours' notice. Non-urgent repairs typically require at least two days' written notice.
Deduct the cost from the bond
If the tenant is responsible for malicious or accidental damage, you might choose to deduct repair costs from their bond. If this is the case, ensure you comply with local tenancy laws and regulations. A property manager can be invaluable in handling such matters.
Communicate with your insurer
For significant damages, consult your insurer. Understanding your insurance policy and what it covers will help you make better-informed decisions on how to proceed.
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First published in February 2024
Collections: Property Investment
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