If your
rental is badly damaged and becomes uninhabitable, you may need to relocate
your tenants. But who covers the relocation costs?
Fire,
flood, violent weather, and vandalism… Sometimes, there are circumstances when,
through no fault of the tenant or landlord, a rental property becomes
uninhabitable.
When that
occurs, there are two main options.
The first is to terminate the lease.
Most state
and territory residential tenancy legislation allows a lease to be broken,
usually immediately and without penalty, in the event the property becomes
uninhabitable. This sees the lease agreement ended and the tenant return vacant
possession to the landlord. The landlord then re-lets the property once the
repairs have been made.
Under the
legislation, the landlord is usually not legally obliged to relocate their
tenants – their responsibilities end with the termination of the tenancy.
However, a landlord may choose to provide assistance.
The
second option is to continue the lease and temporarily relocate tenants.
There are times when this is preferable for both
tenant and landlord. This option is usually only considered when the repairs to
the property are not expected to take too long. In this scenario, the lease
continues and the tenants move out temporarily. Once the repairs have been
made, the tenants move back in. Rights and obligations under this scenario are
often set out in the legislation under the repairs section.
At EBM RentCover we believe in being open, honest, and transparent. And the fact is, relocation costs are typically not covered by
our landlord insurance policies.
In general, tenancy legislation does not make the
landlord responsible for finding or paying for tenant relocation. In legal
speak, the landlord is not liable. As the landlord has no liability, the
insurer also assumes no liability. If a landlord chooses to help a tenant
relocate, it is considered an act of goodwill, not a legal obligation. That’s
why relocation costs are not covered by insurance.
However, it is important to note that if a property
is damaged due to an insurable event, and the property is deemed uninhabitable,
EBM RentCover may pay out for loss of rent while the property is vacant and
being fixed.
So, while the costs of repairs and potentially loss
of rent may be covered by insurance, depending on the policy in place and the
terms and conditions of that policy, if a landlord chooses to help tenants to
relocate after ending the tenancy or to temporarily relocate, those costs are
not.
And, while our policies do not cover relocation,
some tenant insurance policies do. So, it is a good idea to chat to tenants
about insurance and encourage them to have a policy in place that protects them
for risks they may face.
With all this being said, we want to offer a few
tips for landlords who may choose to help tenants relocate…
Landlords who decide to help tenants relocate as an
act of goodwill after the tenancy agreement has ended should consider how they
can assist and the limits to this assistance.
TIP: As any costs
incurred by the landlord are not covered under insurance, landlords should
carefully consider the implications of any financial assistance provided such
as refunding rent or paying moving expenses.
When it comes to temporarily relocating tenants,
there are questions to answer, things to consider and negotiations to be made
with tenants.
Relocating and moving tenants
Do all the tenants’ possessions need to be moved
off the premises?
If some possessions are staying on-site, does the
tenants’ contents insurance still offer cover? NOTE: Landlord insurance does
not cover a tenant’s possessions. Landlords are not liable for the costs to
repair or replace tenant possessions unless the damage was caused by the
landlord’s negligence.
Who will be responsible for packing up and
transporting the tenants’ possessions?
Who will pay the moving costs?
If possessions need to be put into storage, who
will pay those costs?
Temporary accommodation
How long will the tenants need to move out for?
What options are there for accommodation (e.g.
hotel, motel, serviced apartment, caravan, holiday house)?
Who is responsible for finding the temporary
accommodation?
Who will pay for the accommodation?
Who is responsible for paying other related
expenses such as meals, transport, and pet accommodation?
Is the landlord going to waive or reduce the rent
while the tenants are not in their property? NOTE: If a landlord agrees to
waive or reduce the rent, any loss in rent is not able to be claimed against
their landlord insurance. This is not considered a "loss” by insurers – it is
simply a business decision made by the landlord for which insurance does not
apply.
What does the legislation say about tenant and
landlord rights with respect to rent payments and compensation when tenants need
to move out temporarily so that repairs can be carried out? For example, do
tenants have the right to stop paying rent from the date they vacate? Or is the
landlord is required to compensate the tenant?
Once the landlord and tenant agree on costs and
rent payments, they should record what they decide in writing. If an agreement
can’t be reached, it may be possible to seek a ruling from a court or tribunal
(subject to state/territory arrangements).
Before terminating a lease due to the property
being uninhabitable or temporarily relocating tenants while repairs are carried
out, landlords are encouraged to check the applicable residential tenancy
legislation to understand the requirements and their obligations.
And, landlords should always check what the
financial implications are in assisting tenants to relocate, as there may also
be insurance repercussions. If you have an EBM RentCover policy and need
further information, contact 1800 661 662.
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Guest
Author: This
article was written by the team at EBM RentCoverand was originally published here. EBM RentCover is one of Australia’s
leading landlord insurance providers, protecting more than 150,000 rental
properties across Australia.
Jason Gwerder
Friday, 1 July 2022
