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‘Done a runner’: what to do when tenants disappear

By Sharon Fox-Slater
06 September 2016 | 10 minute read
shoes old dirty

It’s the stuff of PM and landlord nightmares – a tenant fleeing with six weeks’ rent owing and no forwarding address. 

Out of pocket by $1,000 – that was the nasty surprise for one self-managing landlord in Perth when her tenants fled owing six weeks’ rent and left no forwarding address.

The landlord went to court to get the bond money back, but the returned bond only covered about half the unpaid rent. The landlord felt for the tenants, who had lost their jobs, but it was a costly lesson nevertheless.

The story of this landlord is no longer the exception in states where housing vacancy rates are steadily increasing.

In Perth, many landlords are finding themselves left high and dry by absconding tenants. Western Australia has seen a twofold increase in the number of tenants fleeing without paying rent or for damages.

An investigation by The West Australian newspaper revealed around 130 tenants have been disappearing from rental homes every week without leaving a forwarding address to settle bond and damage issues. It’s driving landlords and their agents to the courts at an unprecedented rate.

One Perth property agent told the paper he had been in court 20 times on behalf of clients in the past eight months. The tenants had “done a runner” knowing they would not get any bond back and did not want to be liable for repair bills.

The poor economic outlook, glut of rental properties (often resulting in desperate landlords renting to tenants they would not normally choose) and burgeoning drug and alcohol epidemic have all been cited as reasons for the increase in tenants doing a midnight flit.

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The woeful situation in Perth serves as a warning to landlords and PMs across the country and highlights the value of comprehensive landlord insurance.

While damage to a rental property may be covered by building insurance, it won’t cover the loss of rent, legal costs and the PM’s service fees associated with chasing restitution. Even if the landlord has their bond returned, there’s a good chance the sum won’t cover their losses.

With things not looking all that rosy in the rental market in most capitals, it may be a good time to talk to your clients about covering themselves for the financial costs associated with bad tenants (unpaid rent, accidental and/or malicious damage, theft, broken leases and legal costs). It is not a big expense, and it’s generally tax deductible, but it is a solid investment in peace of mind.

ABOUT THE AUTHOR


Sharon Fox-Slater

Sharon Fox-Slater

Sharon Fox-Slater is the Managing Director of EBM RentCover, which protects more than 150,000 rental properties across Australia. She commenced a role with EBM back in 1993 and was part of the core team that helped launch one of Australia’s first landlord insurance policies into the market. She was also the first woman in Australia to complete the Advanced Diploma in Insurance Broking, and is well equipped to educate property investors and property professionals about the value of aligning with a specialist landlord insurance provider.

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