6 minute read
Real Estate
Short-term holiday rental hosts warned not to risk being uninsured
The Insurance Council of Australia (ICA) is warning short-term holiday rental hosts not to place their most valuable asset at risk.
The attraction of earning extra income from short-term holiday appealing, but for the uninsured it could lead to disaster.
Almost 500,000 Australian hosts have listed their property on short-term holiday rental platforms since 2016 and Easter and Christmas are particularly popular times to list a home.
However, hosts who offer their properties on short-term holiday rental platforms are most likely not protected for any damage caused by their short-term tenants under their home and contents insurance.
Most insurers regard short-term holiday rental as a commercial use of a property or a business activity.
A home building or contents claim incurred while a property is being rented by short-term tenants may be declined, leaving the host potentially vulnerable to
Some insurers have responded to the increasing popularity of short-term holiday rentals by offering specialty policies. Cover like this can be tailored to the number of nights the property is rented and the daily cost can be as little as the price of a take-away coffee.
It can cover paying guest-related accidental or malicious damage, theft or attempted theft, personal liability if a guest is injured, identity theft, and strata property damage.
Short-term landlord insurance policies are also available to cover a professionally managed property.
Hosts considering short-term holiday renting should: • Check their building and contents insurance policy details prior to advertising on short-stay holiday rental platforms. If the policy doesn’t cover short-term rental look for a specialty com.au that protects both home and contents while paying guests are staying. • Not rely solely on the rental platform’s host protection insurance as there may be gaps in the cover offered. • Be aware that home insurance includes public liability coverage, however, the commercial activity of short-term holiday stays may invalidate this cover for some claims. • Reduce the risk of theft by removing valuables. • Check strata rules, tenancy agreements and local council laws because these may prohibit short-stay holiday rental. • Ensure their property is safe and secure.
Andrew Hall, CEO ICA said:
“The Insurance Council is aware of frightening stories of hosts returning after short-term paying guests have departed to of possessions or
Death of foreign buyers is accentuating the undersupply of rentals
The absence of foreign buyers may lead to a of rental properties, according to Pete Wargent, co-founder of BuyersBuyers.
Mr Wargent said,“over the past decade, new apartment projects have largely been funded by superannuation fund investors and non-resident investors, mainly from China.
“Neither cohort is buying heavily anymore as credit has tightened, and as the HomeBuilder stimulus impact recedes, we’re heading squarely for a shortage of rental properties in some cities and locations.
“The number of residential real estate approvals reported by the Foreign Investment Review Board fell another 38 per cent in the at the lowest level in a decade-and-a-half, with no sign of the multi-year Wargent said.
The value of FIRB residential investment proposals also contracted another $6.7 billion lower to just $10.4 billion in the year to June 30, 2021.
Mr Wargent said, “the previous years may not be directly comparable for several reasons, but back in 2016 the many times higher at
Mr Wargent said policymakers may need ways to allow nonresidents to invest in new residential properties again.
Environmental risks are higher on the property market agenda
Environmental risks will be given a greater consideration by prospective property buyers, according to Pete Wargent, co-founder of network for buyer’s agents, BuyersBuyers. Mr Wargent said, Australia, receiving international attention as well as local media coverage. Queensland and New South Wales were variously labelled as a once-in-a-century events.
“But given that Brisbane experienced 2011, the risks will be seen differently in the minds of homebuyers, many of whom may not be old enough to remember the event in 1974.
“Climate experts have suggested that severe weather events may occur more frequently in the future, which will change the mindset of housing market participants.
“These days we’re routinely asked to risk when purchasing property for clients” Mr Wargent said.
Flooding and erosion risk
BuyersBuyers CEO Doron Peleg said that buyers will consider evacuation routes as well as environmental risks such as coastal erosion.
Mr Peleg said, “in recent years there have been some isolated cases of coastal erosion, for example, in the Northern Beaches; now it seems that the number of potential events are increasing.
“The Northern Beaches Council has reported that several beaches erosion hotspots by the New South Wales Government, namely the beaches of CollaroyNarrabeen, Bilgola Beach, and Basin Beach at Mona Vale.
“A Reserve Bank of Australia paper on climate risks used a Value-at-Risk (VaR) model to assess risk, through measuring potential increases to an insurance premium. In the calculations used, a VaR of 0.5 per cent would be equivalent to an annual premium of $2,500 on a building that would cost $500,000 to replace.
“The RBA has estimated that 3½ per cent of Australia’s dwellings may be exposed to elevated risk from climate-related events – denoted by a ‘value at risk’ of more than 1 per cent – and this share of dwellings could increase to 8 per cent by the end of the century.
“With the total value of the residential market now close to $10 trillion, this implies that up to around $½ trillion of dwellings by value may already be considered at a relatively elevated risk, mainly in agricultural and coastal regions.
“Of course, some properties may be more seriously at risk of and credit losses for lenders than others, with more than 250 mostly coastal suburbs as potentially being categorised as high-risk by 2050” Mr Peleg said.
Commercial landlords who provided rental relief to tenants between January 14 and March 13, 2022 can now apply for grants of up to $3,000 a month per eligible property.
Small Business Minister Eleni Petinos said the third tranche of the Commercial Landlord Hardship Fund would allow eligible landlords to offset the costs of providing rental assistance to tenants who experienced disruption during the Omicron wave.
“Because of the disruption caused to small businesses by Omicron, we’ve extended the Commercial Landlord Hardship Fund that has already provided $14 million to nearly 2,000 businesses,” Ms Petinos said.
“Eligible commercial landlords who provided support to retail and commercial tenants from 14 January to 13 March this year can now apply for grants of up to $3,000 a month for each eligible property.
“Throughout the pandemic the NSW Government has responded to the evolving challenges and we will continue to provide the small business community with the necessary support.”
To be eligible for a grant through the third round of the scheme, landlords with up to $5 million in total land holdings must have entered into an agreement to provide rental relief to tenants between January 14 and March 13, 2022.
The grant is equal to the value of the rental waiver provided to tenants, up to a maximum of $3000 per month, for each eligible property.
For more information about the Commercial Landlord Hardship Fund and how to apply, visit www.service.nsw.gov. au/transaction/applycommercial-landlordhardship-grant or call 13 77 88.
Applications will close on May 31, 2022.
