Rent cuts put landlords at risk
LANDLORDS who show leniency to struggling tenants as a result of the coronavirus pandemic could void their right to claim on insurance.
The Federal Government last week placed a six-month ban on evictions for tenants who are unable to pay rent due to COVID-19.
Prime Minister Scott Morrison called landlords and tenants to work together to come to an arrangement around rental payments.
That request has since raised concerns as to the impact on Landlord Insurance, which typically covers landlords for a period of weeks when a tenant can't pay rent.
Real Estate Industry of Queensland (REIQ) last night sought to address rising panic among property owners, some of whom face the double whammy of job loss and lost rental income.
REIQ CEO Antonia Mercorella said it was their understanding that private arrangements made between landlords and tenants would impact insurance.
"Each policy will differ but as a general rule, Landlord Insurance will not respond where landlords have reached a mutual agreement with a tenant about rent reduction," she said in a live Facebook briefing.
Furthermore, the moratorium effectively prevents landlords from meeting policy obligations to mitigate their loss by issuing default notices.
"As we understand it, the process of issuing that default documentation can't occur where the rent default is happening as a result of the coronavirus," Ms Mercorella said.
"I know that's probably not the information that landlord's want to hear, but it's important we provide what we believe is accurate information."
The blow comes as multiple insurers this week stopped offering landlord cover altogether as a result of the coronavirus, meaning no new policies could be issued.
Some of the country's largest insurers, including Terri Scheer, Suncorp and NRMA, pulled Landlord Insurance products amid COVID-19 uncertainty which could leave insurers exposed to mass payouts.
Originally published as Rent cuts put landlords at risk