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Homeowner’s CodeInvesting in property comes with risks, and certain suburbs in Australia have been identified as high-risk areas for landlords due to tenant damage and rent loss claims. Exclusive insurance data from Allianz has pinpointed capital city suburbs with the highest number of landlord insurance claims, shedding light on the challenges faced by property owners.
The study encompassed claims from NSW, Victoria, Queensland, and South Australia, revealing that some suburbs with attractive rental returns also experienced a higher incidence of tenants defaulting on rent payments or causing property damage. Additionally, areas prone to natural disasters were highlighted as posing increased risks for landlords.
Nathan Birch, director of property management firm Blink, noted that while investing in these riskier suburbs may entail higher repair costs, the potential for better capital growth often outweighs the challenges. Despite the financial risks associated with these areas, they have been known to outperform the market in terms of returns.
Allianz’s data indicated that storm damage, burst pipes, malicious damage, and lost rent were among the most common reasons for landlord insurance claims. However, the types of claims varied across states, with each region exhibiting unique trends in the nature of claims being made.
In Victoria, suburbs like Hoppers Crossing and Frankston saw a surge in insurance claims, with landlords seeking compensation for unpaid rent and property damages. The state’s rental reforms were cited as a factor driving investors away from the market, prompting many landlords to sell their properties.
Similarly, Western Sydney and regional areas in NSW emerged as risky zones for landlords, despite being popular among property investors for their higher rental returns. The data revealed challenges faced by landlords in gentrifying lower socio-economic areas, where issues like missed rent repayments and tenant-related damages were prevalent.
South Australia’s property investment hotspots also harbored risks for landlords, particularly in areas like Adelaide’s northeast. With rent default, tenant damage, and legal liability posing concerns for property owners, investors were urged to exercise caution in these markets.
In Queensland, cyclone claims ranked high among the most common insurance claims, while suburbs with affordable housing prices were prone to rent loss incidents. Weather-related claims and challenges with rent arrears were prevalent in Brisbane, prompting landlords to navigate a landscape where rental income stability was a key concern.
Overall, the data underscores the importance of thorough risk assessment for landlords, especially in areas susceptible to tenant defaults and property damages. As property markets evolve and external factors like weather events come into play, landlords must stay vigilant to protect their investments and navigate the complex landscape of property ownership in Australia.
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