Flood again strikes Australia leaving landlords to suffer with no tenants and no rentable property

Two, one in a hundred year floods have hit Queensland just two years apart. Countless families could only watch their home become inundated, saw cars float away, lost their furniture and irreplaceable items that money can’t replace and are living in areas where the infrastructure has been completely
destroyed.

This type of disaster affects both landlord and tenant alike, leaving the landlord with no rentable property and the tenant with no home. Surprisingly, a tenancy agreement does not end just because of a natural disaster, even if the property has been totally destroyed. The tenant is still legally obliged to continue paying rent on the damaged property.

No tenant will wish to continue paying rent on a property that is either destroyed or uninhabitable and once they have signed a “notice of intention to leave” they can cease paying rent from the day the notice is served. Notice must be given within one month of the disaster occurring.

This obviously leaves the landlord in a sticky situation with no rental income and in many cases a mortgage to continue paying. Landlord insurance will not cover you for this type of disruption.

“If you own rental property in one of the flood affected areas, the first thing you should do is make sure your tenants are safe and are following instructions from emergency services relating to their return to the property”, said Terri Scheer Insurance General Manager, Carolyn Majda.

“Landlord insurance is designed primarily to cover landlords against actions by tenants rather than weather event.

“Events such as flood damage generally fall under building insurance… Landlords should check the product
disclosure statements of their insurance policies and contact their insurer to confirm their level of coverage”.  Reading the fine print will help you understand what the insurer defines as a flood as there are various definitions around. The Australian Securities and Investments Commission defines a flood as:

In general terms, the inundation of aproperty by water which overflows from a natural watercourse, while storm and tempest damage refers to the inundation of a property by water as the result of a storm.

Therefore, not all risks are covered by the term “flood”. If you are unsure contact your insurance company for clarification.