If you own a rental property, it’s incredibly likely that damage will occur at some point - whether that’s accidental, malicious, or fair wear and tear.

Here’s a step-by-step guide on how to protect your investment property from damage, what the difference is between malicious damage and wear and tear, and how to handle property damage.

When it comes to safeguarding your property from potential tenant damage, preparation is key. Start by ensuring your property is in top condition before tenants move in. This includes conducting thorough inspections and addressing any existing maintenance issues.

Preparing for potential damage

Present an attractive property

Presenting an attractive, clean and well maintained property will not only attract better tenants, it will also set the standard for how it should be maintained. Tenants may be more inclined to take good care of a well presented property than one which is in a state of disrepair. They may also be more likely to pay their rent on time and stay in the property longer.

Screening tenants

One of the most effective ways to prevent property damage is by thoroughly screening potential tenants. Verify their employment and rental history, and check references by speaking with their previous landlords or property managers. This helps ensure you select responsible tenants who are more likely to treat your property with care. If a previous landlord is unwilling to provide a reference, this is a huge red flag.

Working with a property manager for regular inspections

A rental property requires a significant amount of time and commitment, including conducting regular inspections and attending to maintenance requests. Appointing a property manager who can help carry out these responsibilities on your behalf will save you lots of time and ensure that your rental property is being looked after.

Property managers have experience with screening tenants and have access to databases that list tenants who have defaulted on rental payments, or who have maliciously damaged a property or been evicted. Property managers can also liaise with previous landlords or property managers to gauge whether there were any issues in the past on your behalf.

A good property manager will conduct regular inspections so that any damage or maintenance issues can be quickly identified. Regular property inspections are a good way to ensure the lease agreement is being met and the tenant is taking care of the property. Property inspections should be carried out before a new tenant enters the property, and then every three months while the tenant is occupying the property, and once more after the tenant has vacated the property.

Obtain landlord insurance

A good landlord insurance policy should cover landlords for both accidental and malicious property damage. In addition to coverage for malicious and accidental damage, you should look for a policy that provides cover for loss of rent if the property cannot be tenanted while the damage is repaired.

Malicious Property Damage vs Wear and Tear: What’s the Difference?

Malicious property damage is intentional harm to the property. Examples of malicious damage include broken windows, holes punched in walls, an unapproved tenant paint job, urine or pet odour, and stained carpet.

On the other hand, fair wear and tear is the natural and inevitable aging of the property through normal use, like furniture indentations in the carpet, cracks in the walls from movement, faded curtains, worn sliding tracks and so on.

Handling Property Damage

Assess the Damage and Identify Who Is Responsible for Repairs

When damage occurs, first assess its extent. If it's normal wear and tear, the property owner typically bears the repair cost. However, if it’s intentional or negligent damage, the tenant may be responsible. This is where your entry condition report comes into play. If a tenant is claiming the damage didn’t occur during their tenancy, you should check the entry condition report to see if the damage had been noted when the tenant moved in.

There can also be times when the damage isn’t malicious or fair wear and tear. Examples of this include structural repairs, electrical wiring, damage from a natural disaster, or plumbing issues. This is your responsibility as the landlord to rectify.

Review the Lease Agreement

If you’re in doubt, refer back to your lease agreement. This should clearly outline what constitutes damage versus wear and tear. Your lease agreement will guide your actions and help avoid any disputes.

Organise the Repair

Once responsibility has been established, arrange for repairs promptly. You may need to check if there are any state-specific guidelines on how repairs should be handled. Otherwise, do some research online and compare quotes from tradies. Once this has been arranged, make sure to give a copy of the quote and receipts to the tenant to prove how much was spent in case the cost of repairs needs to be deducted from their bond (if they are liable for the damage).

If you’re unsure how to handle the repairs, your property manager will be able to assist.

Notify the Tenant

Communication is crucial. Once the repairs have been organised, you need to contact the tenant and give them notice when access to the property is required. If the repair is urgent, you need to give them 24-48 hours notice. Non-urgent repairs require at least two days' written notice but can be fixed within 14 days.

Deduct the Cost from the Bond

If the tenant is responsible for malicious damage, you might deduct repair costs from their bond. Ensure this action complies with local tenancy laws and regulations.

Communicate with Your Insurer

For significant damages, consult your insurer. Understanding your insurance policy and what it covers is essential for making informed decisions.

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