Where can Melbourne landlords make more insurance claims and choose to sell

Victorian landlords are making massive insurance claims in some of the city’s heaviest suburbs and blame rent protections.

Allianz data shows that more landlords are looking to recover financial blows from homes in affordable areas in Hoppers Crossing and Werribee to Cranbourne and Frankston.

As insurers revealed that unpaid rent was one of the main reasons for the claim, industry experts warned that it was adding fuel to the state’s real estate investors Exodus, who are now worried that landlords could soon be hit by higher premiums, or that underwriters might stop backing up their backings.

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Landlords have high sales in many suburbs, with investors being 43% of the auction houses held by sellers in southern Melton over the past year, according to separate data from Ray White. In 2024, this figure is 31%.

More than a third of Melton and Craigie Burn’s sales have also been investors over the past 12 months, with sales in both sectors also increasing from a year ago.

Ben Kingsley, director of the Australian Real Estate Investors Council, said most areas with high claims are external or regional areas known for their relative affordability, meaning that in many cases, tenants are in a more fulfilling financial position – more likely to lose rent.

But, Mr Kingsley said that as Victorian investors also face increasingly difficult tasks, if they stop paying rent, they still choose to sell rent, an unexpected consequence of government policies aimed at protecting tenants.

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“I think this is another evidence that the government has turned private lease investors out,” he said.

“And, as more and more claims are filed due to the inability to remove difficult tenants, this will increase the cost of landlord insurance policy (higher premiums), which will be passed on to tenants.”

Mr Kingsley added that the risk of rising premiums increases due to increasing claims, and particularly problematic areas may also experience access to landlord coverage.

“We’ve seen climate risks,” Kingsley said.

Kelly Ryan, chief executive of the Victorian Real Estate Institute, said it would not surprise her if the landlord claimed to have lost rent insurance.

“There is a misunderstanding that investment owners have money, and they are not.” Ms. Ryan said.

“If someone doesn’t pay the rent, it puts them under tremendous financial pressure.

“It’s very heavy and it’s almost impossible to get deported for not paying rent.”

Consumer Affairs Victoria’s advice to landlords stipulates that no notice can be given to tenants until the rent is at least 14 days late, and a 14-day notice must be given to tenants.

However, if the tenant chooses not to evacuate, an application must be filed with the Victoria Civil and Administrative Court, and if they agree, they will provide an arrest warrant for deporting police execution.

Mr Kingsley noted that the minimum rent for most landlord insurance policies is six weeks, which may trigger more frequently in the current situation in the state.

Matt Anderson of Allianz Australia said most claims in Victoria were related to burst tubes, malicious damage and rent.

The most common claim costs less than $2,000, which ranges from $2,000-$5,000.

Mr Anderson noted that while most claims only require regular and thorough inspections to proceed, the issue of rent loss may require a history of tenant payments in the rental ledger to ensure that they are made quickly.

Discoverer insurance expert Tim Bennett said landlords who want to avoid rejecting requests to ensure they meet all their obligations to maintain and remind insurance companies that may affect their risks.

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Landlords make the most insurance claims and sell

The top ten areas for Allianz landlords are filing claims, and the share of Ray White’s auctioneer in these areas.

1. Hopper Cross – 13%

2. Werribee – 13%

3. Craigieburn -37%

4. Cranbourne- (no auction data)

5. Melton – 34%

6. Narre Warren – (No auction data)

7. Melton South – 43%

8. Wyndham Valley – 16%

9.Berwick – 5%

10. Frankston – 17%

Source: Allianz, Ray White

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Mr Bennett said the premiums may vary by location, so it is worth evaluating this before buying it.

In the Frankston area, Fosterfroling real estate owner Adrian Foster said his agent’s rent dropped from 1,500 to 900 homes as the landlord sold out, and many were frustrated that it is now “it’s hard to get VCAT tenants not to pay rent, which is ridiculous”.

“Every day, I get a landlord who says they’re tired of not making money and they want to sell it,” Mr Foster said.

“And I would say Victoria has the most insurance claims because it’s so difficult to get money from a tenant.

“I think this will eventually happen for the country.”

Agents estimate that up to one in five investors in the area do not have landlord insurance.

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