Written For The Australian - Property investor? You may be paying unnecessary costs
by James GerrardFri Nov 3 2023
Are you a property investor bleeding cash on repairs and insurance that aren't even your responsibility? You might be. And it's costing thousands.
With interest rates hammering investment property cashflow, most landlords I speak to have zeroed in on rent increases as their only lever. Fair enough — rents have jumped double digits in many capitals. But that hasn't come close to plugging the gap created by higher mortgage repayments. What most investors have overlooked is the expense side of the ledger, particularly if they own strata property.
Here's what surprised me when I looked into it with Stephen Brell, president of Strata Community Association NSW. If your apartment has original bathroom tiles and develops a leak, the cost to rip them up, redo the waterproofing and re-tile is the owners' corporation's problem — not yours. Same goes for balcony tiles, wall tiles bordering common property, and anything embedded in the concrete slab. Carpet and floating floorboards? They're on you.
The kicker: if you renovate and replace those original tiles, you lose that protection forever. Something worth thinking hard about before your next reno.
Insurance is another area where investors double up. Strata building insurance typically covers internal fixtures, kitchens and bathrooms. Yet many landlords take out separate building policies that duplicate this cover. A kitchen fire? Usually covered by strata. Instead, you should only be insuring the gaps — carpets, light fittings, paint.
One policy I strongly recommend landlords do take is liability insurance. Brell shared a case where a child swung from a light fitting, it snapped, and the landlord — despite no negligence — was successfully sued for $30,000.
Windows, balcony doors, front doors, intercoms, even the front lawn of a villa can all be common property. If your strata manager pushes back, tribunals like NCAT and VCAT exist for a reason. Know your rights — it's the cheapest cashflow win going.