Where Melbourne landlords are making the more insurance claims, and choosing to sell up

News.com.au

26-04-2025

Victorian landlords are making vast numbers of insurance claims across some of the city's most investor-heavy suburbs, with increased rental protections being blamed.
Allianz data shows more landlords are looking to recover financial hits on their homes in affordable areas from Hoppers Crossing and Werribee to Cranbourne and Frankston.
With the insurer revealing unpaid rent was among the top reasons for claims, industry experts have warned it's adding fuel to the state's property investor exodus, and that they are now worried landlords could soon be hit with higher insurance premiums — or the risk that underwriters could stop backing them for broke tenants.
Separate data from Ray White shows landlords are selling up at a significant rate in many of the suburbs, with investors the seller for 43 per cent of auctions they held in Melton South in the past year. In 2024 that figure was 31 per cent.
More than a third of sales in Melton and Craigieburn were also investors in the past 12 months, with both areas also recording an increase from a year prior.
Property Investors Council of Australia director Ben Kingsley said most of the areas with high claims were outer or regional areas known for relative affordability, meaning in many instances tenants were in more fraught financial situations — making claims for lost rent more likely.
However, with Victorian investors also facing an increasingly difficult task to move tenants on if they stopped paying their rent, Mr Kingsley said many had been choosing to sell up instead — marking an unintended consequence of government policies intended to protect renters.
'I think it's another piece of evidence that the government are choking the private rental investor out of this market,' he said.
'And, as more claims come in as a result of not being able to remove difficult tenants, that will increase landlord insurance policy costs (higher premiums) — which will be passed on to the tenants.'
Mr Kingsley added that there were also risks of insurance premiums rising as a result of growing numbers of claims, while particularly problematic areas might also run into issues getting landlord insurance coverage at all.
'We have already seen this with climate risk,' Mr Kingsley said.
Real Estate Institute of Victoria chief executive Kelly Ryan said it wouldn't surprise her if landlords were claiming on insurance for lost rent.
'There's a misconception around investment property owners being wealthy, they are not,' Ms Ryan said.
'If someone doesn't pay rent, it puts them under huge financial stress.
'And it is incredibly onerous, and almost impossible to have someone evicted for not paying rent.'
Consumer Affairs Victoria advice to landlords stipulates a tenant cannot be given notice to vacate until rent is at least 14 days late, and a further 14 days notice must be given to the tenant.
However, if the tenant chooses not to vacate an application must be made to the Victorian Civil and Administrative Tribunal, who if they agree, will provide a warrant for eviction to the police to execute.
Mr Kingsley noted that most landlord insurance policies had a six-week minimum for missed rent, which was likely to be triggered more frequently under the state's current situation.
Allianz Australia's Matt Anderson said most claims in Victoria related to burst pipes, malicious damage and rent.
The most common claims were for less than $2000, with those in the range of $2000-$5000 the next most frequent.
Mr Anderson noted that while most claims would only require regular and thorough inspections to progress, issues with rental losses could need documented history of a tenant's payments in a rental ledger to ensure things proceeded expeditiously.
Finder insurance expert Tim Bennett said landlords wanting to avoid having claims rejected needed to ensure they had met all their obligations around maintenance and alerting their insurer to changes that might impact its risks.
Where landlords make the most insurance claims, and sell
Top 10 areas Allianz landlords are making claims, and what share of Ray White's auctions investors account for in these areas.
1. Hoppers Crossing — 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 Vale — 16%
9. Berwick — 5%
10. Frankston — 17%
Source: Allianz, Ray White
Mr Bennett said insurance premiums could vary from location to location, so it was worth investors assessing this prior to purchasing.
In the Frankston area, FosterFroling Real Estate boss Adrian Foster said his agency's rent roll had gone from 1500 homes down to 900 as landlords sold up, with many frustrated that it was now 'ridiculously hard to get a tenant to VCAT for not paying their rent'.
'Every day, I get a landlord who says they are sick of not making money and they want to sell,' Mr Foster said.
'And I would say Victoria probably has the highest number of claims for insurance, because it's so hard to get money back off tenants.
'I think this will end up in tragedy for the state.'
The agent estimated that as many as one in five investors in his area did not have landlord insurance.