Landlords in Melbourne’s outer suburbs are making an increasing number of insurance claims, with many pointing to heightened rental protections as a major factor. The suburbs with the most claims include investor-heavy areas such as Hoppers Crossing, Werribee, Cranbourne, and Frankston, according to Allianz data.
One of the key reasons cited for these claims is unpaid rent, which has been a frequent issue for property owners in these affordable areas. Industry experts suggest that this problem is contributing to the ongoing exodus of property investors from the state. There are growing concerns that landlords could soon face higher insurance premiums or, in some cases, be unable to obtain coverage altogether due to the financial instability of tenants.
Data from Ray White further highlights the trend, revealing that landlords are increasingly choosing to sell their properties. In Melton South, 43% of auction sales in the past year were made by investors, a sharp increase from 31% in 2024. Similar trends were seen in Melton and Craigieburn, where more than a third of sales involved investors, marking an uptick from the previous year.
Ben Kingsley, director of the Property Investors Council of Australia, explained that many of the areas with high claims are located in more affordable outer suburbs or regional areas. In these regions, tenants are often in more precarious financial situations, making rent arrears more common. At the same time, the state’s increasingly stringent tenant protection laws make it more difficult for landlords to evict non-paying tenants, which has led many to sell their properties instead of dealing with the challenges of difficult tenants.
Kingsley criticized government policies that he believes are unintentionally driving private landlords out of the market. He warned that as claims for unpaid rent rise, landlords could face higher insurance premiums, which in turn would be passed on to tenants.
The risk of escalating premiums is not limited to unpaid rent claims. Kingsley noted that, in some areas, obtaining landlord insurance could become increasingly difficult as insurers shy away from regions with high claim rates, much like they have done with areas at risk of climate-related damage.
Kelly Ryan, CEO of the Real Estate Institute of Victoria, agreed that claims for unpaid rent were likely on the rise but emphasized that many property investors are not wealthy. “If someone doesn’t pay rent, it puts them under huge financial stress,” she said. “It is incredibly onerous, and almost impossible to evict someone for non-payment of rent.”
Current guidelines from Consumer Affairs Victoria state that landlords cannot issue a notice to vacate until rent is at least 14 days overdue, followed by another 14-day notice before eviction proceedings can begin. If tenants refuse to leave, landlords must apply to the Victorian Civil and Administrative Tribunal (VCAT) for an eviction order.
Kingsley also pointed out that most landlord insurance policies require a six-week minimum before a claim for missed rent can be made, a condition that may be triggered more frequently under the current rental climate.
Matt Anderson from Allianz Australia stated that the most common insurance claims in Victoria relate to burst pipes, malicious damage, and unpaid rent. While smaller claims—often under $2,000—are the most frequent, claims in the $2,000-$5,000 range are also common.
Tim Bennett, an insurance expert with Finder, urged landlords to ensure they meet all maintenance and insurance obligations to avoid claim rejections. He also noted that insurance premiums can vary by location, and investors should carefully assess these costs before purchasing property.
Top 10 Areas for Insurance Claims and Investor Auctions
According to Allianz and Ray White data, the top areas for insurance claims and investor auctions in Melbourne are:
Hoppers Crossing – 13% claims
Werribee – 13% claims
Craigieburn – 37% auctions by investors
Cranbourne – (No auction data)
Melton – 34% auctions by investors
Narre Warren – (No auction data)
Melton South – 43% auctions by investors
Wyndham Vale – 16% claims
Berwick – 5% claims
Frankston – 17% claims
In Frankston, Adrian Foster of FosterFroling Real Estate reported a significant decrease in his agency’s rent roll, from 1,500 homes to just 900, as landlords increasingly opted to sell their properties. Many investors expressed frustration with the difficulty of evicting tenants for non-payment of rent, citing the challenges posed by the state’s rental regulations. Foster estimates that as many as 20% of investors in the area do not have landlord insurance.
“This is a disaster in the making for the state,” Foster said, adding that landlords are facing significant financial challenges due to the growing difficulties in collecting rent and the increasing number of claims.
With landlords under financial pressure and many selling their properties, experts predict that this trend could continue unless changes are made to address the challenges facing property investors in Victoria.
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