Few Auckland landlords completely understand widespread changes to the way insurance policies work, new research shows.
By Susan Edmunds
The latest Crockers Property Investment Index found that 84% of respondents were aware that residential insurance policies were moving away from full replacement policies – where insurance companies pay out whatever it takes to rebuild a property in the case of total loss – to sum insured policies, where only an agreed amount is paid.
Just under half the investors who responded said they had some understanding of the changes but wanted more information. Thirty per cent said they understood the changes fully and 14% said they knew only a little. Ten per cent said they knew nothing about the move until they were asked for the survey.
But only 6% said they would stick with whatever sum insured value the insurance company decided upon.
Most wanted professional help to determine what their sum insured value should be and 40% would get a professional valuer’s opinion. Just over a quarter would use a value determined by an online calculator.
Rene Swindley, director of online rental property insurance provider Initio said all property owners needed to look carefully at their new policy wordings, as what was included in cover had changed.
While there was confusion about insurance, the survey showed landlords’ investment expectations had bounced back significantly as the Reserve Bank showed its hand on what its intervention in the hot Auckland property market would look like.
The index had dropped over June and July but pushed back up from 73 index points to 80 for August.
More investors were looking to increase the size of their rental property portfolios.
Just under 70% of Auckland landlords planned to make no changes to their investments but 21% were planning to buy more properties, up from July and only 1% fewer than the same time last year.
Just 10% planned to decrease the size of their investments in Auckland.
Among those planning to invest in new properties, significantly more were interested in commercial options than had been the month before. Just under a quarter planned to purchase commercial properties, as opposed to 10% the previous month.
A steady 64% were looking at non-apartment residential properties. CBD apartments continued to drop in appeal, down from 23% in July to 16% in August.
Source: Landlords.co.nzcomments powered by Disqus