Landlord Insurance - Exclusions - Sublease

I am signing up a head tenant who will be sub-letting four rooms to others on short term lease. Our agreement would still be under a Tenancy Agreement with attached special conditions (ie. Tenant is permitted to install fire safety equipment but will remove at end of lease)

In terms of my westpac landlord insurance, I am unsure if this type of lease arrangement would be covered. On their Product Disclosure Statement it states exclusion include the following:

Business and commercial purposes.
• your property, or any part of your property, being used for any business, trade, profession, occupation or commercial purposes, other than being let under a residential lease or as a home office or for ad hoc babysitting (e.g. use as a farm, guest house, display home, club house, boarding house or commune), in each case unless you notify us and we agree in writing to continue to provide cover.

From my interpretation, I don't think this arrangement would constitute a form of 'boarding house' or 'commune' (correct me if I am wrong). I was hoping someone could give some advice from their experience on whether my lease arrangement be considered for business/commercial purpose?

Many thanks

 

Is the tenant going to occupy - this may be classed as a boarding house (5 unrelated parties).

 

The tenant would not be occupying. He is going to manage and sublet it to unrelated parties. If that is the case, then would that be a boarding house?

 

You'll have to read the definition of boarding house in your LEP.

 

I don't work for Westpac but been in insurance many years.

Step 1 should be as scottnomates said - check the LEP.
Step 2 either consult a lawyer or research relevant legislation yourself. Sounds like it would be classed as a rooming house which is heavily legislated in many states. In Vic it's a rooming house if it has 4 separate tenants but some states I think you only need 2 separate tenants to be classified as a rooming house.

Call your insurer and ask - I'd be very surprised indeed if they would allow this activity under a normal landlord policy.

The company I work for would certainly not.

Good luck. If you're looking for an insurance policy that is designed to cover this situation you could refer to findaninsurer.com.au (the Insurance Council of Australia) or google boarding house/rooming house insurance.

Sadly it will be a lot more expensive than a normal Landlord Insurance policy, but that because it's a higher risk.

 

If your tenant doesn't live there, it doesn't even sound like a residential tenancy.

So many potential problems.

 

Contact your insurer and tell them the exact situation.
Get any approval in writing.

 

Hi, can you please update us how you got on with your sub-leasing question?