Landlord insurance in jeopardy

Matthew asks:
(updated on Monday, December 21st 2015)

While investigating possible causes of waste water blockages, I discovered that my tenants have two to three companies using the property as a physical business address.

My insurance covers a home office of 50% maximum. However, this is not home office activity. They are investment and development companies and have boards of directors who do not live at the address.

The lease has no maximum figure number but it does have a clause that says no subletting.

How do I find out how much they claim in rent against their tax and am I entitled to what they have charged these companies for rent?

Further, I am concerned that this activity means that my residential house is uninsured. I am also concerned there is some kind of tax fraud going on as there is only an office in the lounge. Finally, as the businesses were active before my tenants signed a residential lease, was it fraud for them to not disclose this information?

What would you do?

Our Experts Answer:

From an insurance point of view, the tenants are potentially jeopardizing the landlords insurance cover as the usage is not for private residential purposes. Now that you are aware of this you need to take action ASAP. As it a material fact, you should probably tell your insurer. The insurer may well continue cover albeit with revised terms.

Since the tenants are breaching their Tenancy Agreement, there are certain steps you will need to take. My recommendation would be for you to contact Tenancy Services and find out what the correct course of action is in this situation. It is likely that you will have to give your tenants a "notice to remedy" the breach.

Select Home Loans 4.29
HSBC Premier 4.39
ICBC 4.39
Heartland Bank - Online 4.40
China Construction Bank Special 4.45
SBS Bank Special 4.55
Kainga Ora 4.57
Co-operative Bank - First Home Special 4.75
TSB Special 4.85
AIA 4.85
Co-operative Bank - Owner Occ 4.85
Select Home Loans 4.86
Heartland Bank - Online 4.90
TSB Special 4.99
ICBC 5.09
HSBC Premier 5.15
SBS Bank Special 5.19
China Construction Bank Special 5.19
AIA 5.35
Co-operative Bank - Owner Occ 5.35
First Credit Union Special 5.45
Unity 5.55
Select Home Loans 5.20
HSBC Premier 5.89
ICBC 5.89
SBS Bank Special 5.95
TSB Special 5.99
BNZ - Classic 6.19
Kiwibank Special 6.29
Resimac 6.33
China Construction Bank Special 6.35
Westpac Special 6.39
Kainga Ora 6.43
Select Home Loans 4.09
Heartland Bank - Online 4.10
Pepper Money 4.49
Liberty 4.84
TSB Special 4.89
Kiwibank Special 5.00
ICBC 5.25
Kainga Ora 5.43
Kiwibank 5.50
China Construction Bank 5.50
Kiwibank - Offset 5.50