Should I allow pets in my rental property?

Cute dog and a pink wall.Allowing pets in your rental property is a calculated risk, but one that could pay off.

Australians are some of the world's keenest pet owners. According to the Australian Veterinary Association, 62% of Aussie households own a pet. If you own an investment property, banning pets could be cutting yourself out of a significant pool of potential renters.

But the decision whether or not to allow pets isn't an easy one. Animals can be destructive, and your property could end up damaged. Before you decide whether or not to allow pets, you should ask yourself the following questions.

Victoria's tenant laws

If you're an investment property owner in Victoria, the decision whether or not to allow pets is an easy one. Reforms to the state's tenancy laws in late 2017 mean that tenants have the right to keep pets provided they obtain the landlord's written consent. Under the laws, landlords cannot unreasonably refuse a request to keep pets.

1. What's the tenant's situation?

The first factor to assess is the tenant themselves. Each tenant is different, as is the level of trust they instil in you.

If the request to keep a pet comes from an existing tenant, it can be a fairly easy one to assess. Your decision can be guided by the kind of tenant they've been to date. If they're a good, responsible and tidy tenant, odds are they'll be a good, responsible and tidy pet owner as well.

If the request comes from a potential tenant, you'll have less information to go on. However, you can ask the tenant to provide written references for their pets. It could be useful to have a reference from their previous property manager ensuring that the pets didn't cause damage to their previous residence beyond any normal wear and tear. It could also be helpful to get references from neighbours to attest that the pets weren't loud or disruptive.

It's also not a bad idea to ask to personally see the pet in question. You can observe the animal's temperament, size and cleanliness and determine if it's a good fit for your property.

Lastly, you'll have to take into account the tenant's personal circumstances. For instance, if the animal in question is a service animal, you cannot legally refuse the tenant's request.

Compare pet insurance options for tenants

2. What type of property do you own?

The type of property you own can largely dictate whether or not you should allow pets.

If you own a unit, the decision whether or not to allow pets may be out of your hands. Some strata bylaws prohibit pets of any kind. Others may allow pets only on a case-by-case basis, subject to approval of the owners corporation.

Even if your strata scheme allows pets, you'll need to assess the characteristics of the property itself. If it's a small unit with no balcony or without easy access to outdoor areas, it may be particularly unwise to allow dogs.

And regardless of whether you own a house or unit, you should think about the property's characteristics and whether they lend themselves to pets. If you have hardwood floors, there's a strong likelihood animals could leave scratches and gouges.

You also need to consider the area surrounding your property. Take into consideration how allowing pets could impact your neighbours. If your property is in a high density area, you may want to think twice about allowing any animals that could be loud or disruptive.

Pet cat on the couch.

3. Do you have good landlord insurance?

Even with the most conscientious of pet owners, animals have the capacity to cause damage. They can ruin landscaping, scratch up doors, leave stains and destroy flooring. Regardless of whether you have responsible tenants, accidents can happen.

Some landlord insurance policies will cover damage by domestic pets. However, some policies may exclude this cover. Carefully check your policy to ensure you're covered in the event you have to repair damage caused by pets.

Learn more about pet damage and home insurance

4. Can pets help your rental property?

You don't have to be an animal lover or act out of altruism to allow pets in your rental property. It can actually be a savvy strategy for a wise investor.

First, you can grab an underserved slice of the rental market. Allowing pets subject to application can attract good renters who feel locked out of most properties. It gives your property a unique point of difference.

Moreover, you can reduce turnover by allowing pets. Pet owners can be less transient and more committed to their rental than other tenants. Because it can be difficult to find pet-friendly properties, once you have good tenants in place they're less likely to leave on a whim.

You can also use pets as an opportunity to increase your asking rent. You can make a slight rental increase one of the stipulations for allowing pets. Advertising your property as pet friendly can also increase demand, allowing you to ask for more rent.

5. Can you put safeguards in place?

If you do decide to allow pets, you'll want to make sure you have the proper procedures in place to safeguard your investment.

You should include specific sections in your lease agreement pertaining to pet ownership. It's wise to stipulate that the tenant will be liable for any damage caused by the animals, and that they must fumigate the property when they vacate.

You can also specify in your rental agreement the types of animals you'll allow. You could stipulate that cats are permitted but that dogs are not, or you could enforce a weight limit on dogs.

The rental agreement should also include a section to individually list the details of any pets to be kept at the property. This can include the species, breed, weight and the animal's microchip number. These details could be vital should you have to file an insurance claim for damage caused by the animals.

You'll also want to conduct regular property inspections to ensure the tenants are abiding by the terms set out in the rental agreement, and to identify any damage before it gets worse.

While allowing pets does put your property at greater risk of damage, it's a calculated risk. A pet-friendly property is always likely to generate demand. The risk of some scratches or stains could be far outweighed if you secure responsible, long-term tenants.

Property investor? Compare investment home loans

Adam Smith

Adam has more than five years of experience writing about the Australian home loan market.

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