A tenant who can’t pay the rent is a key concern for landlords. After all, you have expenses that need paying whether the tenant has paid their rent or not.
Sometimes the rent forms a large part of your income, and many pensioners are dependent on the income from their rented property. For this reason, it’s important to take action early to minimise any potential loss that can arise from rental arrears.
All too often nowadays, tenants fail to pay the rent because:
– They’ve lost their job
– The cost of living has increased and their rent has become less affordable;
– They’ve had to take a cut in their salary; or
– A roommate has moved out, or they’ve experienced a relationship break-up.
What do I do if my tenant can’t pay?
If your tenant is more than around seven days late (and remember this varies from state to state) you need to use the correct documentation to advise the tenant of their rental arrears and request when the payment will be made. This lets the tenant know you take the issue seriously – and that rent should always be paid on time.
How can I help my tenant?
If you have a tenant struggling to pay the rent, it’s important that the outstanding debt is settled right away. Not only that, it needs to be done in a fair and informed manner. Sometimes agreeing to a payment plan can save you more costs in the longer term than finding a brand new tenant, or of the tenant vacating the property with costs still owing to you.
Your tenant can seek advice from the following organisations if they need support in the process:
– WA – Tenancy WA
– QLD – Tenants QLD
– NSW – Tenants NSW
– ACT – Tenants’ Advice Service
– VIC – Tenants Union of Victoria
– SA – Office of Consumer & Business Services
– TAS – The Tenants’ Union of Tasmania
– NT – Consumer Affairs NT
The breach notice
If your tenant doesn’t pay the rent, you can issue them with a breach notice. For this to happen, the tenant must have been in arrears for a number of days. Make sure you check what this period is in your state or territory – it varies around Australia.
Terminating the tenancy
If you need to evict your tenants, you must follow a process. Locking your tenants out without a tribunal or court order is illegal and you could be fined and ordered to compensate your tenants if you don’t work by the book. Firstly, you must issue a non-payment termination notice in writing and deliver this by hand or by fax. If you post the notice, you must allow extra business days to allow for delivery.
Your notice must contain all of the following information to be legally binding:
– The address of the property;
– the grounds for termination (in this instance, non-payment of rent);
– the date the tenant must vacate the premises; and
– a statement indicating the tenancy will not end should the tenant pay their arrears or sign an agreement for payment of the arrears.
Remember: Serving this non-payment termination does not officially end the tenancy. It officially ends only once your tenants have vacated the property and return the keys to you (the landlord). If they refuse to do this? You may have to look at going before a court or tribunal to have them evicted from your property.
What do to next time?
In life, it’s an oft-heard saying that prevention is better than a cure. When it comes to tenant selection, it’s important that you select and reference check your tenant carefully, checking their previous payment history and ensure their employment records are checked. Wherever possible, try to keep your tenant on a direct debit system to make sure the money is deducted on the day it’s due. You’re far more likely to have a tenant fall into arrears if they decide when to initiate the payment.
With any luck, non-payment of rent won’t reach the eviction stage. Clear communication between you and your tenant and screening all tenants in advance will protect you from this situation going forward.