navigating missed rental payments

How to navigate missed rental payments

Your tenants usually pay their rent every week but the week has come and gone and there’s no rent showing in your bank account. Your mortgage is due soon and the worry about being able to make that payment is starting to creep in.

This situation is really unsettling both for new landlords and for those industry veterans who have been in the game for a long time.

In this blog post we’ll arm you with the five essential steps to navigate missed rent payments without compromising your rental business.

Before rent is late

Evaluate your emergency fund:

It’s essential to have three to six months worth of mortgage expenses in an emergency fund.

This isn’t just in case your tenant doesn’t pay rent but also for the left field things you could find coming at you such as an unexpected large maintenance issue or a longer time between tenancies than you would usually expect.

Set your tenants up for success:

Along with the tenancy agreement we highly recommend giving your tenants a guide that lets them know what you expect from them if ever they find themselves in a situation where their rent will be late.

This guide will clearly set out the steps that you will take should their rent ever be in arrears such as:

Day 1: I will text or email you to check if you forgot to pay your rent

Day 3: I will call you to find out if there is any reason why your rent hasn’t been paid

Day 5: I will send you a formal letter reminding you of the importance of paying rent on time

Day 7: I will issue you a 14 day notice which will state how much you owe and the date the rent was due

Day 21: I will apply to the tenancy tribunal to terminate your tenancy if your rent is more than 21 days in arrears

In our experience clearly setting out your expectations at the beginning of the tenancy can significantly reduce any instance of rent arrears.

What to do after a missed rent payment

If you’re reading this article because you were searching google to find out what to do because your tenant hasn’t paid rent, don’t worry; we can step you through what to do. Here’s how to proceed:

  1. Evaluate the situation:

Take a moment to consider your history with your tenant. Is this the first time they have missed a payment, or have they been late paying a number of times? Have they communicated any difficulty they are experiencing with paying last weeks rent? Understanding their reason for not paying may help you choose the best strategy for a resolution.

  1. Send an informal notice:

If your tenant has always paid their rent on time start by sending them a reminder text or email to make them aware that they have missed a payment. This most often will prompt them to reply by either saying sorry they completely forgot or they will let you know the reason why they are late paying.

  1. Decide on your next step:

If your tenant doesn’t respond to your text or email within say 24 hours then call them to find out what’s happening.

If they do respond then depending on what they say will then determine what you do next. If they have had an expected bill or event in their life but say they will pay within the next few days it is best to accept this but then send them an email saying what you discussed on the phone and clearly state what date you expect the rent to be paid by.

If they say they can’t pay but would like to put in place a payment plan find out what is affordable for them and as long as it’s within reason then agree to it but again send them a formal letter outlining what is owing, how much extra they will pay each week and what date it will be repaid by.

You may be wondering why we suggest being quite helpful with your tenant. The answer is simple: a tenant has to be 21 days in arrears before you can apply to the tenancy tribunal. Applying to the tribunal can be quite time consuming and stressful if you’ve never had to do it before so by helping your tenant find a way to catch up on rent without going to court means it’s a win-win for both of you.

  1. Consider other options for your tenant to look at:

If your tenant isn’t able to catch up on their rent depending on their circumstances they may qualify for rent arrears assistance through Work & Income

Rent Arrears Grant – Work and Income

They don’t have to be a beneficiary to qualify for this help

Other options for them to consider could be asking a family member or applying to KiwiSaver to withdraw some of their funds (this should only be suggested as an absolute worse case)

  1. If all else fails:

If you’ve followed all of the above but still have no luck in the rent being paid you will be left with no choice other than to formally apply to the tenancy tribunal. This is not as daunting as it may seem as long as you have an accurate rent summary, the bond lodgment details and a record of the conversations you had with the tenants. You can apply here:

How to apply to the Tenancy Tribunal » Tenancy Services

You might find this article useful too: Covid-19 My tenant can not pay their rent, what now?

Do you have issues with tenants not paying rent? Do you find managing your investment property more time consuming than you thought it would be?

Give us a call on 096302655 or by filling out our contact form Contact Us – Renthub – lettings agent in Auckland

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