What happens when a tenant stops paying rent?

The Real Estate people principal Ros Burton looks at a serious issue

Like it or not, we all face bills in our lives – and they won’t magically disappear if we simply ignore them.

It’s the same with rent.

As property managers, we have a very important job looking after an owner’s investments – their hard-earned investments – but we also deal with where people live.

The balancing act is very important.

We need to make sure the tenants not only look after the property but also pay the rent to enable them to keep living there.

A strict office policy helps set our guidelines and keeps everything on track.

We currently have an arrears rate (where money is owed by a tenant) of less than 1 per cent. This has been the case for a number of years now; and highlights why we sit as a leading agency in the industry.

I am always targeting zero, but when you’re working with tenants and owners for the best outcome, payment plans are inevitable. You’ll never hit zero no matter what conditions you put in place.

Thanks to consistency and constant communication in our office, we continue to maintain this level and will text, call and breach every day if needed.

This is one of the key areas of property management, because things can (and do) get out of hand very quickly if you aren’t on it every day. It’s not just rental arrears either; water invoices and tenant damage repayments also need to be collected.

We all face hardships in life (financial, emotional), so, as an agency, we’re always wanting to be fair to tenants who are “doing it tough” – especially in this current rental market.

But that doesn’t mean they can just shirk their responsibilities either. It’s not how life works. Our tenants have entered an agreement with us (and their landlord) that they will meet their rental obligations – and we expect them to honour that partnership.

But, if there is a hiccup along the way, we work out a plan with them and always include the owner in that decision.

Then, if the tenant sticks to that plan, we congratulate them and keep working with them to move forward – so nobody (tenant or landlord) is disadvantaged.

And by starting this process early, it means we aren’t dealing with an amount that is insurmountable.

If it seems like we’re being pedantic about payments, it’s because we are. We can’t ignore when payments are missed.

The aim is that tenants always know where they stand and there is no grey area (and that protects the owner of the property).

We act swiftly to mitigate potential losses for the landlord and to ensure the tenant doesn’t get a black mark against their name –because that can severely tarnish their ability to rent in the future.

Keeping the owners informed also helps them rest easy, ensuring there are no nasty surprises along the way.

It’s what good property managers do.