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  • Michael McCulloch

What is the best way to deal with rental arrears?

Updated: Sep 6, 2021

Rental arrears can be a major issue especially for small investors.

With investment properties sometimes forming a large part of a families income and many of our older population relying on this income to get by day-to-day, it is important to take action to minimise your potential loss.

The Reason for Rental Arrears Like most referrals to our office the reasons vary however typically rental arrears is primarily due to the tenant losing his or her employment, an increase in the cost of living, a reduction in work hours or a change from full-time to part-time employment or some other unforeseen event.

Requesting Payment

The law varies from State to State however a tenant must usually be more than 7 days in arrears before any kind of demand for payment can be made. The correct documentation must also be issued which advises the tenant of the arrears outstanding and asking when payment can be expected.

Can I Help The Tenant?

Yes and this is often the ideal solution.

Agreeing to a tenant making increased repayments to clear the arrears can sometimes work out better for both parties in the long term as you do not need to find a new tenant and there is every possibility the arrears will be paid without the tenant vacating the property and owing you money. There are also a number of organisations that a tenant may seek assistance from if they need support. These include:

Tenants NSW

Tenants QLD

Tenants Union of Victoria

Tenants Advice Service (ACT) Tenancy WA

Office of Consumer & Business Services (SA)

The Tenants Union of Tasmania

Consumer Affairs NT

Issuing a Breach Notice

Any Breach Notice must be issued in accordance with the relevant State legislation. You should make enquiries with your relevant tenancy tribunal as this varies around Australia.Terminating the Tenancy

Termination of the tenancy should be the very last resort. If you have been unsuccessful in coming to an agreeable resolution a process must be followed which again varies from State to State. Locking tenants out of the property however without an Order from a Court or Tribunal is illegal.

Generally speaking the issue of a non-payment termination notice in writing does not officially end a tenancy. The tenancy is only officially ended once the tenants have vacated the property and the keys returned. If the tenant refuses you may have to look at commencing proceedings in the Court or through your relevant Tribunal.

Avoiding Future Issues

Clear communication and screening your tenants is the best way to avoid rental arrears and eviction. Ensure that any potential tenants are reference checked carefully, previous rental payment history is considered and enquiries made with employers to verify a tenants employment status and income. Where possible we also recommend that rental payments are made by direct debit on the tenants designated pay day to ensure prompt payment.

Need Further Help At LCollect we work actively with property managers, real estates and tenants to get their situation back on track. Speak with us today on (02) 8923-1600 to see how we can help you.

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