My tenant's rent is late, what do I do?
Renting out a property can be a rewarding venture, but it comes with its fair share of challenges. One common issue property investment owners may face is tenants falling behind on rent payments. In Hobart, Tasmania, understanding the local legislation and taking appropriate steps is crucial to address this situation effectively.
Rent must always be paid when it falls due. This is a condition of all lease agreements.
Rent arrears occur when a tenant has not paid rent by the first day of the recurring rent in advance period.
So, what should you do if your tenant is behind on their rent?
Know Your Lease Agreement:
Before diving into the complexities of managing rent arrears, it's essential to revisit your lease agreement. This document serves as the foundation for your tenant-owner relationship, outlining terms, conditions, and procedures for dealing with late payments. The lease is required to specify a payment period for rent, in other words, how often rent falls due.
Open Communication:
The first step when you notice rent in arrears is to communicate with your tenant. Often, late payments can result from oversight or temporary financial difficulties. A friendly reminder can go a long way in resolving the issue amicably. This is best done with a direct and open conversation.
Understand the Tenant's Situation:
In your conversation, take the time to understand the reasons behind the late payment. In some cases, tenants may be facing financial challenges. Showing empathy and working together to find a temporary solution can help maintain a positive relationship.
Offer a Payment Plan:
Understanding that financial difficulties can sometimes be temporary, consider offering a reasonable payment plan. This can help tenants catch up on rent without causing undue hardship.
Issue a Written Notice:
If the rent remains unpaid, then you should issue a written notice to the tenant (Notice to Vacate). This notice is required to specify the exact amount of arrears owed at the time it is issued. The notice to vacate should detail the overdue amount and specify the deadline for payment. In Tasmania, compliance with the Residential Tenancy Act 1997 (RTA) is crucial at this stage.
Under the RTA, a Notice to Vacate due to rent arrears must provide a minimum of fourteen (14) clear days' notice to address the issue. During this period, the tenant has two options:
- Settle the outstanding arrears by making the necessary payment.
- Choose to vacate the premises.
If the tenant successfully pays the arrears within the notice period, the Notice to Vacate is cleared, and you cannot use it as grounds for eviction.
On the other hand, if the tenant decides to vacate, any outstanding arrears may be deducted from the bond. It's essential to be aware that within a twelve-month timeframe, if a tenant receives three Notices to Vacate specifically related to rent arrears, the tenant loses the opportunity to remedy the breach. In simpler terms, this operates as a three-strike rule.
Upon issuance of the third and final Notice to Vacate, if the tenant fails to vacate the property, you, as the owner, may initiate legal proceedings by applying to the Magistrates Court for an Order for Vacant Possession, commonly referred to as eviction. This legal action can also be taken following any other Notice to Vacate for arrears if the outstanding amounts remain unpaid.
Document Everything:
It is crucial that you maintain detailed records of all communications, notices, and actions taken throughout the tenancy. Proper documentation is essential in case legal action becomes necessary.
Know the Legal Requirements:
Familiarise yourself with the landlord-tenant laws specific to Tasmania. Understanding the legal requirements for issuing notices and, if necessary, proceeding with eviction is crucial. Each step must align with the Residential Tenancy Act to avoid legal complications.
Seek Professional Advice:
You can consult with the Residential Tenancy Commissioner's office or a licensed property manager for assistance. They can provide you with the latest information on rights and responsibilities for both landlords and tenants, as well as any recent legislative changes.
Professionals in this field specialise in tenancy law. They can provide insights tailored to the local area and ensure you follow proper procedures.
Rent arrears can be a challenging aspect of being a property investment owner, but with knowledge of local legislation and a proactive, communicative approach, many issues can be resolved effectively. Understanding the specific regulations governing tenancy is key to successful property management. By staying informed, communicating openly, and following legal procedures, landlords can navigate rental arrears with confidence.
At MIX Property Group, we’ve made it our mission to guide property owners to a stress-free and successful property management experience. If you are looking for help navigating and unlocking the potential of your property investments, contact us today.
Resources
MIX Property Management: visit
Residential Tenancy Act 1997: visit
Consumer Building and Occupational Services: visit
Guide to the Residential Tenancy Commissioner: visit
Tenants Union of Tasmania Fact Sheet: visit