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What to do if your tenant isn’t paying their rent?

November 12, 2015
What to do if your tenant isn’t paying their rent?

One of the risks of owning an investment property is your tenant not paying their rent. As agents, we do what we can to minimise the risk of this occurring by checking prospective tenant’s employment, previous rental history and ‘bad tenant’ databases. But peoples financial situations can change and even after doing all the relevant checks, you may find yourself with a tenant who is late or unable to pay their rent.

If you don’t know how to handle this situation and you don’t follow the correct steps as per the legislation in your state, it can be a very costly and drawn out problem.

As a landlord, there is a reasonable expectation that your tenant will pay their rent on time and in full, as per the lease agreement. If your tenant doesn’t hold up their end of the agreement, there are steps you must take in order to get them to pay or terminate their tenancy and seek compensation from their Bond.

The first step is to issue them with a Breach Notice. Depending on which state your investment property is in, the tenant has to be a certain number of days behind in their rent before you can issue them with this Notice. In Victoria, the tenant must be 14 days in arrears.

As a general rule, it’s always in your best interest to issue the Breach Notice as soon as you can in accordance with the Residential Tenancies Act in your state. You can always cancel the order should the tenant pay but in case they don’t you want to make sure you are protected.

Make sure you keep notes on when you contacted the tenant – keeping a paper trail will be important should you have to take the matter further and terminate the tenancy through the tribunal.

You must go through the tribunal if you want to kick your tenant out – you can’t change locks or physically remove anyone or anything from the property. Doing this is a breach of the tenant’s rights and can result in large fines.

Issuing the tenants with the correct paperwork is also important should you have to take the matter to the tribunal. You should be able to find all the relevant template Notices for your state by searching for them on Google. A Notice to Vacate form will generally ask for the following information:

  • Reason for the Notice to Vacate (In this case it would be non-payment of rent)
  • Property Address
  • Tenant who is being served with the Notice
  • When the tenant must vacate the property (as per the legislation – 14 days)

Send this Notice to the Tenant via Registered Post and keep the receipt should you have to provide it to the tribunal member in the future.

Once the Notice has been served, the tenant will either pay their rent (best case scenario), move out of the property by the date on the Notice (second best option) or not pay their rent and stay in the property (worst case scenario).

If the tenant refuses to pay or leave the property, you will need to make application to the tribunal to have them evicted. If it gets to this point, you will need to provide the tribunal member with evidence of the steps you took (as per the relevant legislation) to give the tenant appropriate Notice. Make sure you keep detailed notes of conversations and try keep all communication via email so it’s easy to present to the member should you have to.