Regrettably life has a habit of throwing up curveballs and no-one can accurately foresee when this will happen, or the impact that these things can have on our lives.
Tenants are no different. Even the best Tenant with a stable job, good income and good habits can fall victim to bad luck. Losing a job, contracting a debilitating illness or falling victim to domestic violence can all be reasons for someone not being able to keep up with their obligation to pay rent on time.
Each case needs to be looked at individually. There is no blanket solution to dealing with these problems. Before you can identify what action to take, consider the following:
- Is this a temporary situation that will resolve itself readily in the very short term?
- Will the Tenant be able to catch up on unpaid rent without causing further undue hardship?
- Is it better to keep the Tenant and resolve the issue or apply to have the Tenancy terminated?
No-one wants to kick anyone when they are down, and a decision to evict a Tenant who is going through a tough time (especially if it is no fault of their own) can be a very difficult decision to make.
What action you take is dependent on the set of circumstances. If your Tenant has lost their job and there is a strong likelihood that they will be in another one soon, then the decision can be an easy one. It is a short-term hiccup that can be solved with implementing a payment plan for un-paid rent to be caught up in a reasonable timeframe. If they have been a good Tenant – you can be reasonably assured that things will get back on track relatively soon.
Issues that are more personal, like chronic illness or a deteriorating family situation are more difficult. As a Landlord you also need to pay your bills/mortgage. A lack or reduction in rent payments can have a flow-on effect of putting you in financial hardship. Because of this, the quicker you act, the better.
In Queensland, you can mutually agree or apply to a Tribunal to terminate the lease agreement early based on financial hardship. This application does not have to come from the Tenant and can be made by the Owner or their representative.
If you agree to implement a Payment Plan for rent arrears, it is important that this plan is structured and very clear on the following details:
- Tenant details for all Tenants named on the Lease
- The amount that is owing at the date the Payment Plan is written
- The amount (over and above the normal rent) that will be paid to the Landlord and the date of the first payment
- The number and dates of each payment that need to be made in order to recover the full amount owing and the date of the final payment
- The consequences if the Payment Plan is not upheld – example: If the Tenant misses any of the prescribed payments as listed above, then the Landlord will proceed with a request to Terminate the Lease.
- The Payment Plan should be signed and dated by all parties and a copy provided to each person listed in the document.
Having good communication with your Tenant throughout the Tenancy is a good way of monitoring when things go off the rails. If your Property Manager is in regular contact with your Tenant, keeps on top of rent arrears and undertakes their routine inspections regularly – you are less likely to receive an unexpected surprise.
At Clark Real Estate, we pride ourselves on our relationships with our clients and our Tenants. We have many touch points with your Tenants:
- We begin our relationship by meeting them in person at the Property for their Inspections, not handing them a set of keys and leaving them to wander through on their own without any supervision. We guide them through and point out the benefits of the Property and answer their questions on the spot.
- Once the lease is secured, we invite them into the office for a 45 minute sign up meeting to run them through the particular points they need to know about your Property, go through the paperwork in detail, explain rights and obligations of both parties to the contract and how to communicate issues like maintenance and what happens if they fall behind in rent etc. This is a valuable exercise not only in providing information but getting to know your tenant better and building that important relationship bridge with your Clark Real Estate Property Management Team.
- Within 3 days of the move in we review the returned Tenant’s Entry Condition Report and we are again on the phone to discuss any discrepancies or maintenance items they may have discovered. This may be the first time we get to display our conflict management skills and its important to ensure we impress upon your Tenant that we will manage the relationship with professionalism and move forward in a positive way.
- We receipt rent every day, run an arrears report and then follow up any tenant who is even one day late and keep following up until we have them on track. As we personally phone our Tenants who are in arrears we are on the case early and personally to find out why and act to ensure a plan of action is in place to resume normal rent payments as soon as possible. Our average rent arrears is under 2% of the portfolio with very few breaches ever required.
- At Clark Real Estate we are proud to be one of Maintenance Manager’s best performing agents in maintaining workflow. We respond to the majority of maintenance requests within 24 hours ensuring your Tenant’s issue is responded to promptly. And we keep following up until the issue is resolved, usually within 10 days.
- Our Lease Renewal Process commences 2 months out from the lease end date with a call to the Tenant to discuss their intentions. This is a great opportunity to learn more about how they are travelling family and workwise and whether they happy to stay.
With all these opportunities to get to know your tenant and how they are doing, we are sure to be made aware early if your Tenants are ever falling on hard times that might need managing to ensure your investment return is secure and any risk minimised.
If you know an investor who has not had such a great experience with their Property Managers, pass on our number 3256 1600. We would be happy to explain how a Full Personal Property Management service from Clark Real Estate might suit them better.
