Dealing with Tenant Hardship
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 most States you can 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.
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.
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.
