Tackling the issue of rental arrears.


One of the most important elements of owning a rental property is having an investment that reaps a return, but what happens if your renter falls behind on their payments?

How do you avoid the issue of rental arrears, and what can you do to ensure this risk is mitigated from the outset?

Good property management

Avoiding rental arrears starts with good property management. It’s about setting the right foundations from the outset to select the right renter, ensuring a legally binding rental agreement is in place, and making all parties aware of their rights and responsibilities under that law.

Then, if something goes wrong, such as the renter falling behind on their payments, it’s about having the right systems and procedures in place to ensure the problem is identified and tackled early.

The right tenant

A key part of your property manager’s role is to select a renter who has the financial ability to pay the required rent each week.

This selection process involves checking their employment status or financial position along with conducting reference checks with their previous property manager to gauge their track record of making rental payments.

These standard checks ensure the renter who resides at your property has the financial means and the general reliability to pay the rent on time each week as outlined in the rental agreement.

Property manager’s systems and procedures

The right property manager will also have systems and procedures in place that quickly identify if a rental payment is missed.

And this is something you should ask any property management agency you are considering using long before you engage them. The question ‘how do you manage rental arrears?’ should elicit a clear response that they:

  • Have a system for immediately identifying late payments.
  • Have a procedure for reminding the renter quickly, such as an automated text message which indicates a payment has been missed, what the renter should do to fix the situation, and a specific time frame when this needs to occur.
  • Have a procedure for issuing a breach notice if the rental arrears are not remedied within the required legal period.
  • Have a procedure for notifying the property owner of what’s going on and how the property manager is proactively handling the situation.

Together, these systems and procedures ensure a missed rental payment does not slip through the cracks and is instead dealt with proactively and effectively, long before the renter falls significantly behind on their payments.

It’s covered under the law

Throughout a rental agreement, the renter is required to ensure their payments are made in advance of the due date.

This starts from the outset of the rental agreement with the requirement they pay up to two weeks rent in advance. If the payment arrives after the due date, it’s considered rental arrears.

For example, if the payment is one day after the rent is due, the rent is one day in arrears, if it’s made two days after the due date, the rent is two days in arrears etc.

It is at this point that a good property manager will politely notify the renter they are behind and ask them to remedy the situation.

Once a renter falls behind by a set number of days, they are considered in breach of the agreement.

When life happens

Sometimes life happens and a renter may fall behind on their rental payments due to circumstances outside their control.

And it’s here that a good property manager is worth their weight in gold.

A good property manager will liaise with the renters early to understand exactly what’s going on and formulate a plan to remedy the situation.

They will also keep the property owner fully abreast of what’s going on, including providing options when it comes to the course of action that should be taken next.

How we can help

Our experienced property managers pride themselves on establishing great relationships with both rental occupiers and owners.

We manage every property as if it were our own and you can learn more about our property management services here.

Alternatively, if you are looking to rent a property, you can view the properties we currently have available here.