Tauranga Property Investors' Association

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Recent updates

12-11-2008

Manage rent arrears through good tenant relationships

Building good tenant relationships can help you manage rent arrears
 
Tenancy Tribunal applications have increased by 16% over recent months with most of these cases relating to rent arrears.
 
Jeff Montgomery, Client Services Manager at the Department of Building and Housing, says even landlords who have used robust selection methods can have problems with tenants not paying the rent.
 
If you have established a clear tenancy agreement, done reference and credit checks, made Tenancy Tribunal online checks, interviewed the tenant using the pre-tenancy application form, and generally developed a good business rapport with the tenant, then you have done as much as you could to increase the chance of a trouble-free tenancy. Remember that you’re required by law to keep up to date rent summary records.
 
‘It’s important to be composed and professional when talking to a tenant about rent arrears,’ Jeff says. ‘And it is critical that you do contact the tenant as soon as the rent is in arrears. Don’t put it off.’
 
Quite often tenants will have a valid reason for not being able to pay their rent. Some landlords even report that tenants have the money already on the premises when the landlord calls to discuss the matter or comes to deliver a 10 working days’ notice.
 
With the holiday season not far away, now is a good time to do property inspections. While you’re at the property looking at maintenance issues, you can use this time to build rapport with the tenant. This good rapport means that if they fall into arrears, it can be easier to agree a practical repayment arrangement.
 
If you negotiate an arrangement like this, it is a good idea to file a tribunal application and get that arrangement sealed before a mediator.
 
If you are experiencing a recurring rent arrears problem with a tenant, then you will need to weigh up whether it may be better to seek a termination of the tenancy. Rent arrears are the most common type of tenancy breach and landlords should serve a 10 working days’ notice on the tenant immediately. Most experienced landlords like to do this in person.
 
If the situation is recurring or unlikely to be remedied, you can also file an application to the Tribunal using Section 56 of the Residential Tenancies Act before the ten working days in the notice expire. That way, once the ten working days do expire, your hearing will be set down sooner so you can get a Tribunal order before further rent arrears occur.
 
Ten day notice templates and Applications to the Tenancy Tribunal can be made online at www.dbh.govt.nz.
 
Jeff Montgomery
Manager Client Services Group, Acting Manager Weathertight Services Group
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