CentrePay direct debit rental payments

From: Crystal .


Hello everyone,
One of my tenants (single mum) finds it extremely difficult to pay her rent on time each week. She has asked my property manager to sign up with CentrePay so that her rent can be directly debited from her Centrelink payments. This service costs $0.92 per transaction.
My property manager didn't want to sign up with Centrepay because it costs for every transaction and promised a new direct debit system that would be free.
I've now been informed that the system is BPay which means the tenant still has to go to the trouble of paying their rent.
Obviously, the best scenario is to have weekly rent deducted automatically so that the tenant doesn't need to "remember" to pay the rent and doesn't get a chance to spend the rent.
Does anyone utilise a direct debit system for their tenants?
I know the banks charge for direct debits, are there any other options?
Otherwise, I will definitely need to encourage my property manager to sign the contract with CentrePay.
Your help is appreciated,
Regards,
Crystal
 
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Reply: 1
From: Greg Mowat


Crystal,

I use direct debits in my transactions. Admittedly this is for weekly wrap payments rather than rent but money is money.

The cost depends on the bank &/or account. NAB for example wanted to charge $5 per direct debit so the client just swapped banks. Suncorp do it for free up to 6 transactions per month.

Although it's a small inconvenience to open the new account it means they've now got peace of mind.

Cheers
Greg
 
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Reply: 1.1
From: Alan Hill


Crystal,

I think it's great that in these times of high Vacancy Rates you are looking at as many options as possible to:

a) make sure you get paid, and
b) that you help the tenant as much as possible with a)

In my situation I have always been quite firm about payments being made on the 1st of the month, but in this current climate I am also a realist!

I have one tenant that lost a reasonably large contract and has had a few difficulties. I don't allow them to actually fall behind over a month, but I am giving them some flexibility in letting them spread their payments over the month.

Managing the tenant and making reasonable accommodations during this period makes much more sense to me than having a vacant place.

It's common sense and you sound like you have plenty of it.


:)
 
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Reply: 1.1.1
From: Cornflower !


BPay payments can be set up automatically. I have set up automatic monthly BPay payments through my online banking at NAB, so it's possible, and doesn't cost the landlord anything extra. Your tenant may need to talk to their bank about getting these payments established if they don't have online banking access.

I have all of my regular payments set up this way.

Cheers

Cornflower.

PS If your property manager can't solve this kind of issue themselves, you may need to get a better property manager. Just my 2c
 
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Reply: 1.1.1.1
From: Joanna K


Hi all,

BPay is the easiest payment system and anyone with a telephone can use it. And as mentioned previously, BPay scheduled payments can be arranged so your tenant will have no excuse not to pay on time.

Property managers generally will set up one system only, and the tenant will need to make that system work for them.


Kind regards

JOANNA
 
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Reply: 2
From: Glenn Mott


Crystal,

Direct debits from Centre Pay are the safest way for you to collect rent from people on benefits. If need be, I would be happy to pay the 92c per fortnight.

Glenn
 
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Reply: 2.1
From: Glenn Mott


Crystal,

Any time you can get to the head of the queue in terms of things your tenants spend money on, GO FOR IT...Why wouldn't your property manager want to set this up for you? What else are they doing for you to work for their management fee that month?

It does not matter to your property manager that your cash flow will be impaired if rent payments are not made as they only have 8.5%(WA) exposure..you have 91.5%!

You tell me which end of the following queue you want to be at:

Cigarettes (addictions always come first)
Alcohol (see above)
Drugs (see above)
Food
Do-dads
Clothing
Mobile phone bills (yes, for unemployed people!!)
Credit card bills
Car loan repayments
Furniture repayments

The last thing I want to do is stereotype anyone, and as stated, your tenant is a single mum who's life is probably pretty tough and scary at times. But think about this for a second, what more security can they get for their accommodation than knowing the biggest cause of landlord-tenant relationship breakdown (non-payment of rent) is not a factor for them as payments are deducted from any payments that the government gives them.

When it comes to setting up a lease, I like to be pro active about the payment of rent. I do not accept cash or having tenants put money in my account by having to go into a branch. I personally go to the major banks, request blank direct debit forms and ask the tellers to show me where the relevant information goes. I fill the form out with as much information about my tenant as I can and use a highlighter to show the part they have to sign...make it simple for them, dont ask them to go to their bank to set it up, they will not do it! Remember..you are securing your cash flow, dont stuff around with it or let someone else stuff around with it!

OOh, now I feel all fired up...

GLenn
 
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Reply: 2.1.1
From: Stirling Reid


Centrepay is definitely the way to go for self managed and agents should get smart too, you don't have the any late payments and part payments when the tenant is $20 short. It makes the accounting so much easier. It is either paid or not paid.

Also the tenant has to make a conscious decision to stop payments, you get the fortnightly statement from centrepay or check your account after the due date and you know when they are in financial hot water.

Stirling
 
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Reply: 2.1.1.1
From: Thorpey !


Only way to go, oooonnnly way to go!

How many times have you stopped a direct debit from your account just because you want to spend that money on something else?

I would feel as though I was defaulting......
Hey, that's just what it is really!

Thorpey.
 
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Reply: 2.1.1.1.1
From: Danny Dwyer


As I am doing my own property management (3 IP's), I've also recently considered this method. After reading the info on the Centrelink website, one has to be "a business or an organisation" to get this Centrepay to work for me. Hummmm.

Refer to this link:
http://www.centrelink.gov.au/internet/internet.nsf/businesses/employ_cpay.htm#how_can

"How can my business or organisation be part of Centrepay?
Service providers must sign a contract with Centrepay to become a registered organisation before deductions from customers can commence."

I have not made any enquires with Centrepay as yet, as I'm not sure if a "landlord" can be considered as a service provider?", I think this is the the way to go if you have tenants who get Centrelink payments of some sort. The "full" rent will be paid on time, everytime (as long as they are entitled to the Centrelink payment, of course!).

Even if it will cost $0.92 each F/N (Centrelink payments are paid each f/n, not weekly), I am sure that this expense can be claimed a tax deduction anyway.

Here's the link to download the form (SA325)that a Centrelink customer needs to complete to arrange the deductions from their payments.

Danny D.

(NB: I intend to make enquires with Centrepay in next couple of days, and if I can be registered as a 'service provider' then I'll get back to ya with the details, unless someone else beats me to it.)
 
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Reply: 2.1.1.1.1.1.1
From: Crystal .


Hi everyone,
Thanks for your replies!
I agree that it would be fabulous to be the first one paid, before the addictions and doodads.
Remember, this system only works if the Centrelink customer agrees...
you cannot force them to use CentrePay.
But, my tenant actually asked for this service!!!
I think the CentrePay contract (about 30 pages) scared my property manager as it's a bit thick (the contract not my property manager?!?!)
I asked to read over the contract and it's pretty straightforward, but only relevant for businesses as far as I could tell.
Thanks for the information on BPay...
I wasn't aware that you could arrange for automatic payments, which means the tenant doesn't even have to pick up the phone!
Good Luck everyone, let's get all our tenants on direct debit!
I'm thinking of making direct debit a condition on all future leases!
Regards,
Crystal
 
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Reply: 2.1.1.1.1.1.1.1
From: Danny Dwyer


Good news! As promised, here are the details for those who self manage their own rentals and wish to arrange for their tenants to pay their rent directly from their current Centrelink payments. (As Crystal said, the system only works if the Centrelink customer agrees...you cannot force them to use CentrePay)

Investment property owners can be registered with Centrelink's Centerpay. You'll need to sign an agreement (25 pages!) with Centrelink and show some sort of proof that you own the rental that the Centrelink customer is renting from you (i.e. a lease or a rate notice etc). The cost will be $0.92 + GST = $1.01 per transaction (so, over 12 mths, 26 times @ $1.01 = $26.26 p.a. - that's not much for peace of mind for all concerned).

Once the system is in place, your rent (less the transaction fee) will be deposited directly into your nominated bank account and you'll get a statement each time this is done. How easy is that? To register, just ring this number 1800 044 063.

Danny D.
 
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Reply: 2.1.1.1.1.1.1.1.1
From: Terry W


I rent a place and have signed a direct debit form so that the rent comes out of my account every 2 weeks straight into the RE agents account.

TW
 
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