Tenants who are bad payers

[geoffw]

Hi,

I have a block of 8 units in Queanbeyan. They are 1BR, at $95pw- except for two at $85.

There's also a caretaker's "mini unit"- not a loty more than a shed- at $40pw. The caretaker does an immaculate job of taking care of the place.

The two at $85 I've had troubles with- two visits to the tribunal each, but now one is up to date, and the other getting there.

The latest report from the PM is that they are all below market value, and it's time for an increase.

She's suggesting that the caretaker's place and the units all get rises- EXCEPT for the people who have not been keeping up with rent.

Personally, I have trouble accepting that people who have not being keeping up with rent get rewarded by not getting a rent raise- and everyone else does get a raise. Including the retired widower who does such an excellent job at keeping up the grounds (and keeping loud tenants in check). Especially as the tardy tenants have lower rents than the rest.

I know that one of the tardy tenants is on a pension, that there was a problem, and that is supposed to have been resolved.

The other tardy tenant has a job, and was able to pay back $800 in arrears- but only after I delayed the serving of a warrant to give another chance.

Am I just being a bad slumlord if I let late payers keep at a lower rent?

I had one thought that PMs have not yet liked. My thought was to ask for a higher rent, but then to give a discount if the rent was paid on time every week- and then to give a discount if the rent was on time.

This might be a burden on PMs- except (perhaps) if the discount was to be applied as free rent (say for two or three weeks) IF the tenant (and any other tenant who kept payments up to date) was not late after one year of payments.

I have tenants who pay three months in advance! I feel that they should not be disadvantaged because of others who get eight weeks behind.

 

[handyandy]

Hi geoff

I would be asking what the rental market is like (vacancy factor etc). Its all well and good to say they are below market but if yours are occupied and others are empty then I know where I would want my price to be.

Personally we rarely increase rent on sitting tenants unless they are troublesome, late payers etc. The only exception is where the rental vacancies are low and the rental market is definately increasing.

The other time that we increase rents is on a change of tenants and every so often we will test the market and set higher rents to see where the pain threshold is. (this will result in longer vacancies).

You've done well in relation to the catch up, congrats.

If I am ever in quennbeyan (unlikely but you never know) I wouldn't mind having a look at your block.

Cheers

 

[Glenn]

Hi Geoff,

Your expenses go up with inflation

Your late paying tenant's pension goes up with inflation.

It is not your fault that he/she spent 40 years in the workforce and have acculated so little that they are having trouble paying a rent of $85 per week....you do not go out to work to earn money to support his/her standard of living...raise the rent!

Glenn

 

[the_duck]

Hi Geoff

I would have to agree with handyandy about putting up rents on sitting tenants that cause no problems. I look at rents each 12 months and if the market has gone up substantially then I would look at a rent rise, but still keeping it a bit below for good tenants.

The property manager has nothing to lose by getting you to agree to a rent increase. If the tenant doesn't like it and leaves, they get a letting fee and advertising etc, and if they stay, more management fee. But you get to lose money and a good tenant. Make sure you look after your caretaker as he is probably worth a lot more than $10 week rent rise.

I would probably look at raising the 'problem' tenants as if your units are the same then I can see no reason why the rents should not be similiar. If they leave then maybe thats good. I would also like to know what the PM was doing to allow the tenants to get $800 behind on a weekly rent of $85? Maybe they need to look at keeping the tenants paying rent and not look at putting it up!

The last thing, and as I am also a local, I would consider $95 to be close to market value for a 1 bed in QBN. About $100 looks to be the going rate with out garages, a bit more for a garage.

Regards,

 

[geoffw]

Thanks for the contributions.

One point- the pensioner is an invalid pensioner (perhaps even ex armed forces).

The rental vacancies in the ACT region were around 3%- which is a good balance- before 530 homes went off the occupancy list. The demand for lower cost units in Queanbeyan is strong.

DHA have increased the rent on my Jerrabomberra by $30 pw (from $265 to $295 pw)- the market rate is a little higher, but that's been covered in another thread, and is another market.

The PM believes $110 pw for a newly let out unit is fair. $100 to $105 for existing tenants is apparently fair.

The units come with microwave, fridge and washing machine. That's worth a little more than comparables.

I've talked to the PM. The caretaker will not get any rise. All other tenants will. The point about "rewarding" bad tenants was acknowledged.

Tenants who are under tribunal orders will not be able to have rents increased until the order expires. Sixty days notice is required otherwise.

Hardship problems will be discussed on a case-by-case.

 

[mitch]

Gday Geoff, now if l was your employer and l was eight or ten weeks behind in your pay would that be OK? As a landlord why should anyone tolerate late rent?WHY does any PM tolerate any one getting so behind in their rent? If the hot water went off would any late rent tennant wait a month or so to get it fixed? Look after GOOD tennants with prompt service to their needs and keep the rent at market value. The others, move them on.In VIC we can evict after the rent is two weeks late.This may sound hard but ive had the slow paying tennants,would get the rent up to date then provide me with a list to attend too.It happend twice then four weeks late on the rent.Moved them on then the PM for letting the rent get behind.Do the right thing for the right tennant and move the bad ones on. Thats not being hard its being fair! MITCH

 

[geoffw]

Mitch,

Unfortunately, I can't evict after two weeks- there's due process which must be followed.

First a late paying tenant gets taken to "the tribunal" (I don't know its exact name). This was done at about 3 weeks late. The tribunal makes an order to pay so much extra per week until arrears are caught up. If the tenant is not keeping to this schedule, there's a second tribunal hearing- the tenant is ordered to pay back all arrears, and is given a date to do this by. If it's still not paid, a warrant is applied for, and when that's issued, the tenant can be evicted. That whole process can be six weeks from the time first applied for.

The eight week tenant got to the stage where the warrant had been issued. At that stage, she had almost caught up- she was only $100 behind then. I was within my rights to have her evicted for that amount, but she had asked for a few more days. I delayed the serving of the warrant from Thursday to Monday (against PM's advice), and the final amount did get paid.

 

[beech]

Hi Geoff i read on a US site a post re discounts on a multi-appartment building and he suggested it worked a treat.
$20 extra was paid by those who were late with their rent.

He stated that there was one guy who continuously paid the extra $20 for being late and he thinks the guy even forgot there was a discount because he paid rent 3 days late every week,$20 more than everyone in the appartment block.

Darren

 

[Jas]

Originally posted by mitch
In VIC we can evict after the rent is two weeks late.

Geoff, I think you misread what Mitch was saying. He meant that you can start evication when the rent is two weeks late, not throw them out at the two week mark.

Jas

 

[geoffw]

Originally posted by beech
Hi Geoff i read on a US site a post re discounts on a multi-appartment building and he suggested it worked a treat.
$20 extra was paid by those who were late with their rent.

He stated that there was one guy who continuously paid the extra $20 for being late and he thinks the guy even forgot there was a discount because he paid rent 3 days late every week,$20 more than everyone in the appartment block.

Darren

Darren,

I've asked about this several times- the PM's don't want to go there.

Even a rebate after 12 months of paying on time is too much for them.

 

[geoffw]

Originally posted by Jas
Geoff, I think you misread what Mitch was saying. He meant that you can start evication when the rent is two weeks late, not throw them out at the two week mark.

Jas

Sorry, Mitch didn't quite explain the process.

Is the process in Vic similar to NSW then?

 

[Jas]

I believe so, but will leave it to Asy to confirm

Jas

 

[JustAMum]

quote:
--------------------------------------------------------------------------------
Originally posted by Jas
Geoff, I think you misread what Mitch was saying. He meant that you can start evication when the rent is two weeks late, not throw them out at the two week mark.

Jas
--------------------------------------------------------------------------------

For Victoria Jas is right. I don't know about the ACT.
In Vic:
* 14 days late - send official (prescribed by 'tenancy authority') Notice to tenant, and request for a hearing to Tenancy Tribunal with $25 cheque (last time I did it - it might be a tad more this year)
* Wait for hearing (approx 1 - 4 weeks ... usually)
* Attend hearing, present case WITH DOCUMENTATION of negotations that have occured with tenant (inc. phone calls and letters, visits, etc)
* If magistrate decides, an eviction notice is drawn up.
* Then you can lodge this with the police authority.

I don't know the process after the hearing, as I have not had to proceed past this point.

ps - often just the 14 days late OFFICIAL notice and letter is enough to smooth the negotiating wheels, and a deal is able to be struck with tenant - including end of tenancy - if that is what the owner wants (and may be a preferable situation - especially if this is not a one off situation). Negotiations are (in my experience) usually MUCH preferable and leads to a more amicable and beneficial end to an awkward situation. If a satisfactory deal is NOT set IN WRITING (by Both parties) within 1-2 DAYS, or has previously NOT been kept to - go to court AS FAST AS POSSIBLE, and budget for some down time on income for putting someone else in.

JAM - Melbourne