What to do when a good tenant falls on hard times?

By
14/06/2014


John Sierakowski advises on what to do when a good tenant falls on hard times

Q: For the past two years we have had wonderful tenants in our property, but three months ago the main breadwinner of the family lost his job and they are now two months overdue in rent payments. We don’t want them to move out, as they have always been reliable and never caused any damage, but as we are just starting out as investors, and this is only our second property, we cannot afford to keep making up the difference until they get back on their feet.

We are also worried that, should we evict them, they may not be able to move out or we might not find other tenants right away. What is the best thing to do to ensure they pay the rent on time without having to take legal action or evict them?

A: Assuming that this is a residential tenancy situation and that there is a fixed-term tenancy agreement in place, you should immediately contact the tenants and organise a time to meet with them to personally speak about their problems. I would suggest that process rather than using the managing agents, if you have them. At that meeting, you should negotiate with the tenants regarding the payment of the arrears of rental. A written agreement to pay should be signed.

Please note that the tenants may be entitled to rental assistance through Centrelink, and if they are not aware of this you should direct them to check. With regard to future payments of rental, you should secure from them an agreement to set up a direct debit from a bank account so that you do not have that concern. But you may have to renegotiate the rental with the tenants at a lower rate if you wish to retain them. If an agreement can’t be reached, you may have to take action to terminate their tenancy.

John Sierakowski, lawyer and conveyancer John Sierakowski is founder and director of John Sierakowski Conveyancing.


 

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Comments
  • Jaffasoft says on 19/07/2014 05:20:02 PM

    If the tenant if on Centrelink while unemployed if you signup to Centrepay then you can set up direct debit this way also. I find it works! You may also be able to help the tenant 1). Find a Job. 2). Help them borrow money from somewhere!

  • howard says on 19/05/2015 09:33:43 PM

    Please note that the tenants may be entitled to rental assistance. If they are not aware of this you should direct them to check.

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