What should the house owner do if the tenant fails to pay rent?

When the house owner rents a house, it is inevitable that tenants sometimes are in arrears with their rent. It is necessary for the house owner to know what to do when rent payment is overdue and where to ask for help.

Tenants should bear the responsibility of paying rent

The lessee is legally liable to pay the rent. Lease agreements generally specify the payment mode and time of rent, and tenants who fail to pay rent on time will violate the lease agreement and residential lease law.

If there are multiple tenants in a house, and one tenant fails to pay the rent or the payment is delayed, all other tenants will be responsible for the overdue rent. If the offending tenant does not pay the rent, other tenants will have to help pay off the debt.

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What should house owners do if the tenant doesn't pay the rent?

Part 01. Understand the situation and collect rent through legal means.

If the tenant has not paid rent, the house owner should first confirm with the tenant to see if he knows.

 

 

If tenants encounter difficulties and cannot pay their rent immediately, the house owner can let them increase a part of the regular rent until they pay off their debts. After reaching an agreement, the agreement between the two parties shall be recorded in written form. If the two parties cannot reach an agreement, a notice can be issued, (such as the tenant owes rent for less than 21 days), or apply to the Tenancy Tribunal for termination of the lease agreement (if the lessee owes rent for 21 days or more, or fails to pay the overdue rent).

Part 02. Termination of the lease due to rent repeatedly not being paid.

Since February 11, 2021, a new part of the 1986 Residential Tenancy Act (RTA) has been providing house owners with an additional option to deal with rent arrears during fixed-term leases. This new Act (section 55 (1) (aA)) was introduced through the Residential Tenancy Amendment Act 2020, which complements the existing provisions of sections 55 and 56 of the Residential Tenancy Act and enables house owners to seek termination of leases agreement under certain circumstances (this provision only applies to open contracts).

 

The house owner can now apply to the Tenancy Tribunal for termination of the lease agreement if the following circumstances occur:

1. Within 90 days: the tenant has been in arrears with the rent for at least 5 working days three times.

2. In each of these three times, the house owner has sent a written notice to the tenant informing them that the rent has not been paid. The written notice should include the amount of overdue rent and date of overdue/unpaid rent. The lessee has the right to apply to the Tenancy Tribunal for a notice of challenge and how many overdue rent notices there have been.

 

 

The house owner may lodge an application for termination of the tenancy to the Tenancy Tribunal within 28 days after the third notice to the tenant. The house owner must prove that the rent has been in arrears for three times within 90 days, which has lasted for at least 5 working days, and three notices meeting the above requirements have been issued.

What should the tenant do if he can't pay the rent?

As a tenant, if you miss the payment, or if you have temporary difficulties paying rent you should contact the house owner immediately to let them know what happened. Don't deliberately avoid or ignore the house owner's phone calls or messages. Be honest with them, and maybe they will work with you to solve the problem. You need to know that the landlord may ask you to add a sum of money to the normal rent until you pay off your debts.

In addition to contacting the house owner in time, you should pay the money you can afford immediately. After all, it is better to pay part of the rent than none. If you feel that you will still encounter payment difficulties, you may need to think about other options. For example, check whether your lease agreement allows you to have paid borders/roommates, contact your company, friends, etc. to see if they can provide support and help. Otherwise, think about whether you can keep living in the house, or whether you need to find a cheaper option.

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