A simple definition of rent arrears is: money that is owed, and should have been paid earlier.
Landlords and tenants are both partly accountable when it comes to dealing with rent arrears. Both parties are responsible for knowing what to do when rent is overdue, and where to go to for help.
What does rent arrears mean for landlords?
For landlords, rent arrears means that your tenant has not paid the agreed amount of rent, on the agreed date.
Landlords should always have measures in place to help with rent arrears. As with any other investment, property investment is not without its risks. Landlords should be doing what they can to minimise the risks for themselves such as;
- Having landlord insurance
- A savings buffer to pay rent for several weeks in the case of having a vacant property, time spent renovating etc
- Doing background checks on tenants before signing a tenancy agreement
Best case scenario: Noticing straight away when rent is in arrears, and immediately communicating this with the tenant. Rent is paid up-to-date, no further issues.
Worst case scenario: Continued rent arrears can mean that a landlord is struggling to meet mortgage payments on their property. If they can’t reach a resolution with their tenant, they can end up taking a case to the Tenancy Tribunal. This is a stressful situation for both landlords and tenants, but it is sometimes necessary.
What does rent arrears mean for tenants?
If you have missed a rent payment or have not been able to pay the full amount of your rent, you will be in rent arrears.
When you signed your tenancy agreement, you agreed with your landlord on how you would be paying your rent, the amount you would pay, and when you would pay it. If you are in rent arrears, it means that you are breaching this part of your tenancy agreement.
Being in rent arrears can put your tenancy at risk, because your landlord can have grounds to evict you from the property.
If you are struggling to pay rent, the first thing that you should do is to get in touch with your landlord or property manager. Explaining your situation honestly means that they can work with you to come to a resolution.
Best case scenario: Rent is missed. After receiving a reminder, the tenant contacts the landlord explaining their situation and why rent is missed. They work together to get to a resolution, and get rent paid up to date.
Worst case scenario: Rent is missed. The tenant stops communicating with their landlord or property manager and doesn’t give an explanation. The tenant is served a 14 day notice and is possibly facing eviction over unpaid rent, or a hearing at the Tenancy Tribunal.
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