Do you pay your rent on time? Do you regularly pay a few days… maybe a week late? Are you constantly in arrears? Have you received one… maybe two… maybe more… termination notices for non payment of rent.
Many people don’t understand the importance of ensuring their rent is paid on time, and more so, don’t understand what short term and long term impacts rental arrears can have. As such, we thought we’d give you a bit of a run down as to why paying your rent on time is so important and what negative impacts rental arrears can have on you both short term and long term.
Difficulty in securing a new rental property
One of the many negative impacts rent arrears can have is the long term effect of securing another rental property. As you may already be aware, when applying for a rental property the application form includes a section for rental history. This section isn’t just there to bulk up the application form… this section is there to help Landlord’s and Real Estate Agent’s determine whether you’ll be a reliable tenant. When processing your application for tenancy, the Real Estate Agent (or Landlord if privately managed) will request a reference from your previous Real Estate Agent’s / Landlord’s, including the request for a rental ledger. Your rental ledger will show every rent payment made. This means if you have ever been late in paying your rent and / or you are regularly in arrears, this will show on your rental ledger.
Now some of you are probably thinking, “well I just won’t put down the Real Estate Agency or Landlord I rented through and I’ll be fine”… right? WRONG! There are many ways we can determine where you have previously rented and who you have previously rented through, even if you don’t include it on your application form. One of these is TICA. What is TICA?
TICA is a tenancy default database that Real Estate Agent’s check to determine if you have any monies outstanding to another Real Estate Agency. If at the end of your tenancy you have monies outstanding for that tenancy, you may be lodged on this database.
Not only does this database show us if you owe money for a previous tenancy… it also shows us which Real Estate Agencies have previously searched for you on the database when applying for properties. Yes that’s right… that means even if you aren’t defaulted on TICA for owing monies to another Real Estate Agency, we can see EVERY Real Estate Agency that has searched you on TICA when you have applied for properties. So you thought you might just leave off an application form the Real Estate Agency that you didn’t pay rent on time to? Guess what… TICA means that Real Estate Agent’s can put two and two together to work out who you may have rented through before… and that privacy consent form you signed when applying for your next rental property… that gives the Real Estate Agent permission to do their research and contact those Agencies.
Difficulty in being approved for a loan
Ever applied for a loan or finance of some sort and you’ve had to include the details of the Real Estate Agency you are currently renting through on your loan application? Ever wondered why that is? Did you know that us Real Estate Agent’s receive requests quite frequently from loan and finance companies not only for confirmation of your tenancy, but also for confirmation of whether your rent is paid on time. That’s right… not paying your rent on time could impact whether you get approved for that little loan you wanted to pay for a holiday… that new lounge you wanted to finance… even that new car you wanted to finance.
Termination of tenancy
If at any point during your tenancy your rent falls 14 days in arrears, a termination for non payment of rent may be issued. The minimum notice period that may be given to you is 14 days, meaning that if in that notice period you don’t pay the arrears owed to bring your rent back up to date, or you don’t enter in to and adhere to a payment plan agreed upon with your Landlord / Real Estate Agent, your tenancy will be terminated and you will be required to vacate the property.
So what happens if the termination date comes around and you haven’t paid your arrears, haven’t entered in to and adhered to a payment plan and you haven’t vacated?
NCAT and Sheriff’s evictions
If in the event you have been issued with a termination for non payment of rent, you have failed to pay the arrears owed or entered in to and adhered to an agreed payment plan and you have failed to vacate the property, the Landlord / Real Estate Agent may apply to NCAT (NSW Civil & Administrative Tribunal) for an order to terminate your tenancy (along with other appropriate orders). In this instance, an order may be made by the Tribunal Member to terminate your tenancy on a set date, meaning you are required to vacate on or before that date. You are responsible for paying the rent owed up to the date you provide vacant possession of the property. If you fail to vacate by the date set down on the NCAT order, the Landlord / Real Estate Agent may arrange for the Sheriff to attend the property and have the locks changed, meaning access to the property for you will cease immediately at that point. This can mean that you are left with nowhere to go and nowhere to stay. A scary though right?
So what happens if you find yourself in a situation where your rent payment is going to be late?
Good communication is the key. It’s important to notify your Real Estate Agent (or Landlord if you are privately renting) as soon as practicable that you may be late in making your rent payment and to reach an agreement to get the late payment and arrears caused from it rectified. We understand that sometimes unexpected things happen in life that may result in you not being able to make your rent payment on time. Where the issues arise are when are you are regularly late in paying your rent, your rent is constantly in arrears or you fall 14 days or more in arrears resulting in your tenancy being terminated and are unable to rectify in the notice period.
So remember… not paying rent on time can have HUGE impacts both short term and long term.