How to deal with tardy tenants

MAYA FISHER-FRENCH - Aug 27 2010 08:20

Neil asks: My tenant is always late paying the rent and municipal services. She always has excuses -- even though she has a good job -- and I'm fed up. But the market is down, so is it better the devil you know, or should I get a new tenant?

Maya replies: It sounds like you have a problem tenant. According to Koos du Toit, CEO of P3 Investment Group, which advises people on property investments, as the owner of rental properties it's all about being an efficient manager.

"If you allow a tenant to pay late and get away with it, they will tend to push their luck even more in future," says Du Toit.

Du Toit says you should inform her in writing that late payment is not acceptable and that she is breaking the terms of the lease agreement. This puts you under financial pressure and you can no longer endure this.

The bottom line is really that she needs to be informed that if she pays late again you will terminate the lease agreement and she will have to move out.

Du Toit adds that since you are ultimately responsible for the municipal account, it is always better to receive the money from the tenant in the form of a levy and pay the council yourself. It could land you in trouble if they fail to pay and you are unaware of this.

"Contrary to what you mention, the rental market is very much alive as fewer people get bonds these days. It might be worth your while to find a new tenant and have a watertight lease agreement with the new tenant. Consider giving a 'discount' [the real rent you require] if they pay on time and 'penalties' for every day of late payment. Put this into the contract and lay down the law about payments right from the start," advises du Toit.

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