An official note followed by a conference from the North Pole’s press secretary, Twinkle GlitterNose, earlier this morning has completely shocked the Real Estate rental market. According to GlitterNose, after extensive deliberation, Mr Claus and the DoCA (Department of Christmas Affairs) have decided to include on the infamous Naughty List, tenants who are negligent with their rental arrears.
With not much more than a month left before Christmas, the announcement from North Pole’s authorities caught everyone by surprise, getting both praise and criticism from different sides of the rental market – while landlords are thrilled with this new feature, tenants are worried.
A new Grinch
Falling into rental arrears is more common than it seems. Sometimes due to problems with technology, delays on bank processes, simply forgetting to pay on the right day and many other reasons, rent moneys might not reach the bank account (or owner’s private account) in time.
If a rent is left unpaid for a single day most management systems, for example, will already classify it as overdue (‘in arrears’). There is a process in place outlined in regulations for such cases – going from simple to the most complex cases.
If a tenant is in arrears or predicts that, for some reason, they might fall in arrears in the near future, they should know this process so that they can work out a plan to get back on track.
Unwrapping the process
As mentioned, there are regulations outlining what is the correct process to address rental arrears. Press secretary Twinkle GlitterNose briefly explained this during his conference in a Christmas-themed slideshow.
“Let’s say Mr Buddy CandyFluffy’s rent is due on Christmas day”, started GlitterNose. “This means if rent is not paid, on the 25th of December Mr CandyFluffy would be on Day 1 of arrears.”
- Days 1 to 7: the property manager will communicate to the tenant the rental arrears, explain the process and consequences, and if necessary work out with them a way for the amount to be paid;
- Day 8: property manager will issue a Notice to Remedy Breach, giving the tenant 7 days (through to Day 14) to pay the outstanding amount;
- Day 15: given the non-payment of the rent, the property manager will issue a Notice to Leave giving the tenants another 7 days (through to Day 21) to vacate the property;
- Day 22: the property manager can apply to the Civil and Administrative Tribunal (QCAT in Queensland), which will organise a hearing to discuss and chase the amount overdue.
It is important to remember rent keeps on accruing throughout the process (no matter how long it takes) until the property is vacated.
Rental arrears also have a deep impact on the tenant’s ledger, which means on future rental applications it will show they haven’t committed to the Lease Agreement and will possibly frustrate their search for a new home.
Neither the DoCA or Mr GlitterNose were specific about in which step of the official process Father Christmas would blacklist such tenants, but were very firm that no letters, milk or cookies would serve as appeal.
How you can save Christmas
Unfortunately, there is only one solution to remedying rent arrears and depending on how much this has built up to, it can be difficult to pay everything at once. The best solution would be to be very open and communicate to your property manager once the problem starts – this could lead both parties to a payment plan that could help tenants and prevent more drastic measures.
Tenants across Australia have already reacted to this and arrears rates have dropped by 2% since the announcement. A trending topic on Twitter, some of them seemed to have decided: “this is way worse than being listed on TICA!”
In situations involving rent arrears, it is important to have a knowledgeable team in charge making sure everything runs smoothly. At Odyssey Property Concierge, our highly experienced team works with smaller portfolios per agent, allowing our Property Managers to dedicate more time resolving such problems.
