When is rent in arrears?
The Residential Tenancy Agreement sets out the day every week or fortnight when the rent is due. If the correct amount of rent is not paid on or before that day, then the tenant will be in arrears.
Not paying all the rent on time is a breach of the tenancy agreement. This means that the landlord is entitled to begin a dispute resolution process. If the issue remains unresolved, the landlord may be able to obtain an order from the Tenancy Tribunal that terminates the tenancy, even if a fixed term has not yet expired.
How can myRent help you with rent problems?
myRent sends a reminder to the tenant 2 days before the rent is due. myRent also send another friendly reminder on the day the rent is due.
If we do not receive the rent on either the due date or the day after (allowing for payment processing), we then send a further reminder to the tenant. If rent still remains unpaid after 2 business days, we then provide the landlord with two options:
- Contact the tenant to discuss how and when the overdue rent will be paid.
- Send a formal ‘Notice to Remedy Rental Arrears’.
- Send a formal 'Notice of Overdue Rent' (if the tenancy is periodic).
Although myRent is not a mediator or negotiator in disputes between tenants and landlords, we are happy to provide information, guidance, and answers to any questions that landlords or tenants may have about rent issues. You can contact us here.
What steps can I take to solve a rent problem?
As a landlord, there is no single way to solve a rent payment issue. As a rule of thumb, however, myRent recommends first contacting the tenant and discussing the issue as soon as possible to come to an agreement about how the overdue rent will be repaid.
The steps set out below are a general guide. You should consider the specific nature of your tenancy, the circumstances of the tenant, and anything else relevant before deciding on your course of action.
Read more about overdue rent here.
1. Discuss and Agree on a Solution
In most circumstances, you should contact the tenant to discuss the overdue rent. In many cases, it will turn out they have simply forgotten to pay the rent or something went wrong with their payment. A simple discussion or verbal reminder will often solve the issue quickly by having the tenant pay the overdue rent as soon as possible without any further action being required. Although the tenant may be in breach of the agreement, it is important to remain calm and courteous in any discussion - that is usually the best way to quickly reach a solution.
Rent Repayment Plans
If the problem is more serious, such as the tenant not having sufficient funds to pay the rent immediately, it may be necessary to agree to a rent repayment plan which sets out when and how the overdue rent will be paid. A rent repayment plan should be put in writing, signed by both the tenant and landlord, and then uploaded to ‘Tenancy Documents’ on myRent for safe storage and easy access.
Read more about rent payment plans here.
If you're using myRent to manage your tenancy, head to Settings / Rent Settings / Payment Plans and we will help set one up for you and prepare necessary paperwork.
FastTrack Resolution
If you reach an agreement with the tenant on paying the overdue rent, you can formalise the agreement by applying to Tenancy Services for a ‘FastTrack Resolution’. The main advantage of a FastTrack resolution is that it allows the landlord to more easily obtain a Tribunal order if the tenant does not comply with the terms of the repayment plan.
Read more about FastTrack Resolutions here.
If the tenant can no longer afford to pay the rent
If the tenant’s financial circumstances now mean that they can no longer afford to pay rent in the long term, the best solution may be for the landlord and tenant to mutually agree to end the tenancy. The landlord should not pressure the tenant to accept this option, however it may be the most effective resolution rather than applying for a possession order from the Tribunal. If you agree to this, the tenant should be given sufficient time to move out and find new accommodation before the tenancy terminates.
2. Serve a Notice to Remedy
If you cannot reach an agreement on how the overdue rent will be paid, you may want to serve a ‘Notice to Remedy’ on the tenant. Although you may serve this notice as soon as the rent is overdue, it is generally best to first attempt to reach a negotiated agreement. The situation may be different, however, if the tenant has repeatedly been late on paying rent and previous negotiations have not worked.
The notice informs the tenant that they are in breach of the agreement and that they have 14 days from service of the notice to pay all the rent owing. If the tenant does not make all the payments by the due date, the landlord is then able to apply to the Tribunal for an order for possession and/or compensation.
Read more about Notices to Remedy here.
If you're using myRent to manage your tenancy, head to Rent section of your tenancy and click on "Are your tenants having problems paying rent? Understand your options" link at the top of the page. We will help you prepare necessary paperwork and serve it for you.
3. Serve a Notice of Overdue Rent
From 11 February 2021, a new section of the Residential Tenancies Act (RTA) 1986 provides landlords with an additional option for responding to rent arrears during a periodic tenancy.
You may now apply to the Tenancy Tribunal to terminate a periodic tenancy if the tenant is more than 5 working days late paying rent on 3 separate occasions within a 90-day period. The landlord should issue the tenant notice of the unpaid rent on each of the three occasions. This notice should be in writing, state the amount of overdue rent, dates for which rent was overdue; include how many other notices of overdue rent the landlord has given the tenant in the relevant 90-day period and mentioned the tenant's right to make an application to the Tenancy Tribunal to challenge this notice.
You can then apply to the Tenancy Tribunal within 28 days after the third notice was given to the tenant.
4. Applying to Tenancy Services for Mediation and/or Tenancy Tribunal Order
If you cannot reach an agreement with the tenant about payment of the overdue rent, it may be necessary to apply to the tribunal for mediation or a Tenancy Tribunal order.
When you apply for a Tribunal hearing and order, Tenancy Services may decide that you should first go through mediation in order to reach an agreed solution. Having a trained and skilled mediator will often be a better way to reach an agreement that both the landlord and tenant can agree on.
If mediation does not work, or if Tenancy Services decides that mediation would not be helpful in your case, then the issue may be scheduled for a Tribunal hearing. The Tribunal has the power to make legally binding orders, which may include a possession order (that terminates the tenancy and gives possession back to the landlord) and/or a money order (that requires the tenant to pay the overdue rent).
Read more about mediation here.
Read more about the Tenancy Tribunal and making an application here.
The information contained in this article is exclusively for promotional purposes. It does not in any way constitute legal advice and should not be relied upon as the basis for any legal action or contractual dealings. The information is not, and does not attempt to be, a comprehensive account of the relevant law in New Zealand. If you require legal advice you should seek independent legal counsel. myRent.co.nz does not accept any liability that may arise from the use of this information.
