When you cannot make a payment, do not delay telling your landlord
TENANTS, if you can’t pay quickly, all experts advise.
The first thing you need to do is communicate with the owner and try to make a plan with him or her, says Herschel Jawitz, chief executive of Jawitz Properties.
“The problem is many owners rely on the rental to pay their mortgage so options are limited in terms of helping a tenant who can’t pay.
“The worst thing a tenant can do is to simply terminate the lease and move out. This may put the owner in a position to report the tenant to one of the credit agencies that owners and agents use to assess the quality of a tenant, which will impact on the tenant’s ability to rent in the future,” warns Jawitz.
Andrew Schaefer, managing director of national property management company Trafalgar agrees, tenants should “quickly approach their letting agent or owner (in the event the owner is self-managing) to discuss payment issues”.
“Owners are generally amenable to assisting when approached early and honestly, especially in the current difficult market conditions with low rental increases, higher vacancies, difficulties finding qualifying tenants and escalating rental arrears.
“The earlier the approach, the lower the arrears, the more options and flexibility are available to make a mutually satisfactory plan. An acknowledgement of debt (AoD), which is an agreement that allows the tenant to pay off the arrears without detracting from his or her liability for rent that is due; early notice; lower rental increase; and reducing services costs are all considerations to assist with cash flow and affordability challenges.”
Ben Shaw, chief executive of HouseMe, an online rental disruptor, says “providing an update sooner rather than later when you are not able to meet you financial obligations, or when you will pay a bit late, is the best option”.
“This could help prevent additional charges, but also prevents animosity building in your relationship. Given the economic climate, a commitment to pay back over time will see many good tenants retain their rental contracts rather than be forced out. Landlords do realise how tough it is out there, and don’t want to go through the hassle of finding another good tenant.” GARY PALMER, chief executive at Paragon Lending Solutions, recommends property owners implement the following as a bare minimum before signing a lease:
Subscribing and using products such as WinDeed, other databases and credit bureaus, for instance Tenant Profile Network, will reveal the personal history of your prospective tenant, including identity document verification, judgments against them and company searches, if they are signing the lease in the name of their company.
Do the legal search
Do the personal search