New code on rent payments

Tenant farming commissioner Bob McIntosh has issued a new code of practice relating to the late payment of rent.

As the commissioner points out “no owner of property can be expected to operate without an effective remedy to deal with the late payment of rent. Landlords are entitled to expect reliable cash flow from rental income, and the deliberate late payment of rent should have consequences”.

However, he also takes the view that there may be some situations where there are genuine mitigating factors which deserve a more supportive response.

The code states that the tenant should always budget so the rent can be paid on or before the date it is due.

Late rent payments should only ever be made by prior written agreement and if a rent payment is late, a landlord should take all reasonable steps to ensure that the tenant fully understands the potential consequences of non-payment and the tenant should be actively encouraged to seek independent advice.

A key requirement of the code is that the landlord should always invoice the tenant for rent due not less than one month and not more than three months before the date it is due.

The code advises tenants to pay by bank transfer and payment by cheque through the postal system is not recommended.

A landlord should make informal contact with the tenant if rent is late and there should be a warning that the tenant risks the termination of the tenancy. If after such an informal contact rent isn’t paid within seven days the landlord should issue the tenant with a formal written notice of arrears.

If a month passes without the rent being paid the landlord should issue a final written warning. Nothing in the code has legal force and if a landlord does seek to end the tenancy because of arrears of rent, they will have to follow the statutory procedures for doing so.

■ Hamish Lean is a partner at Shepherd and Wedderburn

GUIDELINES: The code states that tenants should budget for rent to be paid on or before the date it is due