The goal for any tenant is to stay on top of their rent payments and stay out of rent arrears. However, when a tenant does get behind with their rent payments, it’s important to work out what this means and how to deal with it. Ignoring the problem will only make matters worse and could result in the tenant losing their tenancy.
What can happen if the tenant is in rent arrears?
If the tenant gets behind in paying their rent, they will be in breach of their tenancy agreement and the Residential Tenancies Act (s 40(1)(a) RTA).
14-day notice to remedy
As soon as the tenant is overdue in paying rent, the landlord has the option of giving them a 14-day notice to remedy. This notice needs to tell the tenant what they have done to breach the agreement (ie, fail to pay their rent in full and on time), what they need to do to fix it, and how long they have to fix it. An example of the type of notice a landlord might use for rent arrears can be found here.
Once the tenant receives a 14-day notice to remedy, they have 14 calendar days, starting the day after the notice is received, to pay the rent that is owing, as well as continuing to pay the current rent. If the tenant doesn’t do this, and continues to be in arrears, the landlord can apply to the Tenancy Tribunal to resolve the matter. This may include asking the Tribunal to terminate the tenancy (s 56 RTA).
When a notice is considered to have been received depends on the way it has been delivered. Eg, if the notice is handed over in person, it's considered to be received immediately, but if it was left in the tenant’s letterbox by the landlord, it’s not deemed to be received until 2 working days after the delivery date.
Further details can be found here.
In some circumstances, the landlord may choose to make an application that is just focused on requiring the payment of the rent. A landlord might do this when they don’t want to lose a long-standing tenant who has generally been responsible and reliable, or don’t think they will be able to find a new tenant. They might also do this if the tenant has a fixed-term tenancy and they want to ensure the tenant remains responsible for the rent until the end of the term.
If the tenant is 21 days or more in arrears, the landlord has the option of going straight to the Tenancy Tribunal without first giving the tenant a 14-day notice to remedy. If things get to this point it is more likely that the landlord will want to get the tenant out of the tenancy and to recover as much lost rent as they can.
Termination of tenancy
The landlord can apply to the Tenancy Tribunal for a termination of the tenancy if:
Failure to remedy after 14-day notice
The tenant hasn’t got back on top of their rent payments as per a 14-day notice they have received from the landlord (s 56 RTA).
21 days or more in arrears
The tenant is at least 21 days behind in paying their rent (whether the landlord has sent a 14-day notice to remedy or not) (s 55(1)(a) RTA).
3 notices in 90 days that at least 5 working days’ in arrears
The tenant is currently in rent arrears (by any amount) and the landlord has given the tenant written notice on three separate occasions within a 90-day period that the rent has been at least five working days’ late. To be valid, each notice must say what dates the rent was due, how much is overdue, and the tenant’s right to make an application to the Tribunal challenging the notice. The notice must also say if the notice is the first, second or third notice. The landlord’s application to the Tribunal has to be made within 28 days after the landlord gave the third notice (s 55(1)(aa) RTA).
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