Getting out of rent arrears

Getting behind in rent payments can feel like the end of the world, but it can be possible to get back on track.
Aratohu couple

Consider why the tenant is in arrears

In many situations, the tenant will have unintentionally ended up behind in paying their rent. Unintentional causes for rent arrears could be:

  • An issue with the timing of payments in and out of the tenant’s bank account
  • Unexpected and unavoidable expenses that have blown the tenant’s weekly budget, or
  • A problem with a flatmate not paying their share of the rent on time.

In other situations, the problems with paying rent may be more significant and ongoing, such as where the tenant has lost their job, or their rent has increased to a level that is no longer affordable.

The options for the tenant will depend a lot on the reasons why they ended up in rent arrears and what their opportunities are for getting back on top of their rent payments.

Help the tenant work out what they want to do

Have an honest conversation with the tenant about what they want to do. It’s important to work out a plan for paying back any overdue rent, but it is also important to work out with the tenant whether they want to stay in the tenancy or to exit from it. This will likely depend on whether they feel able to meet their rent obligations over time and what, if any, alternative housing options they have.

Take action to get out of rent arrears

There are a range of actions the tenant can be supported to take:

 

Let the landlord know

If the tenant has only recently fallen behind in their rent payments, encourage them to talk to their landlord about the situation as soon as possible. This gives the landlord the opportunity to consider the tenant’s circumstances and decide what approach they want to take. If it’s a one-off problem, and the tenant has a plan for how they can catch up on overdue rent, then the landlord is more likely to be receptive.

You could support the tenant by helping them come up with some words to say, or write, or by role-playing the situation with them so they can practice what they would say to their landlord. Where needed, you might communicate with the landlord on the tenant’s behalf.

Make a part payment

The tenant should try to make a part payment towards their overdue rent as soon as possible, if they can, along with a promise to catch up within a defined period. This shows goodwill towards sorting things out and will generally increase the chances of successfully negotiating a way forward with the landlord.

If the tenant is able to make an immediate part payment for rent arrears then the following template letter may be useful: Template letter offering part payment for rent arrears.

Quick tip

Don’t get too caught up with trying to explain the reasons that the tenant has got into arrears and instead focus on what will give the landlord confidence that it will not be an ongoing problem. A part payment and a commitment to repay arrears within a short timeframe (eg, a few weeks) will often be enough to satisfy a reasonable landlord.

Explore options for catching up on overdue payments

Talk with the tenant about their financial situation and what their options are for getting on top of their rent payments. These could include:

  • Asking for help from friends or family.
  • Getting help with budgeting so they feel better able to manage their rent payments on an ongoing basis.
  • Finding out whether they are eligible for:

any other financial assistance.

Negotiate a repayment plan

An offer to pay rent arrears, even if it’s over time, may stop the landlord from applying to the Tenancy Tribunal for termination of the tenancy. If the tenant is able to reach an agreement with the landlord before the landlord takes things to the Tribunal, the tenant has a greater chance of remaining in their tenancy. If a repayment plan is successfully negotiated, the landlord may want to formalise the agreement through FastTrack Resolution.

Before entering a repayment agreement a tenant needs to be aware of the commitment they are making and that the consequence of breaking the agreement will most likely be their eviction. If the tenant doesn’t intend to, or is unable to, honour the agreement there isn’t much point in setting it up. Discuss with the tenant the chances of them completely repaying the arrears within the time set down in the agreement. If they are financially unable to pay the rent arrears, then a strategy for leaving the house or flat may be a better option.

If the tenant does want to negotiate a repayment plan for rent arrears, the following template letter may be useful Template letter offering repayment plan for rent arrears. The template is written as a communication from you as the tenant’s advocate, but it could be modified to come directly from the tenant.

Here is a Template Rent Arrears Repayment Agreement. This agreement can be sent to the landlord along with the letter offering a repayment plan for rent arrears.

  Case study

Nadia usually pays $300 a week in rent. She has recently lost her job and for the last two weeks she has missed her payment. The landlord has left a message on her phone asking for the money to be paid immediately.

Nadia wants to get on top of the rent payments but can’t afford to pay it all at once. Because she owns assets over the threshold, Nadia is not eligible for the Rent Arrears Assistance payment from Work and Income. She has now got some part time work and, after putting together a budget, she thinks she can manage repayments of $50 a week.

Nadia owes her landlord $600, which if repaid at $50 a week will take her 12 weeks to pay off ($600 / $50 = 12 weeks). So, for the next 12 weeks Nadia will need to pay $50 a week on top of keeping up with ongoing rent payments, ie, $350 per week for the next 12 weeks.

Next steps

nikau
Aratohu couple