Non paying tenant - It's started.

Discussion in 'Property Management' started by GoneFishing, 1st Apr, 2020.

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  1. GoneFishing

    GoneFishing Well-Known Member

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    Hi all,

    One of my tenants has called me and has said that he has lost his job due to corona virus and cannot afford to pay his rent($350 per week). The IP is fully paid off, have no landlord insurance(He is a good tenant that's been in the property for 15 years and never caused me any issues - that's why) and I am also managing this particular property myself. This particular property is in a trust. What are my options? Any way of recovering some of the rent, because I still have to pay rates, land tax, repairs, etc and I will be out of pocket.

    Thanks.
     
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  2. snoopy

    snoopy Well-Known Member

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    well he can get the dole which atm is $750pw or the job keeper allowance which is also $750pw. So he should be able to pay something - Maybe you can negotiate a slightly lower rent
     
  3. Anthony416

    Anthony416 Well-Known Member

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    With the new supercharged dole he may be in a better position than he was anytime in the past. Maybe do the maths with him to check the credibility of his statement. He should not really have said "could not afford to pay", he should have asked if he could pay a reduced amount at least.
     
    Last edited: 2nd Apr, 2020
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  4. Rugrat

    Rugrat Well-Known Member

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    It's really up to you how you go with this.
    One tenant I have already talked to about if / when the lose their job, I have said I would suspend rent until their centrelink payments start, and then they would pay normally.
    For another tenant, the arrangement will be for them to pay a slightly reduced rate over a longer period of time, until they are able to return to work.

    I am not expecting / asking either to repay the shortfall later.

    But thats because that is the best solution that works for myself and my tenants, and I would like to keep them on long term. They were compromises to minimize my rental loss, and mitigate their circumstances.
    I wouldn't do it if I didn't like my tenants, or if I felt they were trying to take advantage of me.
     
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  5. Antoni0

    Antoni0 Well-Known Member

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    Yep, I would certainly try to arrange something with them but keep in mind that it will take a few weeks before their payments kick in,(5weeks I've heard).
     
  6. Shogun

    Shogun Well-Known Member

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    Let him cash in $10k of Super
     
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  7. abc_123

    abc_123 Well-Known Member

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    This is the issue. If the tenant doesn't pay the agreed rent or nothing, then you can do nothing beyond some faint hope of suing them in the future. You can agree to a lesser rent, in the hope that they are able/willing to pay that lesser amount. But if they still do not pay, not only are you still getting nothing, but if you do sue them in the future, or can claim something on your landlord insurance, you have reduced the amount of damages you can go for. One idea I was thinking of, is to offer a rent reduction that is temporary and is based on the tenant paying the agreed reduced amount being paid on time. If the agreed reduced amount is not paid, then the reduction is void and they owe the full amount. Now of course I do not know whether that is legal to do it would take someone who had legal knowledge and had seen the new laws. I also think tenant should have to agree to recommence original rent amount if/when they get job back but of course that is difficult as it really relies on tenant telling landlord that.
     
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  8. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member

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    seeing u own the place, perhaps consider being empathic and the tennant will the same when their income improves ?

    ta
    rolf
     
  9. GoneFishing

    GoneFishing Well-Known Member

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    Do you think the tax man will be empathetic when my Land Tax bill is due and councils will be empathetic towards me when I need to pay council rates. And who's going to pay for repairs? Ah but of course I am a landlord, so must be rich.
     
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  10. TMNT

    TMNT Well-Known Member

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    I guess it depends on how keen you are to keep the tenant,
    If his story is true as above, hes eligible for 750 per week or 550 per week in the dole (if im not mistaken),
    Then stick him on centrepay,
    If he doesnt agree to it , he might be telling porkies
     
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  11. marmot

    marmot Well-Known Member

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    Are those numbers gross or net .
    On $750 a week does he still have to pay tax on top of that
     
  12. Michael Mitchell

    Michael Mitchell Property Manager Business Member

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    For Qld anyway:

    upload_2020-4-1_21-13-14.png
     
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  13. Ben Chifley

    Ben Chifley Well-Known Member

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    No business proposition is completely risk-free - that includes being a landlord.
     
  14. See Change

    See Change Well-Known Member

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    Loved this article . Doesn't he see the irony ... What a Douche

    Billionaire landlord stands firm on rents as coronavirus pushes small businesses to brink

    The reality is we're facing the worst health crisis in a 100 years and probably the largest financial crisis since the great depression which was around 90 years ago .

    Everyone is going to feel pain . If you think everyone should feel pain but you , wake up .

    I'd talk to the tenant and make the following points
    • you sympathise for his position and its a crap time to loose a job
    • gee isn't it crappy the government is taking five weeks to start paying you ...
    • You're happy to help him in the short time before he starts getting money from the government
    • I'd suggest you give him a month free so he has some breathing space before the government money comes in and then see how things go at that stage .
    • I wouldn't formally decrease the rent but say you're happy to talk if he has problems.
    If you play hard ball , he might think " F..ing wealthy land lord , I've been paying for his property for 15 years and now he won't help me , He can't evict me , so I just won't pay anything ? .

    The transition over the first two months will be tricky for a lot of people

    We've got over 20 properties so our fingers are well and truly crossed , and my income has just dropped around 40 % and I'm meant to be busy. But we won't be going on OS holidays and it's harder for SWMBO to go out shopping and she can't get her hair done so our cost have just dropped as well .

    Cliff
     
  15. vbplease

    vbplease Well-Known Member

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    Well done, you sound rich!
    But having no landlord insurance is a little tight..
    I’d agree with that.. but a little tight ;)
     
  16. Omnidragon

    Omnidragon Well-Known Member

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    Ask him if he has savings and if he does why can’t he pay $2k or $3k? What’s it got to do with losing a job? Or has it got more to do with the PM and Treasurer saying no one needs to pay rent?

    If I lost my rental income and my business income I’ll still pay next month’s land tax, electricity bill and phone bill, because there’s a thing called savings. Is your tenant not paying his phone bill next month because he’s lost his job?
     
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  17. mun5

    mun5 Active Member

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    AFAIK Businesses get the job keeper allowance and not workers.
     
  18. Phineas

    Phineas Well-Known Member

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    On a tangential note... for those of us with LL insurance, would a tenant defaulting on rent due to pandemic economic woes be covered?
     
  19. Revolution2020

    Revolution2020 Member

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    Even if he has been successful in getting through the quagmire of an overburdened understaffed system and his application received he won't receive any payments for weeks or months.
    Please live in reality it is the government you are referring to
     
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  20. Simon Hampel

    Simon Hampel Founder Staff Member

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    Businesses get the JobKeeper allowance so they can continue to pay their workers. It has to be paid - can't be kept by the business.