Blink Property
Paying rent on time seems like common sense if you want to hold down a tenancy and make yourself more appealing to prospective landlords in the future. But a lot of renters get caught out by payment traps and end up being accidentally late.
You may not be aware, but there are consequences for doing this, even if it’s not your fault.
You may take great care of your rental and treat the property and neighbours with great respect. Then suddenly, you’ve got complacent and made one or two late payments. No big deal, right?
Actually, the consequences of a few late rental payments can be far reaching. First, just about everything we do that relates to our financial situation is heavily monitored these days.
If you want to get a loan to buy a property at some stage, your late rental repayments may count against you in the approval process. We all have credit scores and even minor indiscretions could be the difference between being able to buy a property in the future and being rejected. These marks against your credit score can set you back years.
If you have to move on from your current place, you might find that late or missed rent payments make it hard to score another rental. Think about times like right now, where vacancy rates are at rock bottom and there are next to no properties available. You might find yourself up against a stack of other prospective tenants when you rock up at open inspections. Put yourself in the agent or landlord’s shoes. After collecting the rental histories, references and rental ledgers (which include details of every rental payment you have made)… who would you lease your property to, one of the applicants with a perfect record, or the tenant with a history of late payments?
Big data is big business these days. Banks, insurers and all sorts of other organisations use it to minimise their risk and make astute decisions. Part of this new world is a tenant database known as TICA.
TICA has more than 7 million tenancy default records and is checked by real estate agents to make sure you don’t owe money to any other agencies. On top of this, it also shows what other agencies have searched for you in the past. So, even if you haven’t defaulted, multiple searches by different agencies will likely ring alarm bells for an agent considering a current rental application.
If your rent is in arrears by a certain number of days (usually around 14, but check in your own state or territory), you can be served a termination of tenancy notice. This gives you another set period to get your rent up to date or enter into a payment agreement with your landlord. If you fail to meet that deadline, you may face eviction.
If your landlord wants you out of the property for a different reason…say they want to move family in, or have a tenant ready to pay more rent than you, being late may give them a way out of honouring your lease.
Some tenants make late payments by accident because they are confused about when rent is due. Say they moved in on a Friday, they may think their weekly rent is due on a Friday. But the seven days actually ends on a Thursday, so that’s when rent is due. If you’re one day late your rent is in arrears and that can go on your rental record.
Paying your rent a week early can give you peace of mind and also protect you against hurdles that are out of your control. For example, if you are paying by electronic transfer, there might be a system issue with online banking, or a delay in the money going through and suddenly you go from a day early to a day late. Bringing everything forward a week, or even further means this won’t happen. Plus, regularly paying early can make a positive impression with future landlords or lenders.
