Late Rental Payments: How to stay prepared and proactive

Budgets are pinched for most South Africans who battle against high inflation and steep interest rates. For those who are relying on rental income, it is important to be prepared and to know what to do should there be a late payment over this time.

Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, explains that a missed or late payment might not always be budget related. "A late payment can also happen by accident. Sometimes the way public holidays fall affects when the funds reflect in your account, or there could be a bank system problem that also impacts the rent arriving in your account," he notes.

However a missed or late payment might have occurred, to make sure that it doesn't have a knock-on effect on a landlord's bond repayments, RE/MAX of Southern Africa suggests the following:

• To avoid setting false expectations, never allow a late or missed payment to go unnoticed. Chat with your tenant immediately to find out what has caused the delay. If payment is not made after bringing it to the tenant's attention, draft a formal letter to notify them that they are in breach of contract. 
• Allow enough room between the tenant's rental payment date and the date on which your bond repayment is deducted so that you can make a plan if needed.  
• In case a tenant misses or is late on a payment, be sure to have the full bond repayment amount available in an accessible savings account.
• Remember that the formal eviction process can be lengthy. The longer you take to act on a late or missed payment, the longer it will be before you can legally evict a tenant who continues to miss payments. 

"As emotionally challenging as it can be to address these situations, it is important to remember that your bondholder will penalise you if you default or pay late, so there is no reason why you should not remind tenants of their legal obligations to you. A rental agreement is a legally binding business contract. If you are tolerant and play easy-go-lucky, your tenant might think that there will be no consequences if they pay late again, and this could become financially devastating to you as the bond holder."

This is where working through a rental agent can be incredibly useful. "Professional rental agents have access to tools and resources for screening prospective tenants to minimise the chance of defaulting tenants to begin with. They are then also equipped to deal with non-paying tenants on your behalf which means that the relationship with your tenant does not have to become personal," he notes.

"Chasing money and dealing with difficult tenants can be extremely stressful. Working with a professional RE/MAX rental agent will make your life so much easier. Don't let the possibility of a defaulting tenant stop you from making your investment property work for you - enlist the help of your local RE/MAX Office for the best chance of having as stress-free a rental process as possible," he says. 

Additional information: 

The Rental Housing Tribunal has the authority to deal with disputes, complaints or problems between tenants and landlords in the rental housing dwellings:

Any practice unreasonably prejudicing the rights or interests of a tenant or a landowner - It may, amongst other things relate to: 

• Illegal lockouts or illegal disconnection of services (water, electricity etc.)
• Failure to refund a deposit
• Damage to property
• Demolitions and conversions
• Illegal evictions (The Tribunal does not have jurisdiction to hear applications for
• eviction orders)
• Forced entry
• Non-compliance with house rules
• Harassment and intimidation
• Failure to issue receipts
• Unlawful seizure of tenants' goods
• Prohibiting the establishment of tenants' committee and tenants' activities
• Termination of Municipal services
• Causing a nuisance
• Overcrowding and causing health hazards
• Exploitative rentals and determination of fair rentals
• Lack of maintenance and repairs
• Non-payment of rent
• Discrimination by landlord against prospective tenants

In terms of section 13(13) of the Rental Housing Act 50 of 1999, a ruling of the Tribunal is deemed to be an order of a Magistrate's Court in terms of the Magistrate's Court Act, 1994.

Lift That Credit Score

Landlords are not only concerned about your income. They want to see how you've managed financial commitments in the past, as this is a leading indicator of your ability to pay your rent on time and in full. A good credit score will put them at ease but if your credit score is not good, you may need at least six months to improve it. A credit score is calculated by the credit bureaus and looks at five parts.

• payment history (if you consistently pay on time and in full, the better your score),
• debt use (how much of the total credit available to you that you use),
• credit history length (the longer your credit history, the better your score),
• recent activity (you will score points here if you refrain from applying for more credit on a regular basis) and
• your credit mix (you'll score more points here if you own more types of credit e.g., you have a credit card, a cell phone account, and a store account)