How to be prepared for late rental payments

Budgets are tight for most South Africans who are battling against high inflation and steep interest rates. For those relying on rental income, it is important to be prepared and 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 bank accounts, or there could be a bank system problem that also impacts the rent arriving in your account,” he notes.

How to provide cushion against late payments

However, a missed or late payment might have occurred, and 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 bondholder.”

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 property practitioner for the best chance of having as stress-free a rental process as possible,” he concludes.

For more real estate advice or to get in touch with your nearest RE/MAX Office, visit www.remax.co.za.

Writer: Kayla Ferguson