Ten Critical Keys for ZERO Tolerance Rent Control

Rent arrears can have a shockingly big impact on your department. They alone can wreak havoc on any property management department and can highlight the front-running PM businesses to the strugglers.

The best departments in Australia have very low rent arrears rates. These results do not happen by themselves! Complete dedication to zero tolerance rent control is essential in getting a very low to zero rent arrears result. This result can only occur by implementing key strategies that will produce the desired outcome.

These keys cannot be compromised!

If you want the shortest rent arrears list in town, here are ten power keys to equip yourself with:

1. Zero-tolerance attitude

It is impossible to be successful at effective rent control if you believe that stringent measures are not necessary. You must have the rock-solid belief that the tenant should never get behind in rent! The only exception is if the tenant has made a prior arrangement with you! Your attitude on rent arrears simply reflects your belief that in turn drives your performance that brings a result. It all starts with the right belief and attitude and the rest will look after themselves!

2. Strict tenant selection

Only approve tenants that you are convinced will pay the rent on time. Making sure that you have checked out very carefully their rent payment history indicates how they will perform for you. Past behaviour dictates future performance! Be ready to refuse an application if you are unsure of their track record. In an age of the record, low vacancy rates waiting for the right tenant should not be an issue!

3. Zero tolerance policy induction

When signing up your new tenant, spend quality time outlining your zero tolerance rent control policy. Explain your process should a tenant not pay on time and insist they call you in advance if they know they cannot make the payment on time. Clearly outline the full consequences should they not pay on time like tribunal action, possible eviction and lodgement on an internet tenant default database.

Your policy can also be on display in your front office reception area and outlined on the front of your application form. Your full expectations must be clear right from the start!

4. Early intervention

When a tenant first appears on your list you must act quickly! Personal contact with the tenant will get the best results. Calling them at 3 to 5 days late and also recording what amount they have committed to pay. If they do not follow through you must quickly get back in contact with them.

You must treat a tenant at 5 days in arrears like they are 50 days and insist they pay on time next time! Putting on big boots to quickly stamp out smouldering cigarette butts is far easier than having to fight and put out raging bushfires!

5. Utilize SMS texting

Using SMS technology to contact the tenant 3 days behind is a practice that will get noticed! People’s mobile phone inboxes are ‘sacred ground’ and safe from sales and marketing intrusion for the time being. Ensure you send through your message that rent must be paid on time. Also, consider sending an SMS to your late rent ‘serial offenders’ the day they are due to pay. This will get great results and no doubt a few complaints from these types of tenants as well!

6. High impact letters

I am surprised at the number of departments I see that send a letter in the first 7 days that is a simple reminder. The amazing fact is that the tenant didn’t forget! ‘Serial offending’ tenants know full well when they should have paid! They just believe that paying the rent on time is not a priority so why send them a letter telling them what they know anyway!

Instead, send ‘high impact’ letters that send the message clearly that late rent will never be tolerated! Have a variety of letters so that you never send the same letter twice. Also, consider printing real serious letters on red paper for an extra level of impact!

7. Legal notices served on time

Always serve your legal notices on time. Never compromise in delaying this process. Stalling serving a ‘termination’ or ‘remedy of breach’ notice simply because the tenant gave you a promise to pay can lead to disaster. If the rent arrears convert the tenancy into an eviction resulting in a landlord insurance claim you may find the landlord insurance company may reduce the claim payout by the length of time that you stalled the process! Your delay may result in a department negligence payout to the landlord!

8. Effective rent payment methods

Gone are the days that tenants pay their rent directly to the office. Instead, we must employ efficient methods to assist you to collect the rent in a prompt and efficient manner. The best departments are using direct debit, Bpay as well as using rent collection companies. For tenants on Centrelink benefits, Centrepay is an excellent form of rent collection that allows you to directly access their rent payment before the tenant has access to it. The cost of Centrepay can be easily passed onto the landlord if promoted to them in the right way.

9. Track your results

Knowing how you are progressing keeps you on track in aiming for the right results. I personally believe that assessing rent arrears by how much rent money is outstanding is misleading as rental portfolios all differ in rent per week values and therefore this method becomes an unreliable guide.

A better way is calculating the percentage of your tenants that are in arrears. To do this count the amount of tenants 3 days or more late in rent and divide this figure by your total portfolio size. Then multiply this figure by 100. For example, if you have 20 tenants 3 days or more behind in rent and your total portfolio is 100 properties, this means you have 20% of your tenants in rent arrears. The best results are 5% or less!

10. Systemisation

Following the same procedure, every time ensures the same result every time! What day does the tenant get the first and second contact? What day must they receive the first legal notice etc? The document clearly in writing each step and ensure everyone in the office involved with rent arrears follows the same procedure.