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Rent arrears, a big issue for the rental property industry

Rent arrears, a big issue for the rental property industry

"Rent arrears are by far the largest reason for applications to the Tenancy Tribunal" says NZ Property Investors’ Federation Executive Officer, Andrew King. "It can also take many weeks to even get a Tenancy Tribunal hearing, while tenants can sit in a property without paying rent. Without a Tenancy Tribunal order you cannot get a non-paying tenant out of your property. Even when you do, it can then take many more weeks to get a replacement tenant".

Rent arrears are a large problem for the rental industry and rental property providers need to know that they have a suitable tenant in their property. As it can be time consuming and expensive to end a poorly performing tenancy, having confidence that you are getting the right person before they move in is important.

The main ways we advise NZPIF members to quality check prospective tenants is through a credit check, looking up Tribunal Orders online and checking with previous landlords or current landlords if the tenant allows. There may be cases, such as new migrants to New Zealand, where the prospective tenant does not have any of this history. In these cases, confirmation of employment and income could be sufficient to show an ability to pay the rent.

A survey of NZPIF members a few years ago showed that the average loss for each tenancy tribunal application was around $2,300 after having any bond refunded. The loss to the industry each year would be over 90 million dollars, and that is just for the losses that went through the Tenancy Tribunal. Many owners don't bother.

The NZPIF does not believe that asking to view a prospective tenant’s bank statement is necessary. Instead, the NZPIF would like to see faster access to the Tenancy Tribunal, especially for rent arrears where the tenant is continuing to stay in the property. We would also like to see consequences for not paying rent, such as the ability to charge interest on outstanding rent as occurs in other countries.


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