How to Avoid Rental Arrears at Christmas

By Carolyn Parrella
Question: What measures can I put in place to prevent rental default ruining Christmas?

Answer: By Carolyn Parrella, Executive Manager, Terri Scheer Insurance

Rent default can become a serious and very real risk for landlords during December.

There are often additional expenses and financial pressures at Christmas so paying rent may be harder for some tenants at this time of year.

Arrears can be a very long and costly process to resolve and may leave landlords considerably out of pocket and put them under significant financial stress.

There were a number of measures landlords could put in place to prevent rental default from ruining their Christmas.

Screen tenants

Attracting a suitable tenant from the outset may help you retain them in the long-term.

If tenants are happy they may be more likely to pay their rent on time, stay in your property longer and look after it as if it were their own.

Thoroughly check potential tenants’ references during the screening process. Speak with previous landlords or property managers and ask specifically whether they had any issues with the tenant in the past.

Maintain a positive relationship with tenant

Open and transparent communication may encourage tenants to uphold their rental agreement.

Even the most reliable tenants can suffer a change in their financial circumstances that could result in them no longer being able to pay rent.

Landlords understand it’s a hard time of year, and if a tenant feels they can speak to their landlord about a change in their situation or advise in advance if they are having difficulty with rental payments, then they can work with them to address the issue quickly.

Send a Christmas card

A little bit of Christmas cheer can go a long way, particularly at this time of year.

Sending out a Christmas card or small gift to wish tenants a happy festive season can also serve as a way to gently remind them of their obligations to pay rent on time.

Consider placing a small calendar in the card outlining key dates for rental payments.

Monitor arrears daily

Monitoring arrears daily is an important task.

Check your bank account the day the rental payment is due and continue to monitor the account daily.

If your tenant has fallen behind in their rent, the sooner you know about it, the sooner you can attempt to resolve the issue and mitigate any financial loss.

Tenants should be made aware that there are also a number of public holidays over Christmas which means they will need to ensure their rental payments are made in advance to avoid any late payment issues.

It may be worth considering appointing a property manager who can oversee this task.

Tailored landlord insurance

Christmas can take its toll on the hip pocket of many tenants but having a risk management strategy in place, such as landlord insurance, can help ease a landlord’s concerns about receiving regular rental payments over the festive season.

Tailored landlord insurance policies often are specifically designed to cover loss of rental income in certain situations. A sound insurance policy should cover landlords for both malicious and accidental damage, their legal liability and the loss of rental income.

A standard building and contents insurance policy generally won’t cover landlords for many of these risks.
Carolyn Parrella joined Australia's leading landlord insurance specialists, Terri Scheer Insurance, in 2004 and was appointed Executive Manager in 2009.
Carolyn oversees all operations within business, which aims to protect landlords against the risks associated with owning a rental property. These include malicious damage by tenants, accidental damage, legal liability for occurrences on the property that cause death or bodily injury, and loss of rental income as a result of damage to a property or a tenant absconding.
As a South-Australian based national insurance firm, Terri Scheer Insurance is the only company in Australia to specialise solely in landlord insurance.
Carolyn also owns two investment properties.

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