It’s every landlord's worst nightmare — a tenant who has not paid rent for weeks and won’t vacate the property. Landlords in this situation not only stand to lose out on rental income, but they also may not be able to access their property or find new tenants until their existing tenants leave. Ultimately, this leaves landlords significantly out of pocket.

Step-by-step guide to dealing with a non-paying tenant

If you find yourself with a tenant who falls into arrears, I recommend that you take the following steps:

Send notices

Firstly, a breach notice should be sent to the tenant for non-payment of rent.

If your tenant still does not pay the rent after receiving the first breach notice, a second notice should be sent to terminate the lease and request vacation of the property.

The number of days in rental arrears before these notices can be sent varies around Australia, so it is important to be familiar with your local tenancy laws.

If you are unsure of the format these notices should be in or have any questions regarding timeframes, get in contact with your local Real Estate Institute or state Consumer Affairs department.

Even if you are aware that your tenant is suffering from financial or personal hardship, it's still important to send breach notices on time and according to regulations.

If you delay sending the notices and you later have to make an insurance claim for loss of rent, your claim may be reduced.

Get a court order

If your tenant does not vacate the property by the date stated in the termination notice, you will be required to submit an application to the relevant tenancy authority to request a court or tribunal hearing.

The court or tribunal may then issue a warrant of possession to evict the tenant.

The processes around this are different in each state. For example, in Victoria, the police are required to accompany the landlord to the property to issue the warrant to the tenant.

Even then, the tenant may still refuse to leave, so a return to the tribunal may be necessary to gain an eviction order. In this instance, a bailiff or sheriff is likely to perform the eviction.

Change the locks

After a warrant of possession or an eviction order is presented to the tenant, you are within your right to have the locks changed by a locksmith.

If the tenant is absent when you arrive at the property, you are legally required to place their possessions in storage for a certain amount of time. Again, the timeframe is different in each state, so check with you local Real Estate Institute or state Consumer Affairs department.

Do a final property inspection

Do not forget to formally conduct a final property inspection.

Outgoing condition reports with supporting photos and videos can be used as evidence if there are any further outstanding issues once the tenant has vacated the property.

Retain the bond

It's likely that you will decide to retain the bond to cover some lost rent.

If this is the case, you will be required to submit an application to your local tenancy authority to have the bond refunded to you.

Make an insurance claim

An insurance claim cannot be processed until the tenant has vacated the property.

Contact your insurer as soon as this has occurred, and have copies of breach notices, inspection reports and photos and videos ready to support your claim.

Tips to avoid non-compliant tenants

To minimise the risk of this happening to you and ensure your investment home remains profitable, it is important to be aware of the warning signs.

Make regular property inspections a priority. See to it that you see the property every three to four months and look for any signs of neglect.

If the property is unclean, if there is an excessive amount of rubbish stored within its perimeters or if there is accidental or malicious damage to the property, it may be an early indication that your tenants could fail to fulfil their obligations of the rental agreement.

Monitoring arrears daily is also an important task.

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

Screen tenants

Thorough screening may help a landlord avoid loss of rental income by selecting a tenant with a good rental history.

Upon receiving a rental application, landlords should also assess a tenant’s employment background, criminal history and eviction history.

If the screening process shows irregular employment, history of criminal activities, eviction from properties and/or issuing with multiple notices, the landlord should reconsider the applicant’s suitability as their history may indicate a less reliable tenant.

Maintain good relationships

Maintaining a good relationship with your tenant can bring many benefits to a landlord.

An open and transparent relationship with your tenant may encourage them to uphold their rental agreement.

Likewise, if a tenant feels comfortable discussing issues with their landlord, they may be more inclined to advise you well in advance if they are having difficulty with making rental payments and help you avoid unexpected shortfalls.

Get an appropriate landlord insurance

Some landlord insurance policies are specifically designed to cover loss of rental income in certain situations and can provide assurance of receiving regular rental payments when a covered event occurs at the investment property.

A sound insurance policy should cover landlords for loss of rental income, as well as malicious and accidental damage and their legal liability.

Check your insurance policy and seek professional advice to ensure you have the appropriate coverage.

This article was first published on 5 September 2013, last updated 25 July 2022.

Advertisement.
Buying an investment property or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for investors.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.19% p.a.
6.58% p.a.
$2,589
Principal & Interest
Variable
$0
$530
90%
Featured 90% LVR
  • You MUST already have Solar or a documented plan to install within 90 days to be eligible for this loan
  • Available for refinance or purchase
  • No monthly, annual or ongoing fees
6.19% p.a.
6.19% p.a.
$2,447
Principal & Interest
Variable
$0
$0
60%
6.29% p.a.
6.20% p.a.
$2,473
Principal & Interest
Variable
$0
$0
80%
6.29% p.a.
6.42% p.a.
$2,473
Principal & Interest
Variable
$10
$690
90%
6.29% p.a.
6.34% p.a.
$2,473
Principal & Interest
Variable
$0
$600
80%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .