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How to adopt a pay-as-you-go policy for repairing tenant damage

1st December 2015
How to adopt a pay-as-you-go policy for repairing tenant damage.

How to adopt a pay-as-you-go policy for repairing tenant damage.

Many landlords sweep tenant damage issues under the proverbial rug, as they freeze up at the thought of having to approach tenants for money for damage.

If this is your approach to tenant damage, you are sending the tenants a very strong message that you tolerate the damage.

Instead, it is far better to adopt a pay-as-you-go policy for recouping money from tenants.

How to adopt a pay-as-you-go policy for repairing tenant damage

As soon as you’re made aware of the problem (whether the tenants have informed you, or from discovery at an inspection), you need to look at the damage and get a price for repair.

There’s no point in talking to the tenant about how much it might cost; just get a tradesperson to give you a quotation. This is an important step as it will inform the tenant of the ‘real’ cost of the repair. Presenting the cost of the repair in writing (i.e. the tradesman’s quote) to the tenant escalates the issue as it shows the tenant the real cost of the damage.

Escalating the damage issue is important

By presenting the quote to the tenant, it brings the tenant closer to resolving the problem in their mind. This is an important psychological step to take, as the tenant can see that the trades person has assessed the problem; priced the repair; and is available to start the work.

This is positive for most tenants as it means the problem is on the way to being resolved and out of the way.

Other tenants may not realise that damage is their problem

Some tenants may not be aware (or choose not to be aware) that they are responsible for any damage they cause. It may take a few days of informing the tenant the cost of repair and that they are responsible for their damage. It will also pay dividends if you acknowledge it was an accident (assuming it was).

Be sure to identify any barriers the tenant may have for paying for the damage

If you present your tenant with a $500 repair bill, you may identify if the tenant has genuine difficulty in paying for the repair in the next couple of days. In this case, consider a proposal that will assist them with the payment, for example paying 50% of the cost now, and the balance in one or two weeks’ time.

If you assessed the tenant correctly at the tenancy application stage (i.e. they have disclosed their income), then repaying $500 shouldn’t be a problem for them.

However, if they were borderline of being able to afford the rent, then an unexpected $500 bill will cause a problem for both them and for you. A tenant who relies on a benefit to pay for weekly expenses may struggle with an unexpected cost of $500. You need to think about these issues at the tenancy application stage, as a tenant’s solvency is likely to affect the quality of the tenancy.

How you manage the tenant application process has a big bearing on the tenancy. The ideal outcome is finding an A1 tenant who’ll actually inform you of any damage proactively, and will work with you on repair issues.

Remember too that landlords who are uncomfortable with asking tenants to pay for damage are also likely to have problems managing other areas of the tenancy.

You need to be clinical about the matter

As a landlord, you need to be clinical with this process. The steps outlined here are far better than sweeping the issue under the rug.

If you don’t deal with the damage in a clinical manner (or, worse still, end up paying for the damage out of your own pocket), it affects the tenant’s whole judgement of you. This will flow on to how the tenant manages their tenancy, and how they look after the chattels.

Why it helps to be business-like

If you start with the problem (e.g. a broken window) and cost for repair, and then clinically work backwards, a business-like solution can be achieved every time.

You need to be very focused on recouping money for tenant damage (accidental or otherwise) or this will become a bottomless pit on your profit and loss statement.

Landlords and Property Managers who are successful at recouping money from tenants for damage are also likely to be very successful at managing rent defaults.

Now is the best time to get your tenant to pay for the damage

The tenant has the highest motivation to pay for the damage when they’re motivated to maintain the tenancy. While the tenant plans to stay in the tenancy for some time, they are much more agreeable to solving any problems.

Conversely, there is a much lower chance of achieving an outcome in your favour on the last week of the tenancy, or at the tenancy tribunal.

Summary

  • Deal with any tenant damage immediately, by arranging a quote for repairs.
  • Present the tradesman’s quote to your tenant and make arrangements for them to pay you.
  • If your tenant has difficulties making payment, you may wish to review your tenant application process.
  • You need to be clinical about seeking immediate payment for repairs because how you manage this will affect the tenant’s judgement of you.
  • Being business-like helps to ensure that tenant damage doesn’t become a bottomless pit on your profit and loss statement.
  • Your tenant will be far more motivated to pay now, while they wish to maintain the tenancy, rather than in the last week of their tenancy (or at tenancy tribunal).

 


 

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