7 days grace to pay your rent? A myth!
TPN research indicates that 98% of South African residential rental market landlords are micro landlords – landlords with between 1 and 10 properties. And depending on how many properties are mortgaged, any delay in receiving a rental payment can put enormous pressure on a landlord’s cash flow.
For most tenants their rental expense is one of their biggest monthly payments. What tenants seldom realise is that their rental payment triggers a series of follow-on payments from the landlord such as mortgage payments, the levy, rates and taxes, agent’s commission and maintenance costs.
Why tenants pay late
Not all tenants rely on a fixed salary income stream. Emergency expenses, retrenchment or a death in the family are some of the more common life events that can land tenants in trouble. Tenants who have a genuine misfortune and who are not regularly abusing their payment terms will generally find a sympathetic ear from the landlord.
How to get your tenants to pay on time
A landlord’s chance of getting paid on time increases by 20% by simply sending a complete statement of account including current charges, utility charges and any balance brought forward 7 – 10 days before the due date.
TPN’s RentBook provides micro-landlords with a free invoicing system so getting paid on time could not be easier!
The 7 day grace period is a myth
There is nothing in law that allows a tenant a 7 day grace period to make their rental payment. In fact with all the consumer friendly laws, landlords are better advised to act early with a non-paying tenant. Any delay in starting the process of collecting arrears will only lengthen the time the tenant can sit ‘unpaid’ in the property to beyond a calendar month which is generally the funds available in the deposit.
Proper rent at the proper place and time
Tenants have a legal obligation to ‘pay the proper amount due at the proper place and proper time’ as regulated by the Rental Housing Act. Usually the written lease agreement will state the rent due date as a specific date. Often this is the first of the month although it is not unheard of to have the payment due date specified as the 15th of the month.
The lease is a binding agreement between the tenant and the landlord, the payment due date is final and binding between the parties. Tenants who wish to enter into a payment agreement with the landlord to pay on the 15th of the month, must ensure their lease agreement makes specific provision for this.
Importantly, a verbal arrangement is different to the written lease agreement and is difficult to enforce in a dispute. The TPN LeasePack specifically states the rental due date and requires that payment must have cleared by the agreed date specified in the lease.
TPN payment profile Grace Period
Then why is Grace Period a part of the TPN payment profile? To allow an agent or landlord to make the distinction between the tenant who paid their rent 3 weeks late and the tenant whose payment was received the day after the due date in the ‘grace period’ where things like public holidays and banking mishaps come into play.
As a payment profile listing, the Grace Period is still a late payment. It simply allows a clearer picture of the tenant’s payment behaviour to be formed. It has the same consequences on a tenant’s overall credit score as Paid Late and is not an extended time period that a tenant is entitled to.
For more information on the 7 day Grace Period myth, please see our video on Unfair Practises.
Vacancy Survey 2023 Q3
The demand for residential rental property remains strong. Vacancies have declined nationally to 6.76% in the third quarter of 2023, the lowest since 2017. Despite a constrained economy, tenants have continued to meet their rental obligations with te…