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How much does it really cost to evict a Tenant?

April 4th, 2014.

Topics: Landlord Advice
  I am of the belief that good Property Management is all about great Tenant selection. With this in mind, it is a very rare occurrence when we have to evict a Tenant. We choose well we are good at it.

But we recently had example of how costly it can be to evict a Tenant who has stopped paying rent. This Owner had just purchased a new investment property with an existing Tenancy in place. When settlement day came, he discovered that the week prior to settlement the Tenant signed over the 3 week bond to the Vendor for outstanding rent arrears.  The new Owner then contacted the Tenant to discuss rent payments moving forward and also a payment plan to get the bond reinstated.  No money for either rent or bond was received; the Tenant was now 2 weeks in arrears with no bond.

At this point he contacted Pedersens Property Management to take over  the Tenancy;
we immediately issued a 14 Day Notice and lodged an application with the Tenancy Tribunal. We also went to the property and firmly explained to the Tenant that non payment of rent would result in termination of the Tenancy.  

It took a total of 4 weeks to get a Court Hearing, by which point we were finally granted possession. The Tenant still refused to leave the property willingly; it takes another few days for the Bailiff to carry out the eviction.

Finally the Tenant is removed from the property but has had 7 weeks in total of not paying rent. It takes another 3 weeks to clean up the property and secure a new Tenant.
 

So, how much does it really cost to evict a Tenant?

 
Rent Arrears $3,150 (7 weeks at $450pw)
Vacancy $1,350 (3 weeks)
Cleaning, Repairs,
Rubbish Removal & Locks Changed

$1,077
   
Total cost to Owner $5,577
If there was a bond $4,227 ($5,557-$1,350)

 
While this debt was lodged with the Debt Collectors, unfortunately the original Tenancy Agreement didn’t provision for collection costs.  At the time of writing this article it had been several months since the eviction and the Debt Collectors have been unable to retrieve any money from the ex Tenant.

Ensuring that you don’t get “stuck” with a bad Tenant is crucial:
 
  • Always purchase with vacant possession
  • Always conduct thorough checks (including credit Checks) before approving a potential Tenant
  • Always issue a 14 Day Notice as soon as the Tenant is in arrears
  • Never delay in getting the Court process started
  • Never offer a Tenancy without a copy of the Tenants ID
  • Never sit around and wait for the rent to come in, call, text, visit

PEDERSENS do all of this and much more!

 

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