rent payment plan
📖 What is rent payment plan? Meaning and definition
When a tenant in New Zealand owes rent arrears, the Tenancy Tribunal may issue an order that includes a rent payment plan. This plan outlines exactly how the tenant must pay both their ongoing rent and the accumulated debt. The plan specifies the amounts, frequency, and dates for these payments, often breaking down each payment into a portion for current rent and a portion for the arrears.
The purpose of a rent payment plan is to provide a clear pathway for tenants to clear their debt and maintain their tenancy. The Tribunal typically allocates payments in a specific order, prioritising current rent first, then rent arrears, and sometimes other costs like filing fees. This ensures that the most recent rent is covered, helping to prevent further accumulation of debt.
Failure to adhere to the terms of a rent payment plan can have serious consequences. Tribunal orders often include conditions stating that if a tenant misses payments within a specified timeframe (e.g., two working days of the due date), the tenancy may be terminated, and the landlord could gain immediate possession of the property. Additionally, the entire remaining balance of the debt would become immediately payable.
These plans can be tailored to the tenant's circumstances, such as aligning payment dates with salary payments, as seen in some cases. They can range from short-term plans over a few weeks to long-term arrangements spanning several years, depending on the amount of debt and the agreed payment structure.
📋 Requirements
- The tenant must owe rent arrears to the landlord.
- The Tenancy Tribunal must issue an order establishing the plan.
- The plan must specify the amounts for current rent and debt repayment.
- The plan must specify the frequency and due dates for payments.
- Payments are typically allocated first to current rent, then to arrears.
📝 Procedure
- The Tenancy Tribunal determines the total amount of rent arrears owed.
- The Tribunal sets a payment schedule, detailing weekly or fortnightly payments.
- Each payment is broken down into amounts for current rent and for the debt.
- Specific payment dates are set, often aligning with tenant's salary payments.
- The order specifies the allocation order for payments (e.g., rent first, then arrears).
- A condition is included stating the consequences of failing to meet the payment plan.
💡 Examples
- A tenant owing $10,741 in rent arrears is ordered to pay $510 weekly for current rent, and then fortnightly payments of $1,120 (comprising $1,020 for rent and $100 for the debt) until the debt is cleared.
- A tenant with a $16,516 debt is put on a long-term plan of 330 fortnightly payments of $370 (including $320 for rent and $50 for arrears) followed by a final payment, continuing until 2037.
- A tenant owing $2,542 is ordered to make 4 weekly payments of $1,200 (including $700 for rent and $500 for the debt), followed by a final payment, all to be completed within a month.
- Payments are scheduled for every other Thursday instead of Tuesday to match the tenant's salary payment schedule, by agreement.
❓ Frequently asked questions
What happens if I don't follow the rent payment plan?
If you fail to make payments as specified in the plan, especially within a few working days of the due date, the Tenancy Tribunal order may allow the landlord to terminate your tenancy and take immediate possession of the property. The remaining balance of your debt would also become immediately payable.
Can the payment dates in a rent payment plan be changed?
Yes, the payment dates can sometimes be adjusted by agreement, for example, to align with when a tenant receives their salary. This flexibility is typically decided during the Tenancy Tribunal hearing when the order is made.
How long can a rent payment plan last?
A rent payment plan can vary significantly in duration. Some plans are short-term, lasting only a few weeks or months, while others can extend for many years, depending on the total amount of rent arrears and the agreed-upon repayment amounts.
What is the order in which my payments are allocated?
Typically, payments made under a rent payment plan are allocated first to cover your current rent, then to pay down the rent arrears. Sometimes, other costs like Tenancy Tribunal filing fees are also included in the allocation order after rent and arrears.
Is a rent payment plan only for current tenants?
The case excerpts show rent payment plans being ordered for tenants who are currently in a tenancy, as the plan includes ongoing current rent payments. The consequence of not following the plan is often the termination of that existing tenancy.
Can I negotiate the terms of a rent payment plan?
The terms of a rent payment plan are set by the Tenancy Tribunal. While the Tribunal considers circumstances, it's an order you must follow. If you believe the terms are unmanageable, you would need to raise this during the Tribunal hearing.