Penalty fee for late rent?

Question from Miranda updated on 5th March 2014:

Can I charge tenants a penalty fee if the rent is in arrears? Thanks.

Our expert Alan Bruce responded:

There is no provision under the Residential Tenancies Act 1986 (the Act) to enforce a penalty fee against a tenant for rent arrears, but there are other ways to manage this type of issue. The Act states that any requirement of a tenant to pay a sum by way of damages or penalty as a result of a breach of a tenant’s obligations under the Act shall be of no effect. Where a tenant is in arrears, a landlord may give the tenant 14 days’ written notice to remedy the breach (e.g. to pay the arrears in full). As the notice must be in writing, service time must be allowed for and a copy of the notice retained. A template for 14 days’ notice and information about service times can be found on the Ministry of Business, Innovation, and Employment’s website (www.dbh.govt.nz). Where a tenant does not comply with the notice, the landlord may apply to the Tenancy Tribunal to have the matter resolved, which, depending on the outcome sought, may include termination of the tenancy. To discuss your situation further, or for information about applying to the Tenancy Tribunal, you can visit the Ministry’s website (as noted above), or call 0800 TENANCY (0800 836 262).

The Ministry of Business, Innovation and Employment provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.

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