Would charging a "late fee" for late rent payments make tenants less inclined to pay their rent late because they'll be paying a little extra? While yes at times tenants can have valid reasons why they may not be able to pay their rent on time, wouldn't failure to impose penalties work against you in the end since tenants might get the impression that they can pay their rent late and "get away with it?"
In practice here is the penalty for late rental payments with the standard 10% although some landlord charges higher. However, most landlords are considerate especially when the tenant has been staying for a long time - they are sometimes treated as relatives or part of the family hence the leniency. But with the strict landlords, the 10% seem not to be enough particularly when the tenant would be paying late rents every month and sometimes the delay is more than a week.
Here is what I'd do. Make sure there is a late fee part in the rental agreement. First time he forgets it.. if you think he sincerely just forgot or he has a good reason... especially if he notified you in advance.. then I'd let it slide. Just go with "ok I won't charge you for the late fee this time but you need to be more careful in the future" If it starts happening more often then of course you need to charge the late fee.. it's money for your trouble.
Good question, Rainman. I can only tell you how it is in our own case. I'd say that both of the scenarios you mentioned could be valid. If you don't do late fees, tenants may very well know they don't actually have to pay in time. I'd say that would be the more likely option... they *could* be scared of extra fees and be sure to pay in a timely manner, but that's probably less likely. Okay, with our rental, the tenant does indeed get slapped with late fees. He had a terrible time keeping up with the rent and we thought he'd have to leave for a while. He wasn't even keeping up after the late fees were added and gut instinct told me that he'd never catch up because it just kept mounting. It's a D.C. single detached home, so it wouldn't have really been difficult getting a replacement tenant... *but* the property manager felt that the late fees would help get the guy on track and sure enough, they did. The manager even set up a payment plan for a few months because this *is* an excellent tenant otherwise and we really didn't want to lose him. He's not been late with a payment for quite a while now... so in this particular case, late fees worked because it drove the point home that rent needs to be one of his top priorities.
I also think that it's important to have a late fee put in place as a deterrent to people. It shows them that they have a set date to pay by and it will cost them more if they don't abide by it. Having said that, it's entirely at your discretion if you decide to implement it or not. I think it's always best to find the reason behind the late payment first of all.
I think it would deter people from paying their rent late. I guess it would depend on the circumstances of why they didn't pay their rent on time. There are a lot of valid reasons why somebody could be late. If you are going to charge a late fee it should be written up in the lease. I realize that there are some who take advantage of it but most people have their rent paid on time.
I agree with the late fee as being a deterrent to delinquent tenants. But most of the tenants I know who do not pay on time have their "valid" reason or a coated alibi. Like in our previous landlord who is very kind and generous to her tenants, one tenant would always say that their salary is delayed so the landlord would just nod in agreement and take another promise. In that case, fees for late rental would not apply since the landlord is generous. But personally, if I would have a property to be rented out, I would be imposing penalties for late rental although it would be on a case to case basis. At least I have a legal hold on the erring tenant.
I know it's always been hard for me (not so much for our property manager hehe) to give late fees when the reason given for lateness seemed genuine. I've often felt bad about that... but then it happened more and more and I started getting over it. It really seemed as if the tenant caught on that all he needed was a sob story and he could pay late. I'm thinking, difficult as it may be, we (generic "we") should always have some kind of backup money for these reasons... especially rent. If you can't pay the electric bill, the electric company will often help or set up a plan. Same with heating fuel, etc. But rent seems to be in a different category. I always put it first when we were renting... just seemed a step above in importance. If you're $500 short on rent money, I strongly feel that *somehow* you should have at least that much backup squirreled away. You loose heating oil and get cold... but you get evicted and you're homeless... not the same level at all.
Reading all the replies made me conclude that late rental fees should indeed be implemented but with a little bit of consideration on the side. It's indeed a good idea to clearly mention about late fee charges at the very beginning of the lease contract but during the event that a tenant cannot pay his/her rent on time, it's already on the landlord's discretion if he/she will implement the charge after hearing the tenant's reasons for paying late.
I agree with the little bit of consideration because sometimes people experience a shortage of finances that cannot be helped like when there is an emergency. To me, the late fees for rental payments can be applied to the habitual delinquents who are obviously having the intent not to pay the rent on time. In other words, it is on a case to case basis in the issue of late rental payments.
