Should You Charge a "Late Fee."

There are times when a tenant won't be able to pay their rent in time. Since they've got your number they'll call and inform you that for some reason they won't be able to pay their rent in time. Most will pay the money but they need something to dissuade them from paying the rent late. Would charging a late fee [up to 10% of the rent owed] be a great way to discourage tenants from paying their rent late?

 

It would work at discouraging them from paying their rent late if you charge a late fee. When I was renting rooms out in my house there was the occasion that somebody would be late but I was always understanding about it. They would tell me the reason and it most cases it was justified. I like to be as fair as I can and I realize that things happen sometimes. Most paid within a few days and some were the following week but I was fine with that. It was not going to break me to wait a few days for the rent.

 

Of course charging a late fee is reasonable if you offer easy ways to pay the rent, preferably auto-pay from a bank account, and a small leeway of a fee days from the due date--and of course it must be in your lease or contract. And there should be some avenue to make arrangements to avoid the fee if they notify you in advance and are otherwise reliable and good tenants.

If you still require checks to be sent in the mail then you are opening yourself to lots of excuses that can't be disproved like that it was lost in the mail, or checks that bounce etc. Then tenants may dispute the fee and you lose a lot of time resolving the issue.

 

I've always charged a late fee but am happy to waive it on occasion if the tenant has let us know in advance. If the rent remains unpaid with no explanation from the tenant then it costs time and money to chase it up. If the tenant has the courtesy to let me know that they will be paying late then I'm happy to waive the charge as long as they give a date by which it will be paid.

I know some landlords are slightly more mercenary but I've had hard times myself and always appreciated a bit of leeway.

 

Late rent payment is the number 1 problem of landlords here. I know of some tenants who couldn't afford the rent anymore but they have no alternative so they just stay. One is a friend who had lost his job and their finances only rely on his 2 children who are working. I have seen how his wife tried to save money but they really have no means of paying the rent. Now, the responsibility is on the shoulders of the landlord. They are lucky because the landlord is humane.

 

If it's a one time thing then I wouldn't bother. If it was happening constantly then not only would I be charging this fee (if legally allowed to) but I would also be looking for a new tenant.

 

As per my story above, that one big problem of a landlord about a delinquent tenant is that they would not move. The tenant would stay put amid the harrassment simply because they have nowhere to go to. If only the government has provided an alternative then those delinquent tenants would have a choice somehow. In fairness to the landlords here, most of them persevere with being too patient although there's a few who files ejectment cases.

 

This is one headache a landlord has to face as part of his/her business and my family wasn't spared of this headache when we used to rent out rooms from our old house. My mother would always get stressed because of tenants who pay late to the point of not paying for several months. Of course I know that it's really hard to find ways and means to budget money especially when your income is low and you have to make do with the money you have in hand and that could be the problem of some tenants. But they also fail to understand that the landlord also needs the money from their rent for him/her to be able to provide for him/herself too. I think charging at least a 10% late fee is justifiable to avoid any repetitions of late payment.

 

@gracer, I commiserate with your mother. Getting no rent for months would ruin the budgeting of the landlord and it may even reach a point that the landlord would be borrowing money to augment her finances all because of the late payment of the rent. But over here, it is not customary to charge a penalty for late remittance of rent. It is easy to say if the landlord lives in the same apartment as the tenant. But if the landlord lives far, it would be difficult when she checks her bank account and the rent was not remitted.

 

If the tenant often pays the rent late then I would charger a late fee. If this is something that doesn't happen often then I wouldn't bother to charge them extra.