Rent collection for landlords: getting paid on time, every month

The most reliable way to collect rent is a monthly debit order set up when the lease is signed, timed a day or two after the tenant's payday, with EFT against a fixed tenant reference as the alternative. Issue receipts for every payment, bill utility recharges clearly, keep the deposit separate in an interest-bearing account as the Rental Housing Act requires, and follow a written arrears process from the first missed day.

This guide is for private landlords with a handful of units, small rental agencies and managers of residential or commercial portfolios.

Setting up rent collection at lease signing

Capture everything you need before the tenant moves in:

• Lease with rent amount, due date, escalation, and consequences of late payment
• Tenant's contact details and, for companies, registration and VAT numbers
• Payment method: debit order mandate signed by the account holder, or a fixed EFT reference
• First month's rent (pro-rata if moving in mid-month) and deposit paid before handing over keys
• Utility recharge rules (water, electricity, refuse) and meter readings at move-in

Debit order or EFT?

For residential portfolios of more than a few units, debit orders usually save time and reduce arrears. See how debit orders work. If you use EFT, give each tenant a fixed reference such as their unit number plus a code, and never rely on the tenant's name. See payment reference best practice.

Deposits under the Rental Housing Act

For residential leases, the Rental Housing Act sets rules on deposits. In broad terms:

• The landlord must issue a written receipt for the deposit (and for other payments).
• The deposit must be invested in an interest-bearing account, with interest accruing for the tenant's benefit; the tenant can ask for proof of the interest.
• At the end of the lease, after a joint inspection, the landlord must refund the deposit plus interest, less amounts lawfully deducted, within set time limits. Where nothing is owed, the refund must be made within 7 days of the lease ending; where deductions are made, the balance is due within 14 days of the property being restored to the landlord.

Keep the deposit out of your operating account, and record it as a liability, not income. Check the Act and take advice on your specific situation.

Utility recharges and extra charges

• Bill utilities as separate lines on a monthly invoice with the meter readings or municipal account basis.
• If rent and recharges are collected in one debit order, make sure the mandate allows a variable amount and send the invoice before the debit runs.
• Late payment fees or interest must be in the lease; for residential tenants, keep them reasonable.

Receipts and statements

Tenants are entitled to receipts, and statements prevent disputes. Send:

• A receipt for every payment received.
• A monthly statement showing rent, recharges, payments and balance.

For VAT: residential rent is generally an exempt supply, while commercial rent is generally taxable if the landlord is a VAT vendor. Commercial tenants will need valid tax invoices. Check with your accountant.

When rent isn't paid

Act from day one:

1. Day 1–3: reminder with a payment link (card or instant EFT) and EFT details.
2. Day 7: phone call to understand the problem.
3. Day 10–14: written letter of demand in line with the lease, giving a period to remedy the breach.
4. Agree a payment plan in writing if the tenant can pay over time.
5. Legal steps if the breach isn't remedied: take advice before cancelling the lease or starting eviction proceedings.

Evictions of residential occupiers must follow the correct legal process (including a court order). A landlord may not lock tenants out or cut off services to force payment. Speak to an attorney or your local Rental Housing Tribunal.

Reports for landlords and agents

• Rent roll: expected rent per unit per month.
• Collected vs expected, and arrears by tenant and age.
• Unpaid debit orders by reason code.
• Deposits held per tenant, with interest.
• Utility recharges billed vs municipal accounts.

How CentraPoint helps

CentraPoint lets landlords and agents bill monthly rent as recurring plans per tenant, add utility recharges to invoices, collect by Netcash debit order (with online mandate signing), card, instant EFT or EFT with proof of payment, and send branded invoices, receipts and statements automatically. Arrears trigger reminders with payment links, and reports show collected vs expected rent. Deposits should still be held in a separate interest-bearing account. See invoices and debit orders in the docs.

Frequently asked questions

What is the best way to collect rent from tenants?

A monthly debit order set up at lease signing, timed just after the tenant's payday, is usually the most reliable. EFT with a unique tenant reference is a good alternative.

Must a landlord keep the deposit in a separate account?

For residential leases, the Rental Housing Act requires the deposit to be invested in an interest-bearing account, with the interest for the tenant's benefit.

How quickly must a deposit be refunded?

Where nothing is owed, within 7 days of the lease ending. Where the landlord makes deductions, the balance must be refunded within 14 days of the property being restored to the landlord.

Can I switch off electricity if a tenant doesn't pay rent?

No. Cutting services or locking tenants out to force payment is unlawful. Follow the lease and the legal process, and take advice before cancelling a lease or seeking eviction.