How Do I Handle a Tenant Who Falls Into Rental Arrears or Refuses to Pay?
Rental arrears run on your state's tenancy law, not self-help. The general process, plus bond, landlord insurance and property-manager options.
A tenant in rental arrears has fallen behind on rent they owe under the lease. A tenant who “refuses to pay” has stopped paying altogether, with or without a stated reason. Either way, what you can and can’t do next isn’t a judgement call — it’s set out in your state or territory’s own residential tenancy law, with its own notices, timeframes and tribunal. This guide covers the general shape of that process, the risk-transfer tools available to you (bond, landlord insurance, a property manager), and exactly where to find the specific figures for your own state.
How do I handle a tenant who falls into rental arrears or refuses to pay?
The broad shape of the process is the same everywhere, even though the specific notice periods and forms differ by state and territory: keep a clear record from the first missed payment, contact the tenant promptly (ideally in writing as well as by phone), escalate to the formal notice your state’s tenancy Act requires if informal contact doesn’t fix it, and apply to your state or territory’s residential tenancies tribunal for an order if the arrears still aren’t resolved after that notice period expires.
What a landlord can’t lawfully do, in any state or territory, is skip that process. Changing the locks, removing a tenant’s belongings, or shutting off power, water or gas are not lawful ways to deal with unpaid rent anywhere in Australia — the formal notice-and-tribunal process exists precisely so a landlord doesn’t have to (and isn’t allowed to) act unilaterally.
Two specifics matter more than anything else and neither one is a national constant: the exact notice period before you can apply for a termination order, and the minimum arrears amount or circumstances that let you issue that notice. Both are set entirely by your own state or territory’s Act. Get them from your own state’s tenancy regulator, or a property lawyer or tenancy advocate, before you rely on any generic guide — including this one.
Why isn’t there one national notice period or process?
Residential tenancy law in Australia sits with the states and territories, not the Commonwealth — there is no single national Residential Tenancies Act. Each jurisdiction runs its own statute, its own regulator, and (in most cases) its own bond arrangement. The Act and regulator names below are current as at July 2026 — tenancy law does get amended, so treat this as a starting point rather than a permanent reference:
| State/territory | Residential tenancies Act | Regulator |
|---|---|---|
| NSW | Residential Tenancies Act 2010 | NSW Fair Trading |
| VIC | Residential Tenancies Act 1997 | Consumer Affairs Victoria |
| QLD | Residential Tenancies and Rooming Accommodation Act 2008 | Residential Tenancies Authority (RTA) |
| WA | Residential Tenancies Act 1987 | Consumer Protection WA |
| ACT | Residential Tenancies Act 1997 (ACT) | Justice and Community Safety Directorate |
| TAS, SA, NT | Each runs its own Act and regulator | Check your own state or territory government website — see the note below |
Bond handling is just as state-specific. NSW bonds go through Rental Bonds Online; in Queensland the RTA both administers the Act and holds bonds itself; in WA, bonds are lodged with Bonds Administration inside Consumer Protection WA. Moneysmart’s own glossary — a federal consumer body, not a state one — confirms a bond’s amount “varies between different states and territories,” which is itself evidence that there’s no single Australia-wide figure to quote. Tasmania, South Australia and the Northern Territory each run their own tenancy law and bond arrangement too; rather than guess at the details, go straight to that state or territory’s own government site.
What’s the actual step-by-step for unpaid rent?
- Keep a rent ledger from day one. Every payment, every missed payment, the date and the amount. This is the record you’ll need if the matter ever reaches a tribunal.
- Contact the tenant early, before arrears build up. A phone call or message resolves plenty of one-off missed payments; note the date and outcome of the conversation either way.
- Issue the formal notice your state’s Act requires if informal contact doesn’t resolve it. Every state and territory has a defined notice for rent arrears (often called a breach notice or a notice to remedy) — but the exact form, the arrears threshold that lets you use it, and how many days the tenant then has to pay or vacate are all set by your own state’s Act, and they are not the same number in every state. Your state regulator’s page (linked above) has the current form and timeframe.
- Apply to your state or territory’s residential tenancies tribunal if the notice period expires unresolved. Every state and territory runs its own tribunal for this — the regulator pages linked above name the right one for where your property is.
- If the tribunal makes an order and the tenant still doesn’t pay or leave, enforcing that order is again a state-specific process, run through the tribunal and, where relevant, the sheriff or police.
None of these steps is optional, and none of the timeframes in step 3 can be safely assumed from another state or from a friend’s experience — check your own regulator before acting.
Can I use the bond to cover unpaid rent?
Generally, yes, at the end of a tenancy the bond can be claimed against arrears owed — but the amount actually held, what it can be claimed for, and whether the tenant needs to agree or a tribunal order is required, are all set by your own state’s Act and bond authority (linked above), not by a single national rule.
A bond isn’t a substitute for the notice-and-tribunal process above. In most states it’s released — to either party, or split — at the end of the tenancy or by agreement during it, not drawn down as an ongoing top-up while the tenancy continues. Treat it as the final backstop, not the first response to a missed payment.
Can landlord insurance help if a tenant stops paying?
Landlord insurance is an optional add-on insurance product — not a legal requirement — that sits alongside standard building or contents cover. Under ASIC’s own regulations (reg 12G), an “add-on landlord insurance product” — ASIC’s defined regulatory category for landlord insurance sold alongside another purchase — is one that covers loss of, or damage to, leased property, and/or “financial loss, including loss of rental income, relating to a lease of real property.” That second limb describes the cover relevant here whether a policy is sold as an add-on or bought standalone: a policy that includes loss-of-rent cover can pick up some of the income you lose while a tenant is in arrears or while you’re going through the tribunal process, subject to whatever limits and waiting periods that particular policy sets.
As at July 2026, no government body — Moneysmart included — publishes a typical or average landlord insurance premium, so there’s no benchmark figure to quote here. Insurers commonly market extra inclusions like malicious tenant damage cover alongside loss-of-rent cover, but the exact mix of inclusions, limits and exclusions varies by insurer and policy — read the product disclosure statement for any policy you’re comparing rather than assuming one policy covers what another does.
One tax-related detail worth knowing: the ATO’s own rental properties guide lists insurance — including loss-of-rent cover — among the expenses landlords can generally claim as an immediate deduction in the year they’re incurred, provided you (the owner) actually pay it and it isn’t reimbursed by the tenant. Tax outcomes depend on your circumstances — speak with a registered tax agent before acting.
Should I handle arrears myself, or use a property manager?
There’s no universal right answer here — it comes down to factors specific to you, not a single best choice:
- How much time you have to monitor rent and respond quickly to a missed payment.
- How comfortable you are issuing formal notices and, if needed, presenting your case to a tribunal.
- How many properties you hold, and whether you already use a manager for other reasons.
- What a manager’s ongoing service actually includes for arrears specifically — ask before you sign, rather than assuming.
Property managers commonly handle rent-arrears follow-up, formal notices and tribunal liaison as part of an ongoing management service. What that costs isn’t set by government — the Queensland Government, Consumer Affairs Victoria and Consumer Protection WA all confirm management fees are a private, negotiated arrangement between owner and agent, not a fixed or legislated rate. REIQ — an industry body, not a government source — publishes indicative ranges of ongoing management fees as a percentage of weekly rent (figures as at July 2026; commercial rates move, so treat these as indicative rather than fixed):
| State/territory | Typical ongoing fee (% of weekly rent, metro) |
|---|---|
| QLD | ~9% (7–12% regional) |
| NSW | ~5–8% (5–12% regional) |
| VIC | ~5–10% (6% regional) |
| SA | ~9–15% (9–11% regional) |
| TAS | ~5–10% |
| WA | ~8.5–11% (11%+ regional) |
| NT | ~5–10% |
| ACT | ~6–8% (8%+ regional) |
Nationally, REIQ’s figures land roughly in a 5–12% range, most commonly 7–10%, plus a separate letting fee most agencies also charge. Fees are negotiable — get more than one quote and confirm exactly what arrears handling is included before comparing prices.
What if my tenant is in genuine hardship, not just refusing to pay?
Arrears caused by genuine hardship (job loss, illness, a family emergency) and arrears caused by a tenant who simply won’t pay can look identical on a rent ledger, but they call for different judgement from you as the landlord. Some options worth knowing about, without any one of them being the “right” choice for every situation:
- Negotiating a short-term repayment arrangement directly with the tenant, in writing, alongside (not instead of) the formal process above.
- Using a free dispute-resolution or mediation service if your state’s regulator offers one, before a tribunal hearing becomes necessary.
- Proceeding straight to the formal notice and tribunal process if informal arrangements have already been tried and broken.
Which of these fits depends on your own risk tolerance, the tenant’s history, and the specific rules your state sets around notices and tribunal timeframes — a property lawyer or tenancy advocate in your state can help you weigh it up for your situation.
Where this fits into managing an investment property
Unpaid rent is one of the sharper swings on the cash-flow side of holding an investment property — see our guide to cash flow positive versus negatively geared property for how rental income and costs interact more broadly. And if you’re still working through the fundamentals of what property investment involves before getting into a specific operational question like this one, our guide to what property investment in Australia actually involves is the place to start.
