DEALING WITH RENT DEFAULTS

Authored by - Asha Mathew                                                                                                                                    Inability to pay rent is a growing concern among tenants with the ever growing uncertainties around the COVID-19 pandemic – pay cuts, lay-offs are just the tip of the iceberg. For house owners who completely depend on incoming rent for income, this could mean a loss of sustenance for their families. The concern, hence, is very real.

At Raksha Property Management, the rate of defaults during this COVID-19 situation has been less than 5%. “To a great extent, this is because of the rapport and trust that we have been able to build with our clients – both house owners as well as tenants,” observed the Director-Operations at Raksha Property Management. “At times, a lot of mediation had to be done before we finally arrived at a situation that seemed win-win to both the owner and the tenant.”

Solving rent default issues is pretty difficult even on an ordinary work day. With the COVID-19 losses attached to it, it had become a real tightrope walk. So here’s what they did at Raksha to help them through these tough times:

Foresight and Strategy: “At Raksha, we did not wait, till we were in the middle of the storm, to act upon the situation,” said a senior property manager with the firm. The moment the lockdown started, it dawned upon them that this would pull longer than what was initially predicted. The team swung into action - looking at their database and the past payment patterns of clients. Who were the tenants that they were sure could get through this tough situation without too much crunch? Who were the house owners who could afford to take a delay in payment in a crisis like this? What kind of buffer would they need?

Personal Touch:One of the mission statements at Raksha is ‘To Care all the Way’. The team was sure that they did not want to let go off this objective at a crucial time like this. Calls were made periodically to all clients to be assured of their safety and health. If there was a need or concern, the firm rose to the occasion to help the client. “Empathy is important- no matter what business we are in. When clients know that our relationship with them goes beyond just the monetary transactions, they will mostly fall back on us during a difficult situation like this. This bond has to be fostered through the continuous interactions that we have with clients. It is not something that sprouts overnight,” remarked one of the founders of Raksha Property Management.

The Juggle: Then came the part of dealing with the actual defaults. Here is where the homework that was done, right in the beginning, came handy. A lot of patient mediation had to be done between owners and tenants. “In some cases we were able to convince the owners to waive off the annual increase in rent. In another, we could get the owner to collect less rent for a few months. Yet another case saw us insisting that the tenant pay up, as we learnt that the default wasn’t because of a genuine reason. The person was just milking the situation to his benefit. Each situation had to be handled differently and with care and I think the team did a good job of it,” added the Director-Operations of Raksha Property Management.

It was a difficult time for the team at Raksha too but they managed to sail through the situation without any rude shocks because of their foresight, planning and personal approach towards the clients.


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