Rent Arrears

Frequently asked questions

How long before rent becomes official arrears?

Rent is technically in arrears the day after the contractual due date passes without payment. In practice, most landlords allow a grace period of 5 to 10 days before taking formal action. In the UAE, a cheque bounce (a common payment method) is an immediately notifiable event and can trigger legal proceedings within days. In the US and UK, most eviction processes can only begin after rent is 7 to 14 days overdue depending on state or local law.

How do you calculate the financial impact of rent arrears on your portfolio?

Arrears directly reduce your effective annual rental income and cash-on-cash return. If a tenant owes two months of AED 10,000 rent, that is AED 20,000 in lost cash flow until recovered. If unrecovered, it reduces your annual net yield by roughly 1.7 percentage points on a AED 1,200,000 property. Tracking arrears as a percentage of total rent roll is a useful portfolio health metric; anything above 3 to 5% signals a collection problem.

What is the difference between rent arrears and a bounced cheque?

Rent arrears is the broader term for any overdue unpaid rent, regardless of cause. A bounced cheque is a specific type of payment failure where a post-dated cheque is dishonored by the bank due to insufficient funds. In the UAE, bouncing a cheque is a criminal offense under federal law, which makes it a much more serious and legally actionable situation than simple arrears. IONROI tracks both OVERDUE and BOUNCED payment statuses separately for this reason.

Does unpaid rent affect my rental yield calculation in IONROI?

Yes. IONROI only counts rent payments with a status of PAID or PARTIAL when calculating income for analytics and yield metrics. Rent that is PENDING or OVERDUE is excluded from income calculations until it is actually received. This gives you an accurate cash-basis view of your returns rather than an accrual-basis figure that might overstate income. This distinction is important when comparing your reported returns against actual cash in your bank account.