ACT Late Fees: Rules on Rent Arrears and Penalties

The Australian Capital Territory (ACT) strictly regulates how landlords can respond to late rent payments under the Residential Tenancies Act 1997. Australian courts generally view daily penalty fees as unfair, focusing instead on proactive communication and formal eviction notices if rent remains unpaid.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Always consult the ACT Revenue Office or a qualified solicitor before issuing notices for rent arrears. Information last verified: March 2026.

Penalty Late Fees are Unenforceable

In the ACT, a landlord cannot charge a tenant a punitive flat "late fee" (e.g., $50 per day) for missing a rent payment.

The Standard Residential Tenancy Terms do not include provisions for late rent fees. If a landlord attempts to add a "Special Condition" to the lease allowing for arbitrary late fees, ACAT (the ACT Civil and Administrative Tribunal) will likely strike it down as an unenforceable penalty clause under Australian contract law.

While minor, reasonable administrative costs (such as a bounced bank cheque fee charged to the landlord) may theoretically be recoverable, standard operational costs cannot be arbitrarily passed on as late fees.

The Legal Response: Rent Arrears Process

Because landlords cannot rely on late fees to penalize tenants, the ACT law focuses entirely on the process of recovering the rent or recovering the property through eviction.

When a tenant falls into arrears, the landlord should follow a strict timeline:

1. Wait the Statutory Period

The tenant must be continuously in arrears for at least 7 days before formal legal action can commence. During this first week, landlords should send polite reminders to determine if the missed payment was an oversight.

2. Issue a Notice to Remedy

On the 8th day of arrears, the landlord can serve a formal Notice to Remedy.

• This notice must be in writing.
• It provides the tenant with an additional 7 days to pay the outstanding rent.

3. Issue a Notice to Vacate

If the tenant has still not paid the full arrears after the 7 days specified in the Notice to Remedy have expired, the landlord can serve a Notice to Vacate.

• This notice must give the tenant at least 14 days to vacate the premises.

The "Pay and Stay" Rule

Crucially, in the ACT, if the tenant pays the full rent arrears before the 14-day Notice to Vacate period expires, the Notice to Vacate becomes void, and the tenancy continues. The eviction is cancelled.

Note: If a tenant repeatedly falls into arrears—specifically, if a landlord has had to issue a Notice to Vacate on two previous occasions under the same tenancy—ACAT may allow an eviction to proceed even if the tenant pays up on the third occasion.

Deducting from Bond

If a tenant vacates a property and still owes rent, the landlord can claim those arrears from the rental bond held by the ACT Rental Bonds Office. Landlords cannot demand that rent arrears be paid out of the bond while the tenancy is still ongoing.

How Landager Helps

Instead of relying on unenforceable late fees, Landager builds a perfect digital paper trail. Our system issues polite, automated reminders when rent is 1 day late. If rent remains unpaid on day 8, Landager automatically generates a legally compliant, precision-timed ACT Notice to Remedy, ensuring your eviction process holds up in ACAT if disputes occur.

Back to ACT Landlord-Tenant Laws Overview.