Key Points
- Late rent payments are increasing in Denver and Colorado, reaching some of the highest levels in decades.
- Government rental assistance programs that stabilized payments during COVID have largely expired, reducing safety nets for residents.
- Colorado’s regulatory changes, including extended grace periods and restrictions on applicant screening criteria, have contributed to more frequent late payments.
- Application fraud is increasing in many markets, adding additional risk for housing providers.
Tenant late rent payments have become increasingly common across rental markets and this has been especially prominent in Denver. Although fluctuations in payment behavior occur from time to time, the current rise is unusually significant. Grace Property Management has tracked resident payment trends since 1978, and current delinquency levels represent one of the sharpest increases seen in decades. The trend is not isolated to Colorado. National data indicates broader financial strain, making this a growing issue for housing providers in multiple states.
Four primary factors appear to be driving this shift. We also share practical steps housing providers can take to protect their properties, support residents, and minimize delinquencies.
Why Tenants Are Paying Rent Late:
1. A Slowing Economy and Rising Consumer Debt
A cooling economy is one of the most notable contributors as to why more tenants are paying rent late. Several independent reports reflect growing financial pressure on households. Car loan delinquencies have reached record highs, and credit card delinquencies have also risen sharply.
Car loan payments are an especially important indicator because consumers typically prioritize these alongside housing payments. When large segments of the population struggle to pay their car loans, housing payments are usually not far behind.
Economic instability, slower hiring, and increased inflation are combining to reduce overall financial resilience. These stressors frequently show up in rent payment patterns.
2. Reduced Governmental Rental Aid
During the COVID period, federal and state governments deployed substantial rental assistance programs that helped stabilize payment rates. Even when tenants fell behind, available rent payment aid often ensured the rent was ultimately recovered.
Those programs have largely ended. Funding pools at the federal, state, and municipal levels have been significantly reduced or eliminated. A recent Colorado article noted that Denver has cut millions in rental assistance even as eviction cases reach new highs. With fewer safety nets available, residents experiencing financial difficulty no longer have the same support options. As a result, rent payment issues that previously would have been bridged by public programs now fall directly on housing providers and residents to resolve.
3. Paying Late On Purpose
Another trend emerging in Colorado involves residents intentionally delaying on-time rent payments, often due to misunderstandings about current state law. This is due to social and local media correctly stating that Colorado requires a seven-day period before a late fee can be charged from a housing provider. This is correct, but what is often overlooked is that even though a rent late fee cannot be charged until the rent is 7 days past due, that rent payment may still be legally considered as late rent after the day after it is due, and reported as such.
Therefore, some Denver tenants may pay rent late, but they still make payment within the 7 day late fee grace period. Because Colorado landlord late fees are capped at either $50.00 or 5% of the monthly rent, some residents choose to pay late, calculating that the penalty is minimal.
This dynamic is compounded by a longer and more restrictive eviction process. Rent demand notices in many cases must allow a full thirty days before legal action can begin, and housing providers are required to accept a full rent payments at any point in the legal eviction process. These conditions reduce the practical incentives for residents to pay promptly, even when they technically remain delinquent under their lease terms.
Unfortunately, residents who regularly pay within this seven-day window may unknowingly damage their rental history, since many future housing providers view repeated late payments as a negative reference, regardless of whether fees were charged.
4. Reduced Screening Standards and Rising Application Fraud
Historically, standard applicant screening criteria helped ensure that applicants were placed in homes they could reasonably afford. A common national benchmark requires applicants to earn at least 3x the monthly rent. Colorado placed restrictions on housing providers and reduced this standard, limiting income requirements to no more than 2x the rent amount. This shift significantly broadens the applicant pool, but also increases the likelihood that some residents may be approved for rental homes outside of their financial capacity.
Additional restrictions prevent Colorado housing providers from considering certain indicators, such as credit history for subsidized applicants. Decades of industry data show that credit performance is one of the strongest predictors of timely rent payment, yet that metric cannot be used for subsidized tenants.
Alongside these regulatory changes, rental application fraud has become more prevalent. A recent article indicated that fraudulent rental applications have increased by as much as 50% in certain markets. Fake pay stubs, altered documents, and fabricated employment histories are increasingly sophisticated. Even with enhanced verification measures, fraudulent submissions pose real challenges and elevate the risk of future rent delinquency.
Practical Steps for Housing Providers
1. Be Appropriately Reasonable and Fair
When a resident communicates that they will be late on rent, respond with balance. Setting up a payment plan when appropriate can help a resident regain stability. At the same time, avoid extending timelines indefinitely. Housing providers who allow multiple months of nonpayment often create larger problems for both themselves and the resident. Aim for fairness and firmness on both the front end and the back end.
2. Be Precise and Cautious in the Legal Process
If legal eviction action becomes necessary, follow every requirement exactly as outlined in Colorado law. Demand notices must include specific language, exclude certain statements, and be posted correctly. Mistakes in the notice or posting process can delay proceedings and create additional risk. Precision is essential.
3. Be Patient in Following the Legal Process
Eviction timelines in Colorado have lengthened significantly. Even in clear-cut cases, the process can take time, and housing providers should prepare for procedural delays. While most residents want to pay rent and do not fall into delinquency, in rare cases where payment issues persist, it is important to proceed steadily and patiently within the legal framework.
At Grace Property Management, we believe that when property management is performed with integrity and transparency, both tenants and landlords benefit. Property management is not just our business - it is a relationship between us, our owner-clients, and our tenant-residents.
If these are important to you, we may be a good fit to provide you, your property, and your tenant-resident with our full-service property management services.
Feel free to reach out to us for assistance.
Grace Property Management & Real Estate Serving real estate investors and residents since 1978.
www.RentGrace.com
303-255-1990
