View Full Version : Interest on outstanding rent
28-10-2005, 19:01 PM
On the reverse of AST it states that rent over 2 weeks outstanding can be charged at 4% above bank rate (i.e 4.5%) so 8.5% on outstanding rent is charged IS THIS CORRECT ?
28-10-2005, 19:42 PM
As far as I am aware you can claim statutory rate of interest on any money owed when suing in small claims. This interest rate is 8%(again as far as I am aware....this may have changed, and I am not sure how you calculate it so your statement could be correct). As for the amount of time passed before you can claim this, I'm sorry but I have no idea. However, I would suspect that it is longer than 2 weeks.
28-10-2005, 19:51 PM
I charge this on my late payers, but to be honest it is very small amount and I just use it to deter late payment.
For example, and I think this is right, if a tenant is late on a £500 rent, it works out about 12 pence a day! in interest.
But of course letting agencies often act like banks do in this respect - charging £20 for a chase-up phone call and £30 for a letter. The charges would have to be in the contract to start with, I guess. If you feel peeved about getting paid late and want to change things next time maybe this is the way to go.
Personally I think looking the tenant in the eye, having the conversation and making them understand they can't take the mickey on late payments is the first post of call, make it clear that it does not make you view the renewal of the tanancy favourably.
I wonder how my building society would react if I told them sob stories and was late with mortgage payments....?
29-10-2005, 09:59 AM
I think there is a statutory provision, at least for commercial leases, that rent is not considered late if it is no more than 2 weeks late. This may have something to do with the clause mentioned in the your act.
However, the rate mentioned is an annual rate and will only be charged in respect of the number of days rent payment is late.
And, why should anyone be peeved at having to pay interest if the rent payment is late?
From a landlords perspective, it is best to have a clause to charge admin fees or something similar for chasing on late or bounced payment.
29-10-2005, 14:08 PM
I believe there is something about charging only for real loss
i.e you took time to write a reminder with a statement - cost £10
Banks and credit card companies have been told off in several occasions regarding their "fees".
Jennifer, you are right. It forms part of the guidance under the Unfair Terms legislation.
They object to unreasonable charges for late payment. However they are happy if the charges reflect the amount of work a late payment causes.
30-10-2005, 15:30 PM
Thanks for help and advice, tenant has now moved out and paid outstanding rent, with no interest, just glad to see her go - once again thanks
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