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gizzmo
05-12-2005, 17:36 PM
Hello Again Guys

Would anyone be able to advise what would be an acceptable rate of interest to charge for late rent payments? Also does it make sense to expressly state this in the Tenancy Agreement? If so under which part? Also I read in the "Renting Out Your Property to Dummies" book that the landlord could also charge for having to send a letter after 7 days, again after 14 days and also after 21 days.

What if I have not expressly got anything in the Tenancy Agreement about these charges - can I send a letter stating that this will now be the case going forward? Or is that not allowed?

Again - thanks for your help in advance guys.
gizz

susan 2
05-12-2005, 18:54 PM
Gizzmo - you do not state if this is just a one off, or are they constantly paying late. If it's just the once then I would not do anything. However if they are always late, then think about removing them as soon as possible, as in my experiance late payers become non payers.They rarely get better.

MrShed
05-12-2005, 21:03 PM
You can charge for your actual financial loss due to the late payment(EG admin charges etc for letters). Not sure about interest. HOWEVER you must have such charges detailed in the AST! No you cannot state this....if the tenants agree to it, then a seperate(and binding) contract is formed. However realistically they are never going to agree!

Note that if in future you do put such clauses in, make sure you put "tenant is liable to actual charges etc" or similar, NOT "tenant must pay £35 for every late payment" - such a term is an unfair one.

gizzmo
05-12-2005, 22:14 PM
Gizzmo - you do not state if this is just a one off, or are they constantly paying late. If it's just the once then I would not do anything. However if they are always late, then think about removing them as soon as possible, as in my experiance late payers become non payers.They rarely get better.

Hi Susan - This tenant is habitually late - in fact has been late and in arrears constantly since Month 2 of the Tenancy ( now in Month 7). In the beginning she kept saying she would pay interest costs, but I waived them as a gesture of goodwill, hoping this would make her feel guilty. However - she is now taking the p*ss out of my good nature...
She is also clever - constantly keeping her rent arrears just below 2 months worth. My solicitors (through rental and legal insurance) are standing by to pounce as soon as she gets to 2 months assuming she lets slip a bit...but they won'teven pay out until she is 2 months in arrears - so I'm still stuck....

MrShed
05-12-2005, 22:18 PM
You can serve Section 8 on the grounds of persistent late payment, but not 2 months arrears. It is a discretionary ground, but you may as well!

P.Pilcher
05-12-2005, 23:11 PM
I assume she has already received your section 21 notice to quit.

P.P.

gizzmo
05-12-2005, 23:19 PM
I assume she has already received your section 21 notice to quit.

P.P.

Yes - this was served at commencement of the Tenancy

gizzmo
05-12-2005, 23:21 PM
You can charge for your actual financial loss due to the late payment(EG admin charges etc for letters). Not sure about interest. HOWEVER you must have such charges detailed in the AST! No you cannot state this....if the tenants agree to it, then a seperate(and binding) contract is formed. However realistically they are never going to agree!

Note that if in future you do put such clauses in, make sure you put "tenant is liable to actual charges etc" or similar, NOT "tenant must pay £35 for every late payment" - such a term is an unfair one.

Regarding interest - I found this clause in an AST drawn up by the RLA:

"If you owe rent or any other money legally payable to us under the agreement, you will have to pay interest on this amount from the date that it should have been paid. The interest rate is 3% above the base rate used by the Royal Bank of Scotland. This rate may apply before, as well as after, a court judgment has been made against you, depending on the terms of the court judgment."

I have also seen similar through my research referring to 4% above base rate for Natwest.

Would these terms be unfair then MrShed?
Thanks

MrShed
06-12-2005, 07:31 AM
That would seem fair to me gizzmo as it is not fixing the interest rate....I believe the issue with what I said above is fixing any charges is unfair, as the charge may vary, and interest rates certainly vary. I think 3% above base rate would be a maximum, not 4%, otherwise you run the risk of being challenged in court for the high interest rate. However, bear in mind that when taking somone to small claims court you can add the statutory interest rate on the outstanding money, which is, AFAIK, currently 8%!

dazalock
06-12-2005, 11:46 AM
I use the law society rate, which is 4% above barclays. You can find the current rate via a recorded message on 0870 606 2511.

gizzmo
06-12-2005, 15:19 PM
Thanks for your help Guys. I will look to include this type of clause then in future Tenancy Agreements, as I am currently looking for new tenants for my second property and don't want to have the hassles I had with this current tenant.

Interestingly enough - my mere threat to start charging interest put to her verbally resulted in her making a CHAPS payment today - not the whole outstanding rent - but a sizeable chunk of it - so it seems like it has done the trick for now - albeit temporarily.

This is a great site - dunno what I would have done had I not found it....
Cheers Again!!!

PaulF
08-12-2005, 22:05 PM
Gosh! What a lot of wind about very little.

A landlord may charge a "reasonable rate" of interest for late payments if they are 14 days in arrear. 4% above BoE base rate is quite acceptable.
You don't have to have anything within the AST to be able to make an admin charge for send the tenant arrears letters. All you have to have done is advise the tenant in writing that "reasonable charges" may be made for such action, before they signed the tenancy agreement. Having it in the AST is fine but not strictly necessary, but the clause should have been pointed out to the tenant and not "sneaked" in; in other words pre-tenancy protocol should be strictly observed!