Interest On late Rental Payments

[taheemr]

Dear all,

I have a tenant who has been persistently late by 2-5 days in paying her monthly rent, quite deliberately I might add.

She has decided to leave this month and I wish to make deductions for late payments over the last 11 months or so exercising the late payment clause, given that the tenancy is a periodic one.

1 - Can I do this by deducting monies from her deposit.
2 - The contract states 6% interest per annum, per each day of delay, how do I interpret this,

ie 6/365*Monthly Rent = ££ penalty for each day

Many Thanks

[westminster]

1 - Can I do this by deducting monies from her deposit.
You can try, but the tenant may dispute it. Then it'll be up to the deposit scheme's adjudication, or the court, to decide whether the term is enforceable.


2 - The contract states 6% interest per annum, per each day of delay, how do I interpret this

OFT guidance on unfair terms in tenancy agreements states (but note that this is only guidance, not the law):


We regard the requirement to pay unreasonable interest on arrears of rent, at a rate substantially above the clearing banks' base rates, as an unfair penalty. We regard the imposition of a fixed daily or monthly charge for overdue rent, and regardless of the amount due or the surrounding circumstances, as being penal rather than compensatory in nature, and unfair. Tenants would have to pay more than the cost of making up the deficit caused by their default.

[fletchj]

The rates you quote seem reasonable so, I would think not penal, but by my caculations so not worth it.

Say rent is 1000 pinds per month. (you don't say)

On a simple division basis (as you suggest) 6%/365 is 0.0164% per day which is 16.4 pence per day on 1000 pounds

Say on average she was 3 days late for 11 months.

That is a total of 33 days overdue on 1000 pounds giving a grand total of about £5.24.

[taheemr]

On that basis it hardly seems worth the hassle then.

Generally though, I understand that the L makes the deductions and then its upto the T to refute, if indeed they disagree.