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missie
21-02-2007, 22:25 PM
Just a quick question - our tenant is now owing 2 months rent, likely to be 3. We have served notice which has 5 weeks remaining. Our contract states that "the deposit is repayable..... after any deduction therefrom of any sums required to compensate the LL.....for any breach of the tenant's obligations."
Does this mean we can use the deposit to pay towards the outstanding rent as they have breached the contract. The contract states the tenant will pay "the rent......whether demanded or not and without any deduction, counterclaim or set-off".

Also - being over optimistic - can interest be charged on the rent owing?

MrWoof
21-02-2007, 22:38 PM
Our contract states that "the deposit is repayable..... after any deduction therefrom of any sums required to compensate the LL.....for any breach of the tenant's obligations." Also - being over optimistic - can interest be charged on the rent owing?Providing your agreement also states that the tenant is required to pay rent :D then yes you can use the deposit. Don't know about interest though.

Paragon
21-02-2007, 23:08 PM
I would think that you could charge interest as long as the contract states as such.

DianeB
21-02-2007, 23:29 PM
Missie, I was looking into the question of interest the other day and while browsing, read that interest could be charged on outstanding debt. The figure that was quoted was to multiply the outstanding amount by 0.00022 which would give the daily interest accrued. I may have got this wrong and/or the figure may have changed because the report was over a year old, but it certainly amused me for a while working out how much more I would never get from my evicted tenant!

alisonf
22-02-2007, 00:25 AM
Maybe I have a really greedy landlord, but my tenancy agreement states that he can charge me 4% above the current bank of England base interest rate per day for each day the rent is late.

So if I paid late he could charge me 9.25% on £995 per day!!!!! (£92.04p)

MrShed
22-02-2007, 07:30 AM
Definitely unenforceable alison - and I suspect what it means is that rate per YEAR, pro rata for each day.

Miffy
22-02-2007, 08:33 AM
Maybe I have a really greedy landlord, but my tenancy agreement states that he can charge me 4% above the current bank of England base interest rate per day for each day the rent is late.

So if I paid late he could charge me 9.25% on £995 per day!!!!! (£92.04p)

We have something like this in our rental agreement (from the Which book). However, it is pro rata! I think your LL is talking about the DAILY interest rate being 4% above annual base rate divided by 365.

If you work out the interest correctly it is virtually nothing (if we say base rate + 4% is 10% for sake of argument, daily interest rate is 0.0274%. If you are 10 days late on £500, then the interest will be £1.37. Hardly worth arguing the toss about! (Yes, I haven't used every single decimal place or worked out daily compound interest, before anyone asks :p , but I would lose the will to live before I successfully changed the answer by a few pence!)

Mr Shed, (or anyone else) is this also unenforceable? I am guessing that IF the LL genuinely incurs interest charges himself from the lack of rent money, he could enforce it, BUT IF NOT he couldn't???

What if there was a "penalty clause" stating that the tenant would pay compensation to the LL of £x for every occasion the rent was late to compensate for inconvenience? Would this be enforceable?

Ericthelobster
22-02-2007, 09:10 AM
If you work out the interest correctly it is virtually nothing (if we say base rate + 4% is 10% for sake of argument, daily interest rate is 0.0274%. If you are 10 days late on £500, then the interest will be £1.37. Hardly worth arguing the toss about!Exactly - personally I don't even consider charging interest for late payment... if I get the actual rent due that's fine by me. That's not to say I'm easy-going about when the rent is paid - far from it - but to start working out the pennies due for late payment is both soul-destroying and would I am sure be very damaging to landlord-tenant relationship.

Paragon
22-02-2007, 10:38 AM
Maybe I have a really greedy landlord, but my tenancy agreement states that he can charge me 4% above the current bank of England base interest rate per day for each day the rent is late.

So if I paid late he could charge me 9.25% on £995 per day!!!!! (£92.04p)

LOL!! Have I been shortchanging my business by insisting my tenants pay on time??

PaulF
22-02-2007, 11:27 AM
Some points you might want to consider
Just a quick question - our tenant is now owing 2 months rent, likely to be 3. We have served notice It appears you have served a S.21 Notice when a S.8 Ground 8 Notice might get you possession a little sooner which has 5 weeks remaining. Our contract states that "the deposit is repayable..... after any deduction therefrom of any sums required to compensate the LL.....for any breach of the tenant's obligations." Unless you secifically state in the AST that the deposit will cover dilapidations only then you can use this against any rent arrears, and the courts would expect you to, but..........where do you go if there are dilapidations to assess as you have no funds on which to draw?
Does this mean we can use the deposit to pay towards the outstanding rent as they have breached the contract. The contract states the tenant will pay "the rent......whether demanded or not and without any deduction, counterclaim or set-off". You cannot enforce the clause as the tenant has a right to deduct or offset costs if the landlord's failure to repair or maintain is breached under S.11 of the Landlord & Tenant Act 1985, so it should be avoided: it doesn't meet the guidelines of the Unfair Contract Terms.

Bel
22-02-2007, 18:19 PM
Just a quick question - our tenant is now owing 2 months rent, likely to be 3. We have served notice which has 5 weeks remaining. Our contract states that "the deposit is repayable..... after any deduction therefrom of any sums required to compensate the LL.....for any breach of the tenant's obligations."
Does this mean we can use the deposit to pay towards the outstanding rent as they have breached the contract. The contract states the tenant will pay "the rent......whether demanded or not and without any deduction, counterclaim or set-off".

Also - being over optimistic - can interest be charged on the rent owing?

Just a note gleaned from previous thread on this topic; if you do serve a section 8 notice for rent arrears as Paul F suggests; you do not want to be seen to use the deposit for paying off some of the arrears, as you would then have decreased the arrears and made it easier for them to get under the two months requirement if it came to court, if you still wanted possession .

Just in case you dont know (sorry if you do) if you have served a section 21; it will only work if it expires after the fixed period of the tenancy that you have granted them. You cannot get them out with a section 21 during the fixed term; then a section 8 is your only way.

DianeB
22-02-2007, 20:07 PM
I absolutely agree. My tenant did not pay and was taken to court but I kept the key money completely out of the equation and didn't use it until after he was evicted.