calculating interest on tenant dept.

[Markatthepub]

Hi,

I have a tenant who owes about £1000 in rent. This comes from the rent being a bit short each month.

I don't wanmt to evict but I do want to start charging interest at 8% pa. This is allowed for in the AST.

Is it simply a matter of calculating 1000 * 8%/12 to give me the monthly interest. I then add that to the outstanding debt next month?

thanks
Mark

[Markatthepub]

Fair comment, I'll change it in the next AST

[Miffy]

Hi,

I have a tenant who owes about £1000 in rent. This comes from the rent being a bit short each month.

I don't wanmt to evict but I do want to start charging interest at 8% pa. This is allowed for in the AST.

Is it simply a matter of calculating 1000 * 8%/12 to give me the monthly interest. I then add that to the outstanding debt next month?

thanks
Mark

The trouble is that this interest is peanuts-under £7 per month! Is it worth it? I would recommend adding a "late fee" into your contract and charging for reminder letters every 2 weeks or so that the rent remains in arrears.

On another note, if you peg your interest charges to a bank's base rate, that just leads to more hassle for you to keep those records-especially when the rates are changing all the time as they are at present.

[attilathelandlord]

Just get rid of them! Why on earth do you want to hang onto a tenant who is not paying the full whack?

[cillitbanger]

i think you will find this is a bit of a grey area, i belong to the consumer action group and when reclaiming bank charges we are told we can only claim the 8% int from when the charge occurred.
so basically you can only claim interest on the underpayment at the time it occurred i.e if your tenant say pays you £450 a month when the full rent is £500 then you can only claim 8% on the £50 from the day it was due.
Not on the £1000!

[Paragon]

So, as I understand it, he short changes you every month by not paying the full agreed rent. Is that right?