Charging interest on arrears

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    Charging interest on arrears

    Our tenant has accrued some rental arrears (but less than 2 months ).

    Whilst we have a facility to 'cover it'-our rental account is now in overdraft and thus accumulating fees.

    When the tenants contract ends (in about 4 months ) and assuming there are no further rental shortfalls- what are peoples views on charging the outgoing tenant costs (say at 3% over base rate ) on the arrears and withholding this from any deposit due back.

    Our AST agreement does not actually specifically allow for this; but to me seems a legitimate 'expense'.

    I would thus appreciate other views on this and indeed of others have charged similarly.

    Equally-has anyone got such a clause in their own AST agreement-any wording for next time may be useful.

    many thanks

    You cannot charge interest if the agreement does not provide for it, nor can you claim as damages any interest or bank charges you have had to pay.

    Here is a clause (to be adapted as appropriate) to include in the tenant's obligations:

    (a) In this clause “Interest” means a sum calculated at four per cent above the published base rate from time to time of *** Bank plc compounded on each usual quarter day and to be paid both before and after judgment or arbitration award
    (b) To pay Interest from the due date until payment on any sum paid more than seven days after it falls due


      I am sure I have read that interest can not be charged, full stop, unless you have a consumer credit license.

      You can charge an 'admin' fee for late payments if it's in the agreement, but it has to reflect the true cost of the admin involved.

      I charge £5 per letter which covers my time and the cost of Recorded Delivery postage.

      Interest on £800 rent at 3.5% is around 8p a day.


        Agree with Lawcruncher; unless the tenancy agreement states that interest can be charged and the terms*, i.e. rate of interest charged for late rental payments, then interest cannot be charged.

        * Example AST clause:
        "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 Bank of ********. 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. "

        Originally posted by Snorkerz View Post
        I am sure I have read that interest can not be charged, full stop, unless you have a consumer credit license.
        You may be getting confused with loan agreements, which may have a provision for charging interest. For a UK based property rental business, a CCL is not required, just a clause* in the tenancy agreement (AST).
        The information in my posts is provided 'as is'. This is not intended to be legal advice. Legal or other professional advice should be sought before acting or relying on this information or any part of it. I will not be held responsible for loss or damage arising from errors in the information or the way in which a person uses the information on this . For more information on your query use the '' link at the top of this page. Agreements, Forms & Notices can be found .


          Or a Court Order carrying interest from date when debt accrued until date of payment.
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).


            Thanks for replies.
            any further thoughts/advice /input always welcome


              Why not concentrate on eviction? Have you considered issuing a section 8 notice citing grounds 10 and 11.


                Originally posted by michaelmichael View Post
                any further thoughts/advice /input always welcome
                As Snorkers has pointed out, with interest rates at current levels the amount potentially due is pennies (and then you'd be paying tax on it!), so I really don't know why you're bothering - it's not worth the effort in working it all out and then enforcing payment.

                Certainly has no deterrent value either - admin fees for letters (if pemitted under your agreement) might have some effect though .


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