Charging interest on arrears

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  • Ericthelobster
    replied
    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 .

    Leave a comment:


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

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

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  • jeffrey
    replied
    Or a Court Order carrying interest from date when debt accrued until date of payment.

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  • tom999
    replied
    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).

    Leave a comment:


  • Snorkerz
    replied
    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.

    Leave a comment:


  • Lawcruncher
    replied
    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

    Leave a comment:


  • michaelmichael
    started a topic Charging interest on arrears

    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

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