Interest on Late Rent

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    Interest on Late Rent

    Hi,

    I'm a landlord of a property that was let to students on an AST where the rent was paid to me from one joint bank account. The students occupied the property for two years but with a change in two of the tenants at the end of year one but the signing of a new AST. I agreed to carry over the deposits from year 1 with only the two new tenants having to pay their 'share'. Rent was late from from the start by the new tenants, one in particular including deposit cheques bouncing etc. On the request of the other tenants I chased the guarantors for payment which after much hassle was eventually forthcoming, however over subsequent months rent was again late. Having given written notice somtime before the tenancy in year two started, stating that interest is charged on late payment as per contract, the tenants are disputing the interest.

    The Clause in the contract states: "pay interest at the rate of 4% above the BLR for the time being of the Landlord's bankers upon any rent or other money due from the Tenant under this agreement which is more that 3 days in arrear in respect of the period from when it became due to the date of payment." There was a total of £4686.50 late over a period of approx 6 months and I have charged £1,707.90 interest. This is calculated at 4% above base per week that the rent is overdue. Would this hold up in court? As the loss I sufferred in lost time in chasing the money is far greater! I currently am withholding the deposit and tenants are threatening court action. Would appreciate any advice. Many thanks

    #2
    Originally posted by ra1981
    Hi,

    I'm a landlord of a property that was let to students on an AST where the rent was paid to me from one joint bank account. The students occupied the property for two years but with a change in two of the tenants at the end of year one but the signing of a new AST. I agreed to carry over the deposits from year 1 with only the two new tenants having to pay their 'share'. Rent was late from from the start by the new tenants, one in particular including deposit cheques bouncing etc. On the request of the other tenants I chased the guarantors for payment which after much hassle was eventually forthcoming, however over subsequent months rent was again late. Having given written notice somtime before the tenancy in year two started, stating that interest is charged on late payment as per contract, the tenants are disputing the interest.

    The Clause in the contract states: "pay interest at the rate of 4% above the BLR for the time being of the Landlord's bankers upon any rent or other money due from the Tenant under this agreement which is more that 3 days in arrear in respect of the period from when it became due to the date of payment." There was a total of £4686.50 late over a period of approx 6 months and I have charged £1,707.90 interest. This is calculated at 4% above base per week that the rent is overdue. Would this hold up in court? As the loss I sufferred in lost time in chasing the money is far greater! I currently am withholding the deposit and tenants are threatening court action. Would appreciate any advice. Many thanks
    Your 4% above base rate is probably OK but its per year not per week.

    Comment


      #3
      Many thanks, however the contract doesn't specify a time period i.e. per week/month/year under contract. If it was a case of being overdrawn with the bank, 4% above BLR per week wouldn't cover the bank charges. What are your thoughts?

      Comment


        #4
        My thoughts are that any charges of interest over 4% A YEAR are probably illegal !!

        Zoe

        Comment


          #5
          Irrespective of whether it states a time period or not, the BLR is based on yearly interest, therefore you are automatically talking about yearly. If you try and charge it weekly I would not like to see the consequences!
          Any posts by myself are my opinion ONLY. They should never be taken as correct or factual without confirmation from a legal professional. All information is given without prejudice or liability.

          Comment


            #6
            It is not illegal to charge over the odds. I think the term you should use is actionable. Basically, it may be challenged in court and let the judge decide.

            Comment

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