Consumer Credit Act and Tenancy Agreements

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  • Consumer Credit Act and Tenancy Agreements

    Hello,

    Does anyone know if tenancy agreements are subject to the consumer credit act and what are they implications if the are.

    I want to charge interest over the standard 4% above BoE rate on late rent not agreed in advance, this will form part of the core terms (L agrees to wait 2 months for the first rental payment, also no deposit paid) so not subject to OFT (Part of the core terms). Are the any other regs I should be aware of such as

    Unfair relationships?

    Thoughts please

  • #2
    http://http//www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

    Yes it's unfair.
    Page 26.

    Recent Landlord training meeting stated, a fair charge would be having in the Tenancy that you will charge £10 admin letter, re; rent arrears letters.

    Comment


    • #3
      Originally posted by natt48 View Post
      Hello,

      Does anyone know if tenancy agreements are subject to the consumer credit act and what are they implications if the are.

      I want to charge interest over the standard 4% above BoE rate on late rent not agreed in advance, this will form part of the core terms (L agrees to wait 2 months for the first rental payment, also no deposit paid) so not subject to OFT (Part of the core terms). Are the any other regs I should be aware of such as

      Unfair relationships?

      Thoughts please
      OFT guidelines have no legal effect- they're merely guidelines.
      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 http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
      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).

      Comment


      • #4
        I think the general consensus is that, even without regard to any legislation, interest that exceeds 4% above base rate is penal. It is unwise to provide for a higher rate because if it is found to be penal no interest can be charged at all; you cannot "correct" the rate to a reasonable rate.

        The reason for this is that any damages for breach of contract must not exceed the loss suffered. The yardstick by which loss is measured when interest is charged on late payments is the interest which would have been earned if the amount in question had been placed on deposit in an account where funds can be withdrawn at short notice.

        Comment


        • #5
          Yes. The Law Society's prescribed rate, applicable to most sale/purchase residential conveyancing contracts, is Barclays Bank plc base rate + 4.
          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 http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          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).

          Comment


          • #6
            There is case law in B2B lease/loan transactions that anything over +1.5% above BoE is a penalty and so unenforceable.

            Can't remember the case though unfortunately....

            Comment


            • #7
              Originally posted by dominic View Post
              There is case law in B2B lease/loan transactions that anything over +1.5% above BoE is a penalty and so unenforceable.

              Can't remember the case though unfortunately....
              Unlikely, given Law Society rate.
              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 http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
              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).

              Comment

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