calculating interest on tenant dept.

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  • calculating interest on tenant dept.

    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

  • #2
    Fair comment, I'll change it in the next AST

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    • #3
      Originally posted by Markatthepub View Post
      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.

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      • #4
        Just get rid of them! Why on earth do you want to hang onto a tenant who is not paying the full whack?

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        • #5
          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!
          Please note i may be in pumpkin mode, the light might be on but i may not be here

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          • #6
            So, as I understand it, he short changes you every month by not paying the full agreed rent. Is that right?
            ASSUME NOTHING - QUESTION EVERYTHING!

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