Rental Agreement - Late payment penalties

TrickyDicky

Ive not paid the rent on our flat late, but I noticed in the contract that if we were late, there would be a late payment "fee" of £30. This strikes me as a little OTT, and rather like banking charges. Is it something that could be considered similar, and taken to court for?

Clive_Woody

Did you sign a contract to pay your rent on an agreed date each month?

Did this contract detail the late payment fee?

Do you not feel the owner should charge a fee if you don't pay on time?

What would you consider a reasonable fee to cover you paying late?

Do you think people should be allowed to pay bills/rental charges as and when it suits them rather than on the agreed date?

If your employer decided to pay you a week late or when they felt like it, would this bother you?

geordie_joe

Clive_Woody wrote: »

Did you sign a contract to pay your rent on an agreed date each month?

Did this contract detail the late payment fee?

Do you not feel the owner should charge a fee if you don't pay on time?

What would you consider a reasonable fee to cover you paying late?

Do you think people should be allowed to pay bills/rental charges as and when it suits them rather than on the agreed date?

If your employer decided to pay you a week late or when they felt like it, would this bother you?

The point is a late fee should only be as much as the other person has lost because of it, it should not be a punishment.

If you are late paying your rent and the landlord has to send you a letter then they can only charge for sending that letter. They can't "Fine" you.

Clive_Woody

geordie_joe wrote: »

The point is a late fee should only be as much as the other person has lost because of it, it should not be a punishment.

If you are late paying your rent and the landlord has to send you a letter then they can only charge for sending that letter. They can't "Fine" you.

Okay, so unlike banks the landlord will have type the letter up himself (not an automated process), then print it out, put it in an envelope. He will then drive to the post-office, park and then send the letter. He may then follow up with a phone call to query why payment wasn't made on the agreed date. Meanwhile he will lose interest on the rental payment and may potentially incur costs if he had budgeted for this to be paid on time and he cannot pay his bills as a result of this non-payment.

To be honest £30 sounds quite reasonable as a charge for late payment.

geordie_joe

Clive_Woody wrote: »

Okay, so unlike banks the landlord will have type the letter up himself (not an automated process), then print it out, put it in an envelope. He will then drive to the post-office, park and then send the letter. He may then follow up with a phone call to query why payment wasn't made on the agreed date. Meanwhile he will lose interest on the rental payment and may potentially incur costs if he had budgeted for this to be paid on time and he cannot pay his bills as a result of this non-payment.

To be honest £30 sounds quite reasonable as a charge for late payment.

The OP doesn't mention a landlord. The tenancy could be manged by a letting agency who do have an automated system for such things.

To be honest I think this charge is unfair and would not pay it.

Clive_Woody

geordie_joe wrote: »

The OP doesn't mention a landlord. The tenancy could be manged by a letting agency who do have an automated system for such things.

To be honest I think this charge is unfair and would not pay it.

We are both making assumptions here, which means either of us could be right until we know more detail.

At the end of the day if it is a landlord or a letting agency and a tenant paid late and refused to honour the terms of the contract I suspect the tenant would find themselves given notice of termination of their contract and would then find themselves looking for somewhere else to live and a new tenant who paid on time would be found.

exel1966

geordie_joe wrote: »

If you are late paying your rent and the landlord has to send you a letter then they can only charge for sending that letter. They can't "Fine" you.

Yes, and the stationary and cost of administering that letter (time) within reason. Some would say £30 is reasonable, others wouldn't, but if you've signed a contract agreeing to the terms, then surely you are legally obliged ?

geordie_joe

Clive_Woody wrote: »

We are both making assumptions here, which means either of us could be right until we know more detail.

At the end of the day if it is a landlord or a letting agency and a tenant paid late and refused to honour the terms of the contract I suspect the tenant would find themselves given notice of termination of their contract and would then find themselves looking for somewhere else to live and a new tenant who paid on time would be found.

I agree we are making assumptions. Here's another one, the OP may be with a Housing Association like mine. They can't "kick me out" unless they can prove I can pay the rent but choose not to. They don't punish me with penalties if I am late with the rent either. Well they they do but in a much more subtle way.

geordie_joe

exel1966 wrote: »

Yes, and the stationary and cost of administering that letter (time) within reason. Some would say £30 is reasonable, others wouldn't, but if you've signed a contract agreeing to the terms, then surely you are legally obliged ?

A lot of people have signed contracts with banks that say there will be charges, and have then asked for those charges back and the banks have given them the money back.

If the law says you can't punish someone with a penalty, but you get them to sign a contract that says you can, which is right the law or the contract?

exel1966

But the law doesn't say that ! The legalities of bank penalty charges have still yet to be decided upon by the law courts. Banks have only being paying the charges back (up to what is considered reasonable) as they believe a precedent will be set outlining maximum charges to be charged in such eventualities, similar to what the OFT has declared as fair and reasonable i.e the £12 penalty.

geordie_joe

exel1966 wrote: »

But the law doesn't say that ! The legalities of bank penalty charges have still yet to be decided upon by the law courts. Banks have only being paying the charges back (up to what is considered reasonable) as they believe a precedent will be set outlining maximum charges to be charged in such eventualities, similar to what the OFT has declared as fair and reasonable i.e the £12 penalty.

Unfair Terms in Consumer Contracts Regulations (1999).

Schedule 2 Indicative and Non-Exhaustive List of Terms which may be Regarded as Unfair

(e) requiring any consumer who fails to fulfil his obligation to pay a dis-proportionately high sum in compensation.

As you say, £12 is a fair charge, which means £30 is not fair.

Wilson v. Love (1896)

A tenant farmer agreed to pay an additional rent of £3 per ton by way of penalty for every ton of hay or straw that he sold off the premises during the last 12 months of the tenancy. The clause was regarded as a penalty because at the time hay was worth five shillings a ton more than straw.

Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Co. Ltd. (1915)

In the particular case, the judges held that the sum specified in the contract was reasonable and was classified as liquidated damages. However, in this case, Lord Dunedin laid down rules which are still applied today in these types of cases:

i) The sum is a penalty if it is greater than the greatest loss which could be suffered from the breach" in other words, if it is "extravagant and unconscionable".

ii) If it agreed that a larger sum shall be payable in default of paying a smaller sum, this is a penalty.

And

Ford Motor Co. v. Armstrong (1915)

In this case, the judges reached the conclusion that the sum to be paid for a breach of the contract was substantial and arbitrary and bore no relation to the potential loss of the other party. It was, therefore, a penalty.

Bridge v. Campbell Discount Co. Ltd. (1962)

In this case a customer bought a car under a hire purchase agreement. He paid the initial and first payments and then cancelled the agreement. The company tried to recover the sums specified in the contract for canceling the agreement, but the courts held that the sums payable were excessive and constituted a penalty clause. It was, therefore, unenforceable.

Murray v. Leisureplay (2004)

Mr Murray was sacked by Leisureplay and he claimed three years' salary as per his contract of employment. The courts decided that this clause was a penalty clause and he was not entitled to this level of damages.

Judges have been ruling that penalty clauses are illegal for over 100 years, what judge today is going to say they were wrong?

If the banks ever thought they could win their case why are they giving in and returning the money?