Late rent fees

Allan87

I'm just going over a tenancy agreement and where rent is late it says not only can the LL charge a daily 4% over BoE base rate (which is fine) it also says I'd be held responsible for the LL's bank account going overdrawn and any bank fees imposed on him as a result. I'm not intending to ever be late with rent but surely I'm not responsible for the state of the LL's bank account?

kirstyjessen

if this is what is stated in a tenancy then this is what you have to provide I have this in my contract and I was late once by 2 weeks causing the extra intrest and landlord overdraft fee due to it causing my rent of £550 being raised to £580 some agencies just charge the rent as the landlord have to provide proof that it is your rent being missed is the cause of going overdrawn. if you are not with an agency the landlord does not have to provide proof

theartfullodger

In your shoes I'd tell LL to go st**f hisself...

I think the clause about paying for his overdraft is "unenforceable" & "unfair". (4% over BoE is I think OK but will only cost pennies usually..)

See
http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

Page 22...

3.46 We regard a requirement to pay unreasonable interest on arrears of rent, at a rate substantially above the clearing banks' base rates, as an unfair
penalty. We regard the imposition of a fixed daily or monthly charge for overdue rent, and regardless of the amount due or the surrounding circumstances, as being penal rather than compensatory in nature, and unfair. Tenants would have to pay more than the cost of making up the deficit caused by their default.

3.47 Other kinds of penal provisions which may be unfair are damages and costs
clauses stating that the landlord or agents can claim:
• all their costs and expenses, not just their net costs
• both their costs and their loss of profit, if this would lead to 'double counting', and
• their legal costs on an 'indemnity' basis, not just those reasonable costs reasonably incurred, as this could allow the landlord to incur unreasonable legal costs (for example, by serving a notice on the tenant when this is not legally necessary) and pass them on to the tenant. The words 'indemnity' and 'indemnify' are also objectionable as legal jargon (see Chapter 5, Group 19).

The point about 4% over is interesting regarding how it is worded..

If is says "4% above base rate" it could be argued that that means 4% on top of 0.5%, 0.5%x1.04 => 0.52%.
That is why advice to landlords is to word it as "4 percentage points above base rate" so with base rate at 0.5% that means 0.5%+4.0% => 4.5%.

However, if, say, £750 rent if 1 week late, even at 4.5%, that's only 65p (if my sums is right..)

Cheers!

Artful (Landlord since 2000)

real1314

kirstyjessen wrote: »

if this is what is stated in a tenancy then this is what you have to provide I have this in my contract and I was late once by 2 weeks causing the extra intrest and landlord overdraft fee due to it causing my rent of £550 being raised to £580 some agencies just charge the rent as the landlord have to provide proof that it is your rent being missed is the cause of going overdrawn. if you are not with an agency the landlord does not have to provide proof

Just because something is written in a contract does not mean it is legally enforceable.

1. Interest CAN be charged on late rent. I *think* the accepted rate is 8% over BoE base rate. BoE base rate is 0.5%, so that would be 8.5% PER ANNUM.

£450 of rent paid 2 weeks late would incur interest of £450 x 8.5% / 52 Weeks x 2 Weeks = £1.47

2. REASONABLE fees can be passed on - so a charge for a bounced cheque could be charged, a charge for a standing order failure could be charged (although I don't think this would be levied on the LL).

Overdraft fees ? - Nah - far too open ended and beyond the control of the tenant.

brightonman123

would steer clear, if the LL is relying on your rent to stay afloat.. may not have any ££ spare for repairs as/when they crop up..