Advice needed - "Late" Rent charges

whambamboo

clutton wrote:

A deposit is meant to compensate a landlord for breaches of the tenancy agreement by the tenant- such breaches can be many and various.

It is illegal to seek compensation per se from a tenant simply because they have breached the contract, you can only claim for your actual losses.

In the case of a rent received a day late there is clearly no loss to the landlord, except 1 day's interest, which would be no more than about 10p on an £800 rent.

Penalty clauses are absolutely illegal.

Have a read of this from the Office of Fair Trading

http://www.oft.gov.uk/NR/rdonlyres/DAAEFE58-1AAB-422A-AFED-BDE6C654A4EE/0/oft356.pdf

This should be required reading for anyone who's a tenant. Yes, it is 127 pages long, but it is all about the things that landlords cannot do to you. Next time a landlord tries to take the p1ss, you will know you rights.

The landlord is only allowed to charge interest at a reasonable rate not significantly above the base rate.

Here are some terms (see page 84 of that pdf/page 80 printed) which it says are illegal

"Interest will be charged on any outstanding arrears on the first of each month (the same to apply after as well as before any Judgment) of 3 per cent, per calendar month."

"Unpaid rent will carry interest at 15% per annum..."

"A charge of £3.50 per day plus VAT shall be levied and fall due each day the account is in arrears. This is calculated from the next working day after the date that the funds were to be received until all arrears, including but not limited to letter charges, administrative charges, arrears management charges, interest and all fees levied in accordance with the tenancy agreement have been settled, ie: upon the clearance of funds."

And here's what it suggests as a replacement

"To pay interest at the rate of x per centum per annum above the base minimum lending rate of [name] Bank on any rent or other money lawfully due which is in arrears for more than fourteen days after the day on which it became due."

Note that it's 14 days. Not immediately.

So tell these agents to go f*** themselves. Don't change your standing order, they shouldn't be such idiots trying to exploit tenants. Tenants have a lot of rights, and you should not be kowtowing to the landlord/agent, as frankly if they p1ss you off by pulling a stunt like this you can cause them a lot more hassle than they can you. So frankly tell them to give back your £40 and forget changing the standing order date.

Muppets.

See also

"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."

noyk

clutton wrote:

A deposit is meant to compensate a landlord for breaches of the tenancy agreement by the tenant- such breaches can be many and various.

Judge and Jury eh! I dont think so. Normally your posts are more considered, whats up?

MissSunshine

Glad you got it sorted, have you checked the contract to see what it says?

Did you have to set up the standing order yourself?

The letting agency that manage the property I'm renting set up my monthly SO, I just filled in the details and signed it. The rent money goes out of my account on the day it is due, not 3-5 days before to allow for clearing

Also chase the gas certificate, you're living in the property and you have a right to know the system is legal

sm9ai

As said earler, who set up the direct debit? you or them?

Conrad

Barcode wrote:

You're not responsible for your banks clearing times. The rent has gone through on the last working day before.

QUOTE]

Guys this is totaly incorrect. YOU AND YOU alone are responsible for paying debts on the due date.

We all have to plan our finances to ensure nothing is late you cant place blame on a Bank. I dont pay anything late and if I had a hint the clearing time was 4 days I would plan for that.

If I employed you and said I paid you late but it was the Banks fault - how would you feel.

This is a classic example of the disorganised payer. I see them all the time in my mortgage business. Late payers seem always to externalize thier late payments YET THE REST OF US DONE EVER PAY LATE SO THERE IS NEVER AN EXCUSE - WE ALL HAVE TO PLAN OUR FINANCES.

RobKingston

I'd suggest that response is maybe a little over the top, Conrad. I wouldn't dream of pursuing someone whose debt was LESS THAN A DAY late, and can't imagine any business (with any regard for their reputation) would either.

To those who've asked, the standing order was set up by the agents (as the new one will be). However I have full control over it via online banking and if anything is out of order I'll be able to correct it straight away.

I'll admit I hadn't fully read the section of the contract regarding rent arrears as I'd never imagined this would be an issue. As it happens, it states charges may be made but doesn't specify a time period. The original question was more to do with whether such a clause is 'unfair' and therefore unenforceable - which the OFT document above seems to show.

Btw, the gas engineer called this morning so as far as I'm concerned everything's fine now :T

clutton_2

""YOU AND YOU alone are responsible for paying debts on the due date.""

i happen to agree with this - if you go into a shop and want to buy something, you pay for it then and there - you dont ask the shopkeeper to wait for his money - why should he ?

I have to pay my mortgage when the lender says i have to - (and if i dont, i'm in court for repossession within 2 months). It can take 6-9 months to get a tenant out.

Why is it that some folks on here seem to think that landlords should act as Bankers for their tenants ?

We provide a service, and we have entered into a legally binding contract, as has the tenant. If you cannot make arrangements to pay the rent, then dont sign the contract.

I know this sounds very very harsh, but, that is the reality of the individuals economic responsibility.

I, and many thousands of reponsible landlords, act as unpaid Bankers for 2-3 months for every HB tenant we accept (Liverpool landlords used to have to wait 6 months for HB to pay the rent). Meantime, we have to subsidise the mortgage, while HB offices grind more and more slowly.

If bosses said " we cannot pay you your salary this month" - there would be uproar.

But, "its only landlords - they dont matter".

Well, we do matter !!!!!

RobKingston

clutton wrote:

I have to pay my mortgage when the lender says i have to - (and if i dont, i'm in court for repossession within 2 months). It can take 6-9 months to get a tenant out.

And what relevance does that have to the question I asked? I'm not talking about failing to pay for 2 months, 2 weeks or even 2 days. We're talking a matter of hours here.

I agree landlords shouldn't have to wait an unreasonable amount of time to get paid. I guess we just have differing opinions on what constitutes 'reasonable'.

whambamboo

clutton wrote:

""YOU AND YOU alone are responsible for paying debts on the due date.""

i happen to agree with this - if you go into a shop and want to buy something, you pay for it then and there - you dont ask the shopkeeper to wait for his money - why should he ?

I have to pay my mortgage when the lender says i have to - (and if i dont, i'm in court for repossession within 2 months). It can take 6-9 months to get a tenant out.

Why is it that some folks on here seem to think that landlords should act as Bankers for their tenants ?

We provide a service, and we have entered into a legally binding contract, as has the tenant. If you cannot make arrangements to pay the rent, then dont sign the contract.

I know this sounds very very harsh, but, that is the reality of the individuals economic responsibility.

I, and many thousands of reponsible landlords, act as unpaid Bankers for 2-3 months for every HB tenant we accept (Liverpool landlords used to have to wait 6 months for HB to pay the rent). Meantime, we have to subsidise the mortgage, while HB offices grind more and more slowly.

*Yawn*
Who forced you to go into this business? Nobody, the rules were known to you up front. I don't get it. If you bought to let, then you knew the tenants would not pay for a while because it's not like these things aren't well-known. So you should pay less for the property, because a property that will be populated by housing benefit tenants is going to suffer from many problems, not just cashflow. If you paid a fair (low) price for the property (i.e. you're getting >10% gross yield and up), then you're being compensated for the bad cashflow, so you have nothing to complain about - the high yield compensates for the risks. If you are not getting a very high yield, then you shouldn't have paid so much for the property.

You effectively bought the property equivalent of a junk bond. Investors in junk bonds know that they are high yield and higher risk. The yield should compensate for the risk. If your property is not high yield you shouldn't have invested in it - just as you'd expect better yield from Brazillian junk bonds than from UK gilts, and if you pay the same for both you're being stupid. People who don't do the sums and research on their investments but still invest because '£100,000 is cheap', without working out yields and other problems have no-one but theirselves to blame.

In any case, re the OP, he clearly stated the agency chose the standing order day, so it's his fault. A couple of days is not going to make any difference to anyone in any case.

real1314

blimey, another thread creating polar opinions and mis-advice.

firstly, I'd say that your rent wasn't in arrears on the day it was due, only if it wasn't paid by the end of that day.
However, once that day has ended, it is technically late, and lots of tenancy agreements carry a clause to charge for a letter being issued notifying a breach of tenancy, which is what this is.
The charge does have to be reasonable, and you cannot just issue letter after letter, leving more and more charges.

Interest can be charged from the first day that the payment is overdue too.

As for who's responsibility it is, it's the tenants. The landlord says "you must pay rent by the Xth of the month" your direct debit / standing order is set up with your bank, therefore it's up to you to ensure that your bank can ensure that the funds arrive by a set date (mine has this facility, perhaps you need to get your bank to check it?).

If my employer didn't pay me on my pay day, I wouldn't accept "we've sent it, but it's not got there yet". I'd expect interest and compo for any charges on my account / failed direct debits etc.

Ok, so some people don't like the fact that others are landlords. seems a bit petty to me.