overdue rent/contract question

SeanyP321

Hi, my landlord is trying to charge me £20 per day that rent is late. They asked that we make payment on the last day of each month to cover their mortgage. This has always been difficult as we get paid on 1st so sometimes, payment is a day late. BUT the terms of the contract say:

"The first payment of £XXX being due on XXX and future rental payments must be cleared into the Landord’s bank account by the end of the last working day of the month."

Then it goes on to say :

"If the rent is not received and in the Landlord’s bank account by the 1st day of each month then this will be classed as an overdue rental payment and will be subject to interest at the rate £20 per day calculated from the date the payment was due up until the date payment is received."

As they didnt go through a letting agency, they chopped and changed a contract to suit the purpose and I think what they have done is not change the "1st day of each month" to the "last day of each month". I know it's open to interpretation but do you think this creates enough ambiguity to claim that paying on the 1st should not incur a penalty?

Thanks guys.

N79

The LL can not charge a penalty - only their costs.

Therefore interest should be charged at a % rate. (something around 8% would be reasonable).

LL can also charge reasonable costs in chasing the late payment (eg sending you reminder letters) if these costs are set out in the tenancy agreement.

A flat rate of GBP20 per day is ridiculous - it is highly unlikely a court would enforce it. However, if you refuse to pay then the LL can chose to evict you at the end of your fixed term using the no fault process. Only you can decide which course to take.

However, the LL's actions from your failure to meet your obligations. The simple solution is for you to pay your rent on time before the last working day of each month as you agreed with the LL. Perhaps you would be best served focusing your efforts on meeting your obligations in the future while agreeing a settlement with the LL for past actions?

Can you "borrow" one months rent from somewhere to put you on an even keel?

SeanyP321

Thanks for your input mate.

Unfortunately there will be no 'agreements' with this landlord. We have already entered into legal proceedings over damaged property and handed our notice in a result. They have had to pay us money and look to be recouping it in the final hours.

I suppose my question is in the wording of the contract where it says "in the Landlord’s bank account by the 1st day of each month". It is now in their account (the 1st) so have we met that contractual obligation? It doesn't say 'before' and it doesn't 'by the end of' so what does it mean??

N79

That wording would normally be taken to mean in the LL's bank account before the first of the month so the two terms do appear to be in line with each other.

If your leaving then you could simply refuse to pay this penalty and see if the LL takes you to court. (Obviously you need to pay all the rent you owe).

If he does then you can defend on the basis that the contract is (possibly) ambiguous and, a more certain defence, that the level of the charge is a penalty. Personally, I don't think it will get that far.

SeanyP321

Thank you. thats very helpful

SeanyP321

when you say 8%, do you mean of the rent. Is that per month?

N79

SeanyP321 wrote: »

when you say 8%, do you mean of the rent. Is that per month?

No, annual flat rate. Its the normal rate a court would probably apply for late payment.

SeanyP321

also if they incur costs for missing their mortgage payment, couldnt they just claim in court that is why it is so high?

N79

SeanyP321 wrote: »

also if they incur costs for missing their mortgage payment, couldnt they just claim in court that is why it is so high?

Probably not. Your contract is to pay your rent, not their mortgage. The question then becomes is their failure to pay their mortgage a reasonably foreseeable consequence of your failure. In most cases, a judge is likely to say that given the LL must pay their mortgage when there is no T etc and should have a plan for covering mortgages etc the connection is too remote and so it is not a reasonably foreseeable consequence.

In the event that your LL did argue this in court then you would counter argue that the mortgage charges were caused "by reason of the LL's own impecuniosity" which is a standard contract law rule on limiting the scope of liability for contract default.

You can read the OFT guidance on terms in tenancy agreements for an indication of the likely thinking of a court (but they are not bound by the OFT guidance).

girl_withno_name

N79 wrote: »

No, annual flat rate. Its the normal rate a court would probably apply for late payment.

By my calculations, at £500pm rent, one day's interest at 8%pa flat rate would be 11p

N79

girl_withno_name wrote: »

By my calculations, at £500pm rent, one day's interest at 8%pa flat rate would be 11p

Sounds about right. Its not normally worth claiming separately of a claim for outstanding rent. However, if GBP3000 is outstanding for around 5 months then it is worth making the claim. For a few days of late payment its a waste of time.