LA/LL now demanding payment by DD

stator

On an existing SPT that has been going on for 7 years the Letting Agent, who is also the Land Lord (sub letting from the owner), the LA is now demanding that all rent payments be made by Direct Debit and has provided the tenant with a website they must use to set up the Direct Debit.
All previous payments have been made on time via standing order.

Tenant does not trust LA/LL and does not wish to give them the ability to remove money from their bank account.

LA has also stipulated that if payment is not made by DD a charge of £30 will be made.

Tenancy agreement has the following clauses regarding rent payment:

To pay the Rent at the times and in the manner specified.

Interest at the rate of ..... from time to time shall be charged on all payments, which are more than 10 days overdue to be calculated from it's due date. The costs and expenses (including professional fees) which the Landlord insurs due to any breach of this Agreement shall be payable by the Tenant. A charge will be made for any cheques returned from the Tenant's bank that have not been honoured.

The first clause seems quite vague. I'm sure the LA would say this means you have to pay the rent in any way they ask for, ie the 'manner specified' by them.

The second clause I'm sure is what they would use to attempt to justify the £30 fee, which is clearly extortionate. Paying them £30 to check their bank account to see if they have receive the rent on time is not proportionate.

Any opinions on how to interpret the above? Would you say they are within the agreement to demand a DD payment?

kinger101

Direct Debit actually gives you better protection than standing order. Although you are correct in that this is the LA taking money from your account rather than you paying it, if you did raise a dispute with the bank, they'd refund you largely based on your word. With SO, you could never claim the money back from the bank (for example, if you accidentally forgot to cancel it when the tenancy ended)

It's not IMO in the interests of the LL to collect rent via DD due to the extensive rights the tenant has to dispute the payments with the bank. Recently a LL on here (potentially) lost lots of rent due to a fraudulent indemnity claim. That's not your problem though.

TBH, I'd be happy switching to DD. It's easily cancelled when the tenancy ends.

If the tenant wanted to stay with SO, it does seem they are trying to vary the terms of the original agreement, and the £30 is excessive. But moving to DD is easier than getting an eviction notice.

G_M

I agree DD provides protection.

Look up the 'Direct Debit Guarantee' on your bank's website (or speak to the bank).

The rules also changed recently(ish) so that you can now cancel a DD yourself at any time with your own bank, rather than having to tell the DD claimant (landlord) that you wish to cancel.

As for the contract, I suspect the LL could use "The costs and expenses (including professional fees) which the Landlord insurs due to any breach of this Agreement" to claim off you if you used cash, Standing Order etc.

You could, of course, argue that the costs to the LL do not equate to £30 ......

bouicca21

As someone who has tried to set up direct debit facilities for a charity I can assure you that it costs a small organisation more than receiving payment by standing order. It's also a mega hassle. What it does give is flexibility to the recipient to change the payment as and when necessary rather than relying on the payer to remember to change a standing order.

What I'd be wary of and would seek advice from the knowledgeable people here is whether DD guarantee would work in a scenario where landlord increases rent without going through proper procedure, and where the increase is not accepted by the tenant. In such circumstances the LL could change the DD and claim the tenant had been notified (?)

G_M

That's really a banking question (hence my advice to investigate the DD Guarantee), but my understanding is that the payer (tenant) can make a claim to their bank that the claimant (landlord) has made a mistake, commitied fraud, whatever and

a) the bank refunds the money to the payer immediately and then
b) the matter is investigated (how, not sure)

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/27/27-directdebit-guarantee.htm

booksurr

as GM says, any change to the amount collected MUST, in accordance with the DD Guarantee terms, be notified to the tenant in advance of taking the payment. Failure to do so means the tenant has a claim against the bank (not the LL) for return of the money. In all such cases the bank automatically returns the money to the tenant and then the bank will take the matter up with the LL. That is why banks are very, very, careful over who they allow to operate DD and why they charge so much for granting such a facility compared to other methods of receiving money into your bank account. I too operate a DD facility on behalf of a charity.

Clear'y upon receipt of the notice, the tenant has the opportunity to cancel the DD if the amount demanded is not to their liking. Of course in that case you would be in rent arrears if you made no payment at all so you would simply pay the old rent manually and then argue the toss with the LL over any increase - assuming the rent increase has not been correctly served itself

as the others above say, it is much stronger for you to pay by DD rather than by SO

gazter

The tenancy seems to suggest you can pay by cheque. I suggest you start paying be cheque as an alternative to standing order. Then ask them which one they would prefer payment by. Nobody wants to have to deal with cheques.

45002

stator wrote:

On an existing SPT that has been going on for 7 years the Letting Agent, who is also the Land Lord (sub letting from the owner), the LA is now demanding that all rent payments be made by Direct Debit and has provided the tenant with a website they must use to set up the Direct Debit.
All previous payments have been made on time via standing order.

Tenant does not trust LA/LL and does not wish to give them the ability to remove money from their bank account.

LA has also stipulated that if payment is not made by DD a charge of £30 will be made.

Tenancy agreement has the following clauses regarding rent payment:

The first clause seems quite vague. I'm sure the LA would say this means you have to pay the rent in any way they ask for, ie the 'manner specified' by them.

The second clause I'm sure is what they would use to attempt to justify the £30 fee, which is clearly extortionate. Paying them £30 to check their bank account to see if they have receive the rent on time is not proportionate.

Any opinions on how to interpret the above? Would you say they are within the agreement to demand a DD payment?

If they been paying by SO for past 7 years with no problems just carry on with SO and make sure SO is adjusted for any rent increase and rent paid on time.

chris_m

gazter wrote: »

The tenancy seems to suggest you can pay by cheque. I suggest you start paying be cheque as an alternative to standing order. Then ask them which one they would prefer payment by. Nobody wants to have to deal with cheques.

Only potential problem with that is that they'd probably still charge the £30 for not using DD.

Guest101

this is a change in terms. It's an offer.

I'd agree as long as rent is dropped 10% and fixed for 12 months. - is counter offer

stator

Thanks for all the replies.

As I understand it, if you dispute a DD payment the bank will refund you, then contact the payee. If the payee confirms the payment was correct the bank will take the payment again and there's nothing you can do.