Interest on late rent payment ?

Guitar62

Tenant just stopped paying weekly rent, no contact no warning. Told us the rent is now being paid by UC but effectively 4 weeks in arrears, can we charge interest on any rent over 14 days late with the new COVID rules ? We do have a clause in our tenancy agreement. Before anyone thinks we are awful landlords....We do understand this is an awful time for everyone but we rely on this rent as our income. We are not rich property tycoons but retirees on a small private pension and not entitled to any benefits. We relied on the weekly payments and had to use savings to keep us going for 4 weeks until they claimed they got paid from UC, so we have lost our interest on our savings.  Any advice would be appreciated 

numbercruncher8

What's the rate of interest nowadays anyway? And applies to rent for 4 weeks how much is this loss calculated as? 
It's going to be pennies.

You can request money of course, but if they don't pay it, how will you enforce it?? Threatening to kick them out will probably see more rent unpaid? You can write what you want in a tenancy agreement but it doesn't automatically make it enforceable.

grumiofoundation

According to document below interest can be charged at no more than 3% above BOE base rate - so 3.1%. 

If clause in contract 'charges' higher than this would be unenforceable - don't know of this would mean you are unable to charge any interest.

However - as above this is going to be pennies

If rent is £1000 per month 2 weeks interest (at 3.1%) is £1.20 so you haven't exactly lost much.

In order to keep a good relationship with the tenants don't think worth claiming this!

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/819635/TFA_Tenant_Guidance_190722.pdf

AdrianC

Guitar62 said:

...but we rely on this rent as our income. We are not rich property tycoons but retirees on a small private pension and not entitled to any benefits. We relied on the weekly payments and had to use savings to keep us going for 4 weeks...

Here we go again...

You are running a business. You can expect bad debts, voids, large maintenance bills. Probably all at the same time. This is not a passive low-risk investment. You really need to have enough capital outside your business to be able to weather these predictable issues.

There is no statutory right to interest on bad debts from individuals.

If they were a business, then you could - let's say the rent is £1000/mo. Statutory interest is 8% + bank base rate = 8.1% annual. Two weeks interest is £3.10. Hardly worth the effort, is it?

FreeBear

Guitar62 said: Tenant just stopped paying weekly rent, no contact no warning. Told us the rent is now being paid by UC but effectively 4 weeks in arrears

Yup, UC pays the housing benefit (rent) portion one month in arrears. But if they have made a new claim, it could be five weeks or more before the claim is fully processed. Was helping a young lad out at the beginning of the year (before this pandemic lark kicked off), and it took the DWP nearly three months to pull their collective fingers out.

Semple

Guitar62 said:

We are not rich property tycoons but retirees on a small private pension and not entitled to any benefits. We relied on the weekly payments and had to use savings to keep us going for 4 weeks until they claimed they got paid from UC, so we have lost our interest on our savings.

If you're heavily reliant on rental income then it sounds like you can't afford to be landlords. What are your contingency plans if your tenant doesn't pay rent and you have to start eviction proceedings. What happens if your property throws up a major repair bill...

greatcrested

Rather than worry about the negligible interest, you should be praying that the rent itself keeps coming.

By the sound of it, if rent arrears built up you'd be in real trouble! And nothing much you could do about it under the COVID rules. Be understanding and keep the tenants happy rather than hassling them over peanuts.

And read the Tenant Fees Act guidance here.

And COVID guidance here.

Guitar62

New to this site and my first ever post. Thank you to the people who gave examples of the calculation - I hadn't got that far I was just enquiring.  I now see its not worth bothering with so thanks.
Many thanks grumiofoundation for a helpful and well explained nice answer, appreciated.
Thanks numbercruncher8, Freebear, Semple & greatcrested again nice answers - we do have savings as mentioned so we can afford to be landlords and are not 'totally' reliant on the rent. It just means we don't have to use our savings.I did not want to confuse my question with too much personal info which is not relevant but understand it may have confused. Thank you for your replies.

What I did not expect was comments like  AdrianC  'Here we go again' ?? What happened to the Forum rule of Please be nice to all Moneysavers ? For someone clearly new to this site its a bit harsh from someone who has obviously been making thousands of posts. I appreciate this sort of question may have been asked before but if you cannot answer nicely maybe you shouldn't comment ? Especially when grumiofoundation had already explained it nicely before you.

theartfullodger

Welcome to MSE..

Tenant just stopped paying weekly rent, no contact no warning.

So you provide a rent book as supplied by law, ss.4, 5 and 7 Landlord and Tenant Act 1985??

We are not rich property tycoons but retirees on a small private pension and not entitled to any benefits.

So hopefully, like me, aged 72, you would be entitled to 6 benefits already - state pension, free eyetests, winter fuel allowance, free prescriptions, £10 Xmas bonus, free 'bus passes? If so, claim away! If not old enough perhaps consider employment?

Any advice would be appreciated 

How nice to be asked so politely for any advice.  Might I advise that relying on just one main source of income would normally be considered at least unwise, please?

May I humbly ask what landlord/tenant law training you've done?  When I started, 2000, I thought I knew what I was doing - oh my stupidity & overpowering hubris!!!. Expensive, painful, long-drawn out, complicated mistakes... Resolved to learn. Still learning, still making mistakes.

Serve s8g10 at least TODAY! Just for the price of a stamp you might just nudge tenant to wake up and realised their issues. Yes an s8g10 may be validly served if only 1p is underpaid for only 1 day.  And explain, verbally only "intentionally homeless to them.

That rent may be paid by UC or any other means is very interesting but tenant remains liable for rent so keep serving s8's each missed/underpaid rent day.  But only evict by s21 and/or s8g8,10&11

And please, either no reference or only a full, honest one. 

What were this tenant's landlord references like please?

Best regards to all.

Guitar62

theartfullodger, thank you so much for your very informative and helpful reply. 
Yes tenant was given a rent book.
No not old enough to claim anything and certainly do not want to return to work ha ha. I did say I didn't really want to go into more detail on our personal finances , suffice it to say we are not going to be destitute if we lose some rent or have a maintenance bill. It is not our only possible source of income.
No formal landlord/tenant law training.
Will look into the s8G10 thanks. This is probably the BEST answer to my original question before everything seemed to go sidewards.....thanks. A nudge may be all he needs.
Purchased with sitting tenant , references from previous owner = no issues raised, paid rent on time. 
Thanks again for some very useful info  Best regards

theartfullodger

Have you served notice(s) compliant with s48 & S3 to make, whilst owners, fully Landlord?  If not no rent due (s48) and possibly criminal charge & fines (S3). So s8g10 not applicable

When did tenant 1st move in?  If early enough s21 might not be an option