UK Landlord Forum / Life

I have had some tenants for 5 years in a property and they were consistently late in paying their rent. Now they have left and left a lot of damage to the property too.

I am trying to keep their deposit of £580 towards the damage, but they are disputing everything.

I've also noticed in my tenancy agreement there is a clause under tenants obligations:

"To pay interest at the rate of 4% above the Bank of England base rate (o.5%) from time to time prevailing on any rent or other money lawfully due from the tenant under this Agreement which remains unpaid for more than 14 days. Interest to be paid from the date the payment fell due until payment"

From Nov 2009 until Jan 2013 the rent was late by 1222 days in total (this was just the month's that it was more than 14 days late)

From our contract:

4% + BBR of 0.5% is 4.5%, so I can charge 4.5% of £580 x 12 /365 = £0.86 per day that the rent is late.

Therefore I can charge  £0.86 per day x 1222 = £1050.92

I also had £40 worth of bank charges because of late rent payments.

I am correct in this calculation and should I claim for it as well the damage caused? Would I need to take this amount up through the courts as it's obviously more than their deposit?

Any help would be much appreciated!

The daily interest accumulating on £580 at 4.5% would be 7p per day, not 86p.

This usually becomes so meaningless, such a little amount, that I do not bother having these clauses in my ASTs; they are no deterrent.

That said, you can probably claim for it, but it won't be a figure like you currently think, I believe, and you really don't want to go in with an incorrect figure.

How did you incur £40 of bank charges specifically due to your Tenant paying late? If you really have such tight cashflow that a late rental payment causes you to go into the red, I think that should be a serious concern for you. Of course, it could be another reason as to why.

Hi,

thanks for your reply. Yes I realised my error...it still works out around £80 in late rent as over the 5 years they were 1222 day late with the rent.

The bank charges were for 2 days when I was away and their rent didn't go in. Usually I would transfer money into the account to cover the mortgage payment going out as they nearly always paid late, but forgot on this occasion.

thanks for the advice!

Sadly, compensation-wise, your mortgage payment is not related to your Tenant's rental payment. So, while in your mind they most definitely are - in that you pay your mortgage with their rent - in reality they're not. The fact that you got charged by your bank is down to your own cashflow... one of the risks of doing business. I think you are onto a loser there... but go for the ~£80. However, I'd be interested if you thought it was a real deterrent to people, having this kind of clause in ASTs... I concluded it wasn't.

1223 days = 3.43 years late with the rent? 

£80 owed 

It's more like £90... but there you go.

Now you say THAT, it's worth pursuing. 

Can you explain how you got to the 7p though?  I did a calculation and came out with the 80p figure aswell.

The amount we're concerned with is £580.

The annual interest, at 4.5%, would be simply 4.5% of £580 - that's £26.10p.

The daily interest, at 4.5%, would be £26.10 / 365 - that's £0.07.

Now, if you were compounding, it might be different - but I'm not sure you can do that, and I'm not sure it would be massively different either.

Here you go... https://www.gov.uk/make-court-claim-for-money/work-out-interest