I’m not a charity: Is it time to issue a Section 21?

I’m not a charity: Is it time to issue a Section 21?

9:36 AM, 4th July 2024, About 2 weeks ago 32

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Hi, I’ve been a landlord since 2005 and I’ve never issued a Section 21. However, I’m about to change that as I have two tenants that are behind in rent payments,one owes £600.00 and the other owes £2,500.00.

In my efforts to be reasonable I have agreed payment plans for both of these tenants. The one owing £600.00 does make a regular payment to reduce the debt.

The other tenant is now unable to work and has been in touch with social services to increase her benefits to pay rent but the debt is not reducing.

The social workers are now questioning me about the payment plan that I set up and why I’ve charged this troubsome tenant interest of 10% on the amount of unpaid rent. I’ve been made out to be the villain in this situation, a situation not of my making.

I’m not a charity and I’ve had enough of the aggression from the social workers wanting to know about my finances and why I’ve charged interest on the unpaid rent.

I’ve never issued a section 21 and always tried to help tenants when they fall behind in their payment, but I’m about to change that helpful nature and I want this tenant out.

Do any Property118 readers have any advice on how to handle this situtation?

Thanks.


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Janet Carnochan

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8:02 AM, 4th July 2024, About 2 weeks ago

I personally don't charge interest on rent arrears. I would just be glad that a payment plan had been agreed and if it was being followed then I would try to work with the tenant. At least I was getting my money and the tenant was trying. However I wouldn't answer questions about my personal finances to anyone and if a tenant was £2500 in arrears and wasn't sticking to a payment plan then I would be trying to evict while I can. As you say you aren't a charity, nor are you a bank. You are a business. You still have expenses relating to that house and rent should be what covers them. If your tenant can't pay their rent then you should be looking to resolve the situation where you have one who can.

Cider Drinker

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8:54 AM, 4th July 2024, About 2 weeks ago

You have breached the Tenant Fees Act. You cannot charge 10%.

Seek professional advice.

SteveFowkes

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9:39 AM, 4th July 2024, About 2 weeks ago

You can't simply charge 10% interest on late pay

It was easily googleable

Late rent. Your landlord or agent can only charge you if you are 2 weeks late with your rent. They can charge interest. This cannot be more than 3% above the Bank of England base rate.

Cider Drinker

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9:50 AM, 4th July 2024, About 2 weeks ago

Reply to the comment left by SteveFowkes at 04/07/2024 - 09:39
Exactly.

And it’s an annual interest rate charge.

So, if there is a late payment of £1000 the could charge less than 23p per day in interest.

That’s 1000 x 8.25% divided by 365.

(It’s 8,25% because that BofE base rate plus 3%).

We are landlords, not loan sharks.

John Simpson

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10:03 AM, 4th July 2024, About 2 weeks ago

Reply to the comment left by Cider Drinker at 04/07/2024 - 09:50You didn't say what the monthly rent payments were, so I can't see how serious the situation is in terms of number of months in arrears. But I wouldn't have thought the £600 one was that many behind? Anyhow, even though you're entitled to charge interest, I'd only do so if it came to having to evict them after all attempts to avoid that. So if it comes to legal action, include it in your court claim amount by all means, but if you want to be seen to be bending over backwards to help a tenant which, like it or not, is what we have to do these days, then I wouldn't have introduced interest into the conversation at this stage. I don't think the thought of being charged 59 pence a day or whatever it is, is going to make your missed rent materialise.

TheBiggerPicture

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10:03 AM, 4th July 2024, About 2 weeks ago

You are right, you are not a charity. But the Government has taken over your property rights and given some of them to the tenants.
As other have mentioned, the rate of interest you can charge is not your right, but a privilege you can do up to a certain rate.

Ron H-W

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10:07 AM, 4th July 2024, About 2 weeks ago

As the others say, you cannot charge interest of as much as 10% PER ANNUM on unpaid rent - only 3% above the Bank of England base rate (which has been 5.25% for nearly a year now, so one can charge 8.25%pa).
HOWEVER, if what you have charged is a 10% FLAT AMOUNT on something that has been outstanding for well over a year, this is likely to be legitimate - somebody needs to convert this to an equivalent annual rate!
On another note, why do you want to add fuel to the arguments of those who want to abolish S.21?
'Cos this will be viewed (wrongly) as "yet another no-fault eviction" - and it seems to me that you can easily issue a S.8 notice:
* Ground 8 (mandatory): Serious rent arrears - at least 2 months' arrears (assuming it should be paid monthly);
* Ground 10 (discretionary): Rent arrears - not as serious as those used for mandatory ground 8.
* Ground 11 (discretionary): Persistent delay in rent payments.
Do check the maths - and the details - first, and maybe (IF necessary) you can re-do the payment plan/s to be compliant with the interest levels that one IS allowed to charge.

MasterG

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10:09 AM, 4th July 2024, About 2 weeks ago

"Tenant can't afford to pay what they owe me so I'll charge them an extra extortionate, illegal, 10% on top". In what way did you possibly think that was a good idea? 🤦 That said, S21 is the way to proceed but expect to write off the debt.

Cider Drinker

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10:19 AM, 4th July 2024, About 2 weeks ago

Reply to the comment left by Ron H-W at 04/07/2024 - 10:07The only information that we have from the author is…
… 𝐼’𝑣𝑒 𝑐ℎ𝑎𝑟𝑔𝑒𝑑 𝑡ℎ𝑖𝑠 𝑡𝑟𝑜𝑢𝑏𝑠𝑜𝑚𝑒 𝑡𝑒𝑛𝑎𝑛𝑡 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑜𝑓 10% 𝑜𝑛 𝑡ℎ𝑒 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑢𝑛𝑝𝑎𝑖𝑑 𝑟𝑒𝑛𝑡…
It doesn’t say anything about the actual fee charged in terms of an annual interest rate. This is not lawful and could land the errant landlord with a fine of up to £5,000. Also, the landlord will not be able to rely on Section 21 until they have repaid the illegal charges. The late payment interest fee (BofE base rate plus 3% (annually)) can only be charged if the AST says so.
Author needs to seek professional legal advice urgently.

Duncan Forbes

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10:23 AM, 4th July 2024, About 2 weeks ago

Lets hope if Labour get in they don’t impose an eviction
Ban siting a housing crisis .
Prepare for a long wait down the Court rout the tenant
wont pay. Its hard but sometimes easer to pay them off
if defended it can take a long time back and forth to court
I took me a year sometimes much longer I have heard.

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