Tenant Fees Act – Rent arrears default fees

by Readers Question

14:15 PM, 8th April 2019
About 2 months ago

Tenant Fees Act – Rent arrears default fees

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Tenant Fees Act – Rent arrears default fees

The way I read rent arrears is we can not charge unless it is more than 14 days overdue. Thereafter we can charge 3% above BoE base rate. We can no longer charge a fee for letters etc.

So assuming average rent in England excluding London of £782, this equates to £1.12 for the first 14 days and £0.08 per day thereafter. I’m sure tenants will be quaking in their boots at the thought of being charged 8p per day if they are late.

There is clearly no incentive for tenants to pay on time. These charges and fee bans should be inline with what the banks charge. It’s just not a level playing field.

My reaction is; I will let new tenants know at the outset, if you are late with your rent, I will issue a Section 21. I’m done with being messed around. Fergus Wilson was very clear on this, you may not like his forthright approach, but he’s right on this.

Michael

Editors Note:

From the official .Gov guidance published last week >> Click Here

DEFAULT FEES AND DAMAGES PAYMENTS

Q. What is a default fee?

You can only charge a default fee where a tenancy agreement permits you to do so and one of the following applies:

1. A tenant is late paying their rent

  • A default fee can be charged for late payment of rent but only where the rent payment has been outstanding for 14 days or more (from the date set out in the tenancy agreement)
  • Any fee charged must be no more than 3% above the Bank of England’s base rate for each day that the payment has been outstanding. A fee which exceeds this amount is a prohibited payment.

The tenancy agreement should set out the circumstances under which a tenant is liable for a default fee and how the fee will be determined. This might be called a default fee provision or payment in the event of default provision. Landlords and agents should highlight relevant default provisions within the agreement to the tenantbefore it is signed. Agents must also publicise any default fees they charge on their website and in their offices. If a tenancy agreement does not permit you to charge default fees, you may still be able to recover damages for breach of contract. Most landlords and agents will seek to recover damages by claiming against the tenancy deposit at the end of the tenancy (but may do so at any time through agreement with the tenant or by initiating legal proceedings)



Comments

Ian Narbeth

15:55 PM, 8th April 2019
About 2 months ago

Michael
You are absolutely right. It is hardly worth calculating the payment and sending out a demand. If demands have to be by post rather than email the cost of envelope paper and stamp will be at least £1.

However, there may be a way round this. I am looking into it and will post on this board later in the month.

Kathy Evans

15:28 PM, 9th April 2019
About 2 months ago

Any other business can charge 8% over base on an overdue invoice (usually after 30 days unless the contract says otherwise)

Chris Daniel

21:28 PM, 9th April 2019
About 2 months ago

Michael,
That's just one reason why its important landlords get a tenancy into its Periodic status as soon as possible. Put another way, issue an initial 6 month Fixed term and then let it go periodic.
But what's really going on here - what's the big picture. ?

My view, call me cynical if you wish ( I don't mind ) is that the Govt have got a Housing problem in that accommodating tenants, particularly those on benefit that the state 'fund' - is in govt's financial view, - too expensive.
Landlords are lambasted for receiving all this Housing benefit and at the same time, pressured not to discriminate or not rent to DSS.
So what's the Govt's plan? - well I believe its to 'strategically engineer' the PRS to provide accommodation for all of societies 'problem childs' at a discounted rate. !
How are they going to achieve this - well their plan is already underway.
Sec 24 to take more of the rents out of Landlords pockets, followed by,
No discrimination about refusing to rent to Fraudulent tenants ( see my forthcoming article ' Why do Landlords take the blame for intentionally homeless tenants ' )
No effective ( speedy ) Civil Justice system for Possession or rent recovery, infact, debt recovery by Debt Pre-Action Protocol since 1/10/17 has made recovering debt harder - slower. [ if that was possible ]
Tenant fee ban.
Postulating over longer tenancies and removal of Section 21 - this will have effect of landlords being 'stuck' with a bad tenant for longer.
In short, Landlords will be legislated into providing homes with less decision-making over their tenants and for a cheaper rate. ( sorry if this sounds to much doom and gloom ;-(

Gromit

9:12 AM, 10th April 2019
About 2 months ago

Reply to the comment left by Chris Daniel at 09/04/2019 - 21:28
I think you're right.

Add to that the possible suspension of s.24 for Landlords housing "social" tenants. And the Government's buddies, aka Tory Party donors, in the BTR sector wanting take the cream of tenants with minimal competition from the PRS.

bob the builder

8:34 AM, 13th April 2019
About 2 months ago

Reply to the comment left by Gromit at 10/04/2019 - 09:12
Yep that's why we should all be planning our exit ASAP.


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