LL charging daily interest and late fees - please help!

[dangermummy]

I have posted previously on here for help with my LL from hell, and have had some excellent and much appreciated advice. However, as is with the case when delaing with such LLs, I would again appreciate some guidance.

I have an AST for 6 months (ends 19 Sep) for which I pay £525.00 pcm direct to my LL. I used to pay this via a LA, but in March the LA ceased trading and my LL insisted on me signing a new TA, even though the previous TA was on a rolling contract. I was told to sign the new one, or she would serve a section 21.

Since signing, this woman has been obstinate, bullying, unreasonable and intimidating (to be fair; always in writing, never in person). She has attempted to make claim for previous rent payments she says were never made to her from me, and has been very vindictive in her chasing of this money. She has attempted all number of ways to intimidate me into making payments I do not have to make by threats of legal action, threats of a claim for misrepresentation, continual references to 'criminal matters' and lying in regards to the Liquidators of the LA, whom she has offered many lies to be about so called meetings and demands from me from the liquidators. The woman is a nightmare. I dread the sound of droppage from the postbox after 12pm, as I know it will be her with one of her new harrassment letters.

Whilst I have many issues with this LL, I would specifically like advice on interest charges and late fees. I have done some hunting, but there is quite a lot of conflicting advice around.

In March 2011, I noticed an error on my Tax Credit award notice, which had my partners earnings at 3 times the actual amount he had earned. Despite phoning them immediately, my WTC payments stopped in April. They promised they would have the issues sorted by 20 June, but I am now being told there is a backlog and they still have not processed my backpayment due from them.

When these WTC stopped, my household fell into financial hardship. Our budgets were already tight, and so I was struggling without the extra WTC payments. I am still in the same financial position.

I explained all of the above to my LL, before the first late rental payment, and informed her of exact dates when payments would be made. Where I offered her such dates, I have always paid the amount promised on these dates.

I initially told her 'I am hopeful that all arrears will be cleared by (but hopefully before) 20 June 2011, as this is the date that HMRC Tax Credits has given as the latest the claim should be rectified.' I have since updated her regularly on the Tax Credit situation, informing her of what has been said over the telephone, as well as letting her know when I will call Tax Credits again to offer her another update. As well as this, I have been making payments wherever possible in order that I do not fall two months into arrears and risk a PO being granted (I have a 2yr old boy, and no money to move at present).

The TA states that 'any late payments will be subject to a fixed penalty of £35.00 payable immediately'. This is stated on a seperate sheet from the tenancy agreement, which lists a number of other T&Cs not included in the main agreement/small print.

The small print has the usual 'to pay the LL reasonable costs as reasonably incurred.....etc'.

There is also a clause in the contract to pay 'an interest charge of 4% above the BOE base rate from time to time prevailing on any rent or other money lawfully due from the T under this TA which remains unpaid for more than 14 days, interest to be charged daily from the date the payment fell due until payment'.

Being the kind hearted soul that she is, when I fell 14 days late with my May rent, she activated this clause. There was a total outstanding of £265.00; to the date the rent was paid (33 days) she has added £431.46 in interest charges, a total charge of 164% of the original arrears.

Whilst I have managed through begging, stealing and borrowing to clear May's rent, I am now in arrears on June's full rent of £525.00 (it was due 21 June). In a statement sent yesterday she has added interest of £496.12 on these arrears, which will continue to accrue until the arrears are paid. That's a charge of 94% of the original arrears to date, and this will only get higher. At 4.5% per day, I am accruing interest of £23.63 per day.

Whilst I understand that a 4% above BOE base rate interest charge is fair, surely this is annually and not daily?! I have no hope of ever clearing this debt at this rate. She has also stipulated ion her last letter that any payments made by me will be credited to the arrears and interest in date order, meaning that even if I make a payment of the full £525.00 now (which I have no way of doing), this would actually be used to clear the £430.00+ interest charge from May, and not clear any rent. Surely this is unfair, as I will be forced to go into arrears every month as monies will be used to pay the interest and not the rental payments.

Any help or guidance you can offer would be much appreciated; I am very stressed with having to deal with a restricted income at the moment through no fault of my own, and this is making a bad situation unbearable. I would also pint out that I am an advocate for paying rent; it is my first priority and it would never be my wish not to pay. The only reason I am falling late is because I do not have the money to pay. As soon as Tax Credits get their behinds into gear and make the backpayment, the arrears and late penalty fees will be paid.

Many thanks in advance!

[Aequitas]

No court in the land will allow your landlord to charge interest at 4.5% per day even if that was what your agreement said; that quite clearly would amount to a contractual penalty. But that is not what your agreement says. The Bank of England base rate is an annual rate.

 

Fixed charges for late payment are a contractual penalty and you need not pay them. The OFT shares my view. Go here and scroll down to page 21: http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

 

If you have paid any fixed charges or any interest at the extortionate rate then write and tell your landlord that they were paid in error and that you will offset them against your next instalment of rent.

[Steve__M]

The 4% is obviously annually, not daily.

 

"charged daily" just means that you are charged 1/365 of the interest each day!

 

The question is whether the extra clauses on the "separate sheet" are part of the contract. I would have thought that as long as they were provided at the same time as the contract, and it was made clear that they were part of the contract, then it is fine to do this.

 

If I were you I would plan to move, not pay any of the excessive interest claims and not pay the penalties. If it comes to it and she claims for the penalties in court, then you may have an argument that as they are stated to be penalties and as they are excessive, that they are intended to be penalties and they are unlawful in contract law.

 

If you google "penalty contract law" you'll find a lot of info such as:

 

http://www.alway-associates.co.uk/legal-update/article.asp?id=82

 

I'd probably write back and say I have no intention of paying anything other than the due monthly rent, and if she wishes to claim excess payments, to submit a court claim and stop harassing me.

 

Have you checked that your deposit is protected?

[MrShed]

Agree with both above posters. A late fee (or similar) is effectively a way of a landlord or other party reclaiming their financial loss due to the breach of contract - as such, this is all that this can amount to. Anything more is an unfair penalty, and unenforceable.

 

Dont pay, let them sue, and invite them to prove that the fees are a true reflection of their financial loss. They wont be able to.

[dalifnei]

Reading this one makes my blood boil! How does she think she can get away with that?

 

Wish you the very best of luck with this one

[Ed999]

My comments only apply if the premises are entirely within England and Wales, and you were granted a shorthold tenancy (under which you - and your spouse/partner/children, if any - have exclusive use of a seperate dwelling, which is not shared with another tenant nor with the landlord), and you were over 18 years of age when the tenancy was granted, and the rent is less than £2,083 per month.

 

 

Late Payment charges

 

Where the landlord is purporting to impose administrative charges on the tenant, the starting point is always the tenancy agreement, i.e. the contract. On its true construction, does it give the landlord the right to impose the charges in question?

 

It is unlikely that a court would find there to be an implied right to impose charges on the tenant; but a court would probably feel bound to uphold any such clause that had been expressly agreed as part of the contract, i.e. agreed at the same time as the rest of the tenancy agreement.

 

The only statutory issue is whether the contract clause amounts to a penalty, and is therefore unlawful; or whether the charge amounts merely to a genuine pre-estimate of the loss. The larger the charge, the more likely it is to be held to be a penalty. A small charge, such as £15 per default, might well be so small as to be a reasonable estimate of the actual cost to the landlord of a late payment, and therefore not invalid.

 

IMHO the court would look at it as a question of actual expense to the landlord, who will incur (for example) a £20 bank charge for a bounced cheque.

 

A figure of £12 has actually been approved by the Office of Fair Trading. On that basis, it's reasonable for the landlord to recover any amount up to £12, if the contract permits a charge to be made. Remember: £20 is now the usual item charge imposed by a bank if a cheque paid in bounces.

 

Therefore fixed charges for late payment are not necessarily an unlawful penalty, as the OFT has approved a fixed charge of £12 per default.

 

 

The admin charge is imposed to meet the actual cost of the extra administrative work involved in issuing a notice of default and a demand for payment, and is not based on the interest rate chargeable on overdue rent. Such interest will be payable in addition to the admin charge, but it is an annual interest rate, not a daily rate.