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Stuart J
Stuart J, Solicitor
Category: UK Law
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Experience:  PGD Law. 20 years legal profession, 6 as partner in High Street practice
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I am a property landlord who has the following clause in my

Resolved Question:

I am a property landlord who has the following clause in my tenancy agreement. Are the penalties for late payment stated here legally enforcable?

34. The tenant agrees to pay the rent in advance as stated in the particulars at the times specified by STANDING ORDER direct into the bank account specified. Should the rent remain unpaid 24 hours after the due date an administration charge of £30.00 will be incurred increasing by £15.00 per 24 hours thereafter. If after seven days of becoming payable the rent or any part of it remains unpaid in clear funds, then the tenant also agrees to pay interest in respect of the rent and the date other sums of money become due, until the date of payment at a rate of 4% over the bank of England Base Rate (interest to be calculated daily) until full payment is actually made.
Submitted: 1 year ago.
Category: UK Law
Expert:  Stuart J replied 1 year ago.



Hello, I am Law
Denning and I am a practising solicitor in a High Street practice. I have been
an expert on this website in UK law since 2008. During that time, as you
appreciate, I have answered thousands of questions from satisfied users on a
variety of subjects.



Because
we are all in practice with clients and court and other users, I might not always respond in minutes,
particularly evenings and weekends. Please bear with me in that case



It is my pleasure to try and assist you with this today. Please bear with me
while I gather some further information from you in order for me to be able to
advise you fully.



Does
the rent, when overdue increase by £15 per day?



Who
worded this clause because it is very badly done?

 

I will expand on my comment that the clause is very badly worded.

I will come back to enforceability in a moment.

It says that the administration charge is increased by £15 per 24 hours thereafter. Does that mean that it is £30 the first day and £45 the second day and £60 the third day and so on?

If that’s what it means, I think you have more chance of winning the lottery than enforcing this clause. It is punitive and it is a principle of English law that penalties, to be enforceable, have to be a genuine measure of loss and not seen as any kind of punishment. Using the legal “blue pencil test” the judge would not make the clause reasonable but would strike it out. The clause is just about as badly drafted as it could be.

When it gets struck out, everything else goes with it which includes the liability to play by standing order, the basic administration charge, and interest. You will lose the lot.

This should have been in several clauses:

1 pay by standing order. That is okay and enforceable

2 administration charge. That is okay and enforceable but not after 24 hours

3 increase in administration charge. That is not enforceable

4 interest. That is enforceable

However, not only of not enforceable, 24 hours is unreasonable. That is why leases have periods allowing for late payment which vary between seven days and 28 days.

If it is not in already, you need to adding “the tenant shall pay as rent, any costs incurred by the landlord in enforcing the terms of this agreement”.

That means that if you go to Small Claims Court to recover rent, you can still recover solicitor’s costs when you win because they are contractual costs payable under the agreement.



Customer: replied 1 year ago.
Thank you for your reply.

Under these circumstances, if the tenant has not paid and has been advised that I will take court action if he does not pay:

1. Can I still go to small claims court to claim rent owing to me?
2. Can I still claim interest for late payment at the rate usually granted by the county court?
3. Can I still claim court costs in the usual manner?
Expert:  Stuart J replied 1 year ago.

As it is:

1 Yes You will only recover the basic rent.

2 As there is a provision for interest in the lease even though not enforceable, you lose the right to interest and penalties under late payment statutes.

3 You will only get court and solicitors fixed nominal costs if you use sols, not the sols hourly rate

 

Modified and drafted properly:

1 Yes

2 Yes, either under statute or the provision in the lease but not both.

3 Yes, incl sols usual hourly rate if you win

Stuart J, Solicitor
Category: UK Law
Satisfied Customers: 20077
Experience: PGD Law. 20 years legal profession, 6 as partner in High Street practice
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