Can a landlord charge interest on a late rent payment?
Landlords can charge a penalty fee for various reasons but only if they are listed within the tenancy agreement.
Here we consider one case which often occurs where a landlord charges interest on the late rent payment after seven days from the due date, and also charges £25 for an administration fee on top of the interest, explaining that the £25 fee is due to the bank charging him when he is overdrawn.
The landlord is not entitled to charge any fees what are not set out in the tenancy agreement.
If fees are specified in the tenancy agreement, then they must be fair and reasonable or the relevant clause will be void under the Unfair Terms in Consumer Contracts Regulations 1999. If the clause is void, the tenant does not need to pay the fee.
However, if in the tenancy agreement simply says that the tenant must pay all the landlord`s costs, then this will also be ineffective. The costs may be incurred for something which the tenant is not in law responsible for.
Any administration fee in addition to an interest payment will normally be considered as unreasonable.
In this case the landlord is charging the tenant twice for the same thing. The circumstance that the landlord may be charged interest on his overdraft will not justify an additional charge. Fees paid by tenants should not depend on the state of their landlord`s bank balances.