Rent arrears interest calculation?

[Yella Fella]

I want some confirmation of this, and mainly around the maths:
The Tenancy Agreement states:

"If you owe rent you must pay under the agreement, you will have to pay interest on this amount from
the date that it should have been paid where you are 14 days or more in arrears. The interest rate is
3% above the base rate used by the Bank of England". This is currently 5.25% so 8.25%

If the rent is £1000 per calendar month and no rent has been paid since the rent day

1) Is the calculation per day or per year

i.e. if rent arrears are £1000, calc is (simple interest assumed) either
1000 x 0.0825 = £82.5 per day or
1000 x 0.0825 / 365 = £0.23 per day (rounded up)

2) Is the interest rate chargeable compound or simple interest?

3) After 14 days, is the interest rate chargeable from day 1 or day 14?

If the latter part of par 1), it surely gives the incentive to the tenant not to pay as the interest is so so low anyways.

Confused...

 

[Martynt74]

I don't know about 2/3 but i'd say it's the latter part of part 1, so around £7 a month.

I imagine the incentive would be to not be evicted?

 

[Yella Fella]

True though no doubt they will just get another place and the landlord will be left stung with a massive mortgage via unpaid rent and bills they didn't pay.

 

[Mercenary Keyboard Warrior]

Yes BOE rate is the annual rate so by default pegging anything to it is also annual.

I would say assumption to me is simple. I cannot imagine it would get to a point where the difference would be anything other than pennies.

Point three I would say from day 1. You get 14 days grace and after that your charged interest as your in breach of contract.
Works the same way on credit card interest, if you don't pay within the free window then its from the date of the transaction.

 

[Diddums]

Oh dear, is your BTL biting you in the arse?

 

[dlockers]

True though no doubt they will just get another place and the landlord will be left stung with a massive mortgage via unpaid rent and bills they didn't pay.

Maybe landlord should get a real job if the obvious risks of being a landlord are too difficult for them to swallow?

 

[Diddums]

1) Is the calculation per day or per year

i.e. if rent arrears are £1000, calc is (simple interest assumed) either
1000 x 0.0825 = £82.5 per day or
1000 x 0.0825 / 365 = £0.23 per day (rounded up)

If you have to ask questions like this then you probably shouldn't be anywhere near tenants. Or properties. Or money in general.

 

[Yella Fella]

If you have to ask questions like this then you probably shouldn't be anywhere near tenants. Or properties. Or money in general.

I was hoping you'd turn up to have your say. Let's go!!

 

[Diddums]

I was hoping you'd turn up to have your say. Let's go!!

I seldom disappoint. If there's a cheap quip to be made at someone else's expense, I'll be there. Like a turd that just won't flush. Floating around in your toilet bowl laughing at your incompetence.

 

[Yella Fella]

I seldom disappoint. If there's a cheap quip to be made at someone else's expense, I'll be there. Like a turd that just won't flush. Floating around in your toilet bowl laughing at your incompetence.

That's still good to get some advice from the forums. Do you recommend putting a certain amount towards investments or some sort of savings?

 

[Thekwango]

I seldom disappoint. If there's a cheap quip to be made at someone else's expense, I'll be there. Like a turd that just won't flush. Floating around in your toilet bowl laughing at your incompetence.

You seem overly angry of late and less fun!!

 

[Diddums]

You seem overly angry of late and less fun!!

I must admit, being under the weather my usual sunny disposition has faded somewhat

 

[Thekwango]

I must admit, being under the weather my usual sunny disposition has faded somewhat

get off the internet - when one is under the weather, mixing with delinquents, eejits and ne'er-do-wells will only make one feel worse rather than better

 

[Yella Fella]

I must admit, being under the weather my usual sunny disposition has faded somewhat

Hope you get better soon. Its Friday at least.

 

[arknor]

What a crappy landlord, I'd stop paying the rent and smash the place up...


if you pay the rent in advance do you then earn interest on those payments until the due date?

I bet the rent goes up by 9% a year or something daft too.... sounds like a proper nazi landlord

8.25%.... I bet loan sharks offer better rates

 

[Yella Fella]

What a crappy landlord, I'd stop paying the rent and smash the place up...


if you pay the rent in advance do you then earn interest on those payments until the due date?

I bet the rent goes up by 9% a year or something daft too.... sounds like a proper nazi landlord

8.25%.... I bet loan sharks offer better rates

Yeah that didn’t work. Only for the landlord to charge more for messing the place up.

Just meant loosing the deposit. Good to know tenants don’t need to pay rent let alone on time. Squatter rights is real ha

 

[arknor]

Yeah that didn’t work. Only for the landlord to charge more for messing the place up.

Just meant loosing the deposit. Good to know tenants don’t need to pay rent let alone on time. Squatter rights is real ha

it is if a landlord starts extracting urine.
if your not the landlord then start looking for a new place where your landlord isn't a penny pincher....

Peace of mind from a good tenant is surely worth something.... greed is disgusting

 

[Yella Fella]

it is if a landlord starts extracting urine

To be fair it is their territory to mark it as they choose.

 

[pepp77]

3) After 14 days, is the interest rate chargeable from day 1 or day 14?

From what you wrote, the interest would chargeable from day 1. So if you pay at day 13 you have no interest to pay, but if you then dont pay and the 14th day is reached you would have to pay interest on the full 14 days.

 

[Eddie99]

I want some confirmation of this, and mainly around the maths:
The Tenancy Agreement states:

"If you owe rent you must pay under the agreement, you will have to pay interest on this amount from
the date that it should have been paid where you are 14 days or more in arrears. The interest rate is
3% above the base rate used by the Bank of England". This is currently 5.25% so 8.25%

If the rent is £1000 per calendar month and no rent has been paid since the rent day

1) Is the calculation per day or per year

i.e. if rent arrears are £1000, calc is (simple interest assumed) either
1000 x 0.0825 = £82.5 per day or
1000 x 0.0825 / 365 = £0.23 per day (rounded up)

2) Is the interest rate chargeable compound or simple interest?

3) After 14 days, is the interest rate chargeable from day 1 or day 14?

If the latter part of par 1), it surely gives the incentive to the tenant not to pay as the interest is so so low anyways.

Confused...

The way to calculate it is with the daily compounding rate, there are calculators online and there's a formula for it.

"1000 x 0.0825 / 365 = £0.23 per day (rounded up)"
This would only be accurate if you paid it exactly 1 year later.