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Penalty Charge

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Reading through the contract on the new place my partner and I are due to move into in the next few days I see there is a clause that they can charge us £25 if the rent is late.

Is this normal and legal?

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Reading through the contract on the new place my partner and I are due to move into in the next few days I see there is a clause that they can charge us £25 if the rent is late.

Is this normal and legal?

No idea if it's legal ... but unlike most of the unusual clauses that come up here, I'd say that one looks perfectly reasonable. A tenancy agreement - like any other contract - is a two-way thing.

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Reading through the contract on the new place my partner and I are due to move into in the next few days I see there is a clause that they can charge us £25 if the rent is late.

Is this normal and legal?

Not legal.... you can not charge a penalty under a consumer contract unless it is proven that there is an actual cost involved to the landlord in reclaining the money.

At best they can claim interest at a reasonable rate say 2% above the bank of blah base rate which is next to nothing over a short period.

they can put what they like in the contract but they wouldn't stand a chance of getting back in court.

Just ignore it

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What it tells us is that landlords are having trouble with tenants that dont/cant pay the rent

and these are the same people who are expected to save the housing market by jumping in with 40% deposits

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Not legal.... you can not charge a penalty under a consumer contract unless it is proven that there is an actual cost involved to the landlord in reclaining the money.

At best they can claim interest at a reasonable rate say 2% above the bank of blah base rate which is next to nothing over a short period.

they can put what they like in the contract but they wouldn't stand a chance of getting back in court.

Just ignore it

But there is a cost.

It's the cost of sending out the reminder letter.

And for a comercial organisation, 25 pounds per letter is a fairly standard (and reasonable) charge.

IMHO they have every chance of enforcing it.

tim

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But there is a cost.

It's the cost of sending out the reminder letter.

And for a comercial organisation, 25 pounds per letter is a fairly standard (and reasonable) charge.

IMHO they have every chance of enforcing it.

tim

Well, whether or not is reasonable is surely going to be dependent on the bank charges court case. Similar contract clauses, similar value of penalties.

Also depends how trigger happy they are in sending the reminder letters, such as not taking account of a standing order taking longer to hit the LA account when the three day period from it leaving the tenant is extended by a weekend and a bank holiday, and mailing the tenant to tell they haven't paid, £25 is now due, kthxbye.

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Well, whether or not is reasonable is surely going to be dependent on the bank charges court case. Similar contract clauses, similar value of penalties.

But different corporate cost structures.

The banks send out computer generated letters by the thousands per day.

A small company credit controller will send out manually generated letters at the rate of a couple of dozen per month

The latter costs considerably more to process per letter.

This is why the OFT think that the Bank's 25 pound per letter is too high. Banks used to send out letters manually from each branch and charged 25 pounds for doing so. Then they automated the process and sent the letters out automatically from a central office, thus reducing their processings costs, but still expected to be allowed to charge 25 pounds per letter.

tim

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What it tells us is that landlords are having trouble with tenants that dont/cant pay the rent

and these are the same people who are expected to save the housing market by jumping in with 40% deposits

Ah, but you fail to grasp the basics of the UK housing market. Tenants defaulting are scum to be booted out. But hard-working families defaulting on a mortgage need and deserve a taxpayer bailout. The bail versus the boot.

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But there is a cost.

It's the cost of sending out the reminder letter.

And for a comercial organisation, 25 pounds per letter is a fairly standard (and reasonable) charge.

IMHO they have every chance of enforcing it.

tim

The poster said it was a penalty...penalties are not legal in a contract...all you can do is claim loss of profit, ie to put you right as if the contract was fulfilled.

in addition, there will be a period of grace...any court would expect one as there is for any other debt.

best thing is to avoid the hassle and pay by DD.

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