Penalty/incentive clauses in tenancy contracts
Discussion
Having had a 'mare with my last set of tenants as they started withholding rent due to a noisy neighbour beyond my control, I'm looking for a way to minimise the risk of rent being withheld due to anything like this again i.e. I'm perfectly willing to cut tenants slack if they fall on hard times (treat others as you would like to be treated etc), but have zero sympathy for those who deliberately break a tenancy agreement for no legal reason.
I proposed inserting a clause in to the next contract to the agent who lets my property along the lines of: "if the payment of the month's rent is more than 5 working days late without the written consent of the landlord and without following the rules of Set Off, an additional fee of 10% of the months rent will immediately become due".
i.e. if you choose not to pay to be difficult rather than for any legal reason, there's a significant cost to you.
Basically, the standard "you'll be charged 4% interest above the base rate" is useless and provides zero incentive to ensure you pay on time and meet your obligations.
The agent contacted ARLA and they said my proposed clause would not meet their guidelines and so the agent is unwilling to let the flat with that clause in the contract. Assuming I don't want to change agent, has anyone else managed to come up with an "ARLA friendly" clause to put into a contract that may achieve the same thing?
I proposed inserting a clause in to the next contract to the agent who lets my property along the lines of: "if the payment of the month's rent is more than 5 working days late without the written consent of the landlord and without following the rules of Set Off, an additional fee of 10% of the months rent will immediately become due".
i.e. if you choose not to pay to be difficult rather than for any legal reason, there's a significant cost to you.
Basically, the standard "you'll be charged 4% interest above the base rate" is useless and provides zero incentive to ensure you pay on time and meet your obligations.
The agent contacted ARLA and they said my proposed clause would not meet their guidelines and so the agent is unwilling to let the flat with that clause in the contract. Assuming I don't want to change agent, has anyone else managed to come up with an "ARLA friendly" clause to put into a contract that may achieve the same thing?
dacouch said:
Interesting - it all seems to be dependent on the word "reasonable", which means different things to different people. Is it reasonable to charge people a late payment fee of 10% after they've had a week's grace and not offered a reasonable explanation?Mario149 said:
Interesting - it all seems to be dependent on the word "reasonable", which means different things to different people. Is it reasonable to charge people a late payment fee of 10% after they've had a week's grace and not offered a reasonable explanation?
I would say not, and expect that if someone did it to you you'd find it pretty unreasonable as well. Nobody is going to say 'Fair cop guv' and hand over an extra 10% for being a week late, they will tell you where you can stick it 
Simpo Two said:
Mario149 said:
Interesting - it all seems to be dependent on the word "reasonable", which means different things to different people. Is it reasonable to charge people a late payment fee of 10% after they've had a week's grace and not offered a reasonable explanation?
I would say not, and expect that if someone did it to you you'd find it pretty unreasonable as well. Nobody is going to say 'Fair cop guv' and hand over an extra 10% for being a week late, they will tell you where you can stick it Simpo Two said:
Mario149 said:
Interesting - it all seems to be dependent on the word "reasonable", which means different things to different people. Is it reasonable to charge people a late payment fee of 10% after they've had a week's grace and not offered a reasonable explanation?
I would say not, and expect that if someone did it to you you'd find it pretty unreasonable as well. Nobody is going to say 'Fair cop guv' and hand over an extra 10% for being a week late, they will tell you where you can stick it Mario149 said:
What would you consider fair if you paid your rent significantly late through your own fault for no legal reason?
Being realistic, would you take them to court at the end of the tenancy for a relatively small amount of money in late payment fees? As that is what you'd have to do if they don't pay it.I'm happy to be corrected, but I don't think charges like that are deductible from the deposit? So you are relying on the people who are paying rent late, to then stump up for the fees, which seems unlikely.
Then bear in mind the agents are probably charging them a fee already for every letter or chase up of rent they do.
The standard x above base rate etc is probably the standard because it's the easiest to enforce? Maybe speak to some solicitors or Google for some case law and see what's about or stood up in court before.
Slagathore said:
Mario149 said:
What would you consider fair if you paid your rent significantly late through your own fault for no legal reason?
Being realistic, would you take them to court at the end of the tenancy for a relatively small amount of money in late payment fees? As that is what you'd have to do if they don't pay it.I'm happy to be corrected, but I don't think charges like that are deductible from the deposit? So you are relying on the people who are paying rent late, to then stump up for the fees, which seems unlikely.
Then bear in mind the agents are probably charging them a fee already for every letter or chase up of rent they do.
The standard x above base rate etc is probably the standard because it's the easiest to enforce? Maybe speak to some solicitors or Google for some case law and see what's about or stood up in court before.
What would you consider fair if you paid your rent significantly late through your own fault for no legal reason?Mario149 said:
Take your points, but you didn't answer my question What would you consider fair if you paid your rent significantly late through your own fault for no legal reason?
It's mostly irrelevant, though, isn't it? What would you consider fair if you paid your rent significantly late through your own fault for no legal reason?The sort of people who sign the contract knowing they can't afford the rent or are gunna try and game the process and be late or not pay and use excuses about the property are exactly the sort of people who know what they can get away with. And also the sort of people that probably wouldn't even be able to pay the charges if you could get them enforced.
That's the risk of being a landlord.
There's almost no legal ground for tenants withholding rent. At best, if the landlord hasn't carried out repairs etc, they can pay for repairs themselves and deduct it from the rent if they've followed a very specific guide. If they want to deduct rent because of noisy neighbours, then you deduct it from the deposit or take them to court to recover it.
I would just tell the agent to stick the clause in the contract, and that you are aware it is not enforceable. Although, if they were doing their job well in first place, they wouldn't put s
t tenants in your property.You have to remember, you're a rich landlord with many houses etc etc (in the tenant's eyes), so most tenants won't give a s
t if they are late with the rent, you can afford it. So finding tenants with the right attitude is more important than any clause in a contract.Gassing Station | Business | Top of Page | What's New | My Stuff