I’ve recently moved out of a property and I am trying to get my deposit back. From damages cost aside, our landlord is trying to charge us excessive rent interest.
A long story short, we had a tenant abandon us for 3 months and so 1/4 of the monthly rent was unpaid for 3 months, until we found a new tenant and eventually paid off the outstanding rent. Our landlord has charged us an insane amount of interest on this late rent, however, I feel she is missing a part in her calculation of this.
She has used 3% above BoE to charge interest, so this is 3.5% I believe. However, to me it seems she has charged us the ANNUAL interest rate on a DAILY BASIS. In other words, I think she forgot to divide by 365 to get the daily charge along the way. Can anyone shed some light on these workings? As this interest on rent seems ridiculous.
I tried uploading a picture but can’t seem to work it out so I’ll summarise the workings..
For each day that rent was not paid she has incurred a charge of 3.5% of the amount of rent owed. For example, £350 was not paid for 304 days in total by the tenant who left (number of days accumulated altogether from all the months of unpaid rent = 304 days).
So she has done .. 3.5% of 350 (rent pm for each tenant) which works out as £12.25. Now she has incurred this £12.25 daily and so £12.25 x 304 = £3724 as interest. Which seems crazy.
From what I’ve read her workings should have been 3.5% x £350 = £12.25 … £12.25/365 (To get daily rate?) = 0.0335 (3/4p a day?)
In my tenancy agreement this is all the information on rent interest …
“To pay interest on any payment of Rent not made as set out in clause 2 of this Agreement.
Interest is payable from the date on which the Rent was due until the date on which the Rent is actually paid. The interest rate will be 3% above the Bank of England Base Rate.”.
Thanks for the help guys!