Late Rent Fees and Grace Periods

If you are late on a bank loan, there are penalties. If you are late on a mortgage payment, there are penalties. If you are late to school, or to work, there are penalties.  Why should a tenancy agreement be any different?  If you are late with your rent, there are penalties. Most landlords apply a late rent charge when a renter fails to make the payment of rent by the given deadline. This relieves the landlord of administrative and financial distress.  

These penalties are a deterrent and can hopefully prevent late payments.  No-one likes to have their debts increase due to an oversight or a situation that can be avoided! 

In most cases, landlords will charge clients a late fee on the second of the month unless there is a grace period in the lease or enforced by law. Grace periods allow renters more leeway to settle their lease or bring their debts current, before the landlord can lawfully impose a late payment charge.

For landlords and tenants alike, rent grace periods may be a thorny issue. If rent is due on a certain day, why do tenants not pay a late charge the following day? Why can’t the rental payment due date be adjusted to make the transaction simple? Typically, lease agreements include grace periods for rent payments so that occupants get a chance to pay rental fees if something unanticipated occurs or they accidentally forget the payment. It’s understandable that life gets hectic at times, however the absence of a grace period over most expenditures may make things more complicated.

There came into effect in the United Kingdom on 1st June, 2019, the “Tenant Fees Act 2019,” a legislation designed to limit the charges that private landlords may impose on renters, including a cap on how much they can incur for overdue payments.

The Law allows for the following:

1. Landlords may only demand late payments if it’s in the tenancy agreement.

2. The late payment penalty may only be applied in the event that the rental has been delayed for a period of 14 days or more (from the date set out in the tenancy agreement).

3. Any surcharges that are billed can’t be more than 3% above the Bank of England’s standard rate per day if the payment is late.

It is always advisable to make payments on time, on any debt or obligation, but when things happen to stop this, communication is key.