Can landlord fine me like this?

[Xenia999]

I live in a private student house share which is managed by a company who are sublet as landlords by the owner of the house.

 

Here are the issues:

 

- The landlord imposes a fine of £10 every week when the rent is not paid on time. Would this be enforceable? Is this not a penalty clause? I can't see it being a reasonable liquidated damages clause, as it is described as a 'fine' and is obviously punitive.

 

- The landlord has also fined us all £20 each as the property is in an 'unacceptable condition' to them. This is mainly down to a minority in the house who are a bit messy, over which we have little control. Is this enforceable, even if contained within the original contract? It does not cover any cleaning costs or anything - it is merely punitive. Would this not be a penalty clause of some kind?

 

So, are the above fines enforceable? We are expecting an invoice at the end of the year for these fines.

 

If they aren't - then, even though we live in a private house and not in university halls, how come a lot of universities are allowed to issue fines to students for being messy, noisy, etc?

Edited June 16, 2011 by Xenia999

[Snorkerz]

Anything called a 'fine' in a contract is not enforceable. Only courts can fine people. Even a parking 'fine' imposed by the police is really a 'penalty notice'.

If we forget the issue of wording - around 4 percentage pints over the base rate is the maximum that courts would accept - so £10 is likely to be an unfair term under the Unfair Terms in Consumer Contract Regulations (UTCCR).

 

You are only responsible for the condition of and contents of the area let to you - in this case, presumably your room. You can not be held liable in part or whole for anything in the communal areas UNLESS the landlord/agent can prove that they are as a result of your (in)actions. So, a red wine stain on the hall carpet - their problem. A red-wine stain and CCTV of you spilling it - your problem. The LANDLORD has a responsibility to keep the property clean, tidy and safe under the 2006 HMO regulations. think this is the right link but I can't check it because their server is down right now http://www.statutelaw.gov.uk/legResults.aspx?LegType=S.I.+(All+UK)&title=multiple+occupation&searchEnacted=0&extentMatchOnly=0&confersPower=0&blanketAmendment=0&TYPE=QS&NavFrom=0&activeTextDocId=2483006&PageNumber=1&SortAlpha=0

[Nightmare4banks]

Xenia,

 

Sorry to read about your housing problem.

 

In reply to your question and in my view:

 

1.The charge is excessive and in breach of The Unfair Terms in Contracts Regulations 1999 and legally unenforceable too.

 

2.More realistic and fair amount to charge would be 8% Simple Interest - this is the amount of interest a person can obtain if taking a legal matter to court and succeeding.

 

If you have any questions,please feel to ask.

[Xenia999]

Anything called a 'fine' in a contract is not enforceable. Only courts can fine people. Even a parking 'fine' imposed by the police is really a 'penalty notice'.

If we forget the issue of wording - around 4 percentage pints over the base rate is the maximum that courts would accept - so £10 is likely to be an unfair term under the Unfair Terms in Consumer Contract Regulations (UTCCR).

 

You are only responsible for the condition of and contents of the area let to you - in this case, presumably your room. You can not be held liable in part or whole for anything in the communal areas UNLESS the landlord/agent can prove that they are as a result of your (in)actions. So, a red wine stain on the hall carpet - their problem. A red-wine stain and CCTV of you spilling it - your problem. The LANDLORD has a responsibility to keep the property clean, tidy and safe under the 2006 HMO regulations. think this is the right link but I can't check it because their server is down right now

 

Xenia,

 

Sorry to read about your housing problem.

 

In reply to your question and in my view:

 

1.The charge is excessive and in breach of The Unfair Terms in Contracts Regulations 1999 and legally unenforceable too.

 

2.More realistic and fair amount to charge would be 8% Simple Interest - this is the amount of interest a person can obtain if taking a legal matter to court and succeeding.

 

If you have any questions,please feel to ask.

 

Thanks for your replies.

 

- As to failing to enforce the late payment of rent, what part of the UTCCR would this come under?

 

- Regarding the fine for the house being in an 'unacceptable condition' - I believe this mainly regards the communal areas. I am unsure as to what type of residency we are, but I presume it is a house in multiple occupation? Basically, the 'fine' isn't to repair damage or to pay the costs of cleaning the communal areas - it's a punishment as the landlord considers the communal areas to be too messy. As far as I am aware, this fine just goes into the landlord's pockets and is simply a punishment/deterrence. If the landlord had to clean the property due to mess or repair damage - they would charge this separately.

[Steve__M]

I don't know whether the word "fine" in the contract has a bearing on the issue.

 

I don't see why a late payment charge can't be made though if the banks are allowed to make them. Also, unlike the banks, a charge of £10 could be a reasonable pre-estimate of the damages as the LL's overdraft charges may exceed £10.

 

The £20 fine for messiness sounds unenforceable to me as it is entirely subjective and makes no difference to the LL.

[mariner51]

I tend to agree with Steve M, £10 is a late-payment charge which Ts are aware will be applied if rent is late by even 1 day. Or it can be regarded as an admin charge to cover reminder letters etc ALSO if rent is 1 day late, then T is in breach of contract, repeated breaches would be basis for repo order.

OP says mess is due to other Ts which they have little/no control over. If mess is in comunnal areas then all are jointly responsible.

Students are mini adults and should be learning how to live and persuade others, else marriage is going to be a big disappointment.

Also mum & dad are no longer on tap to bail you out and tidy up after you all. Sounds like LL is trying to provide some indirect focus.

If other Ts are dragging you down, option is to leave and find your own friends to share, or suggest other Ts leave if they are not prepared to pull their weight. Students sharing is a steep learning curve. The additional charges may not be legally enforceable, but you will have to take it to Court to find out!

[Xenia999]

I don't know whether the word "fine" in the contract has a bearing on the issue.

 

I don't see why a late payment charge can't be made though if the banks are allowed to make them. Also, unlike the banks, a charge of £10 could be a reasonable pre-estimate of the damages as the LL's overdraft charges may exceed £10.

 

The £20 fine for messiness sounds unenforceable to me as it is entirely subjective and makes no difference to the LL.

 

I guess the use of the word 'fine' highlights that it is punitive (thus a penalty clause which is legally unenforceable) as opposed to liquidated damages.

 

Would their overdraft (if they have one) really charge £10, per week, per resident? Bearing in mind this is a standard student house, not a luxury residence.

[Steve__M]

Would their overdraft (if they have one) really charge £10, per week, per resident? Bearing in mind this is a standard student house, not a luxury residence.

 

I think it only needs to be justified as a genuine pre-estimate of losses. An agreed overdraft would normally be cheaper than this, but overdrafts can get very expensive very quickly if they are not agreed.

 

To be honest I suspect that a landlord/agent with lots of individual students could get into quite a bit of a pickle if they didn't try to be ruthless. My partner had a tenant who was a complete t****r - wouldn't pay rent till asked, and even then would shout and complain at the agent about made up problems. As soon as we asked the agent to threaten a £25 fee for late payment everything started to go smoothly.

[mariner51]

OED defines 'fine' as a financial penalty, accepted in common usage.

'Fine' is derived from the latin 'finis' - a fee paid to settle a lawsuit. (OED)

Legally a criminal fine can only be imposed by a Court, any other 'civil fines' should be correctly described as 'penalties'. A concept the Press has yet to embrace.

All fines or financial penalties are meant to be punitive for non-compliance of rules.

Footballers, F1 drivers and many other employees are 'fined' by teams/prof bodies for breach of regulations.

I have yet to hear of a child contesting parent witholding pocket money (punitive, fine) for misbehaviour.

The OFT have held that a late payment charge of £12 max is not punitive nor an unfair contract term & condition, whatever the size of the unpaid amount or cost involved in applying. What are 'liquidated damages'?

Edited June 17, 2011 by mariner51

[Xenia999]

The OFT have held that a late payment charge of £12 max is not punitive nor an unfair contract term & condition, whatever the size of the unpaid amount or cost involved in applying. What are 'liquidated damages'?

 

Do you have a source for this?

 

And I am going by what the House of Lords (now Supreme Court) have established with regards to contract law.

[raydetinu]

What does it say in the contract regarding these terms, if it an AST then it is not Late until 14 days.

[mariner51]

Raydetinu. My understanding is that rent is overdue the day after date payment duem hence a late payment fee can be applied.

I think your 14 day ref applies to applying interest to the outstanding rent amount, not quite the same thing.

[raydetinu]

Techniaclly yes, but most agreements that I have dealt with it is 14 days, and legally/ morally you must have a few days grace ( a court would not enforce a judgement on just being less than 7 days late ), that is why it 14 days ( sometimes 7-10 ) depends what is in the contract.

It cuts both ways in most cases; why would a LL fine an otherwise good tenant on being a few days late now and again. Also being consistantly late risks not getting the tenancy renewed.

It would be up to the tenant if they pay these fines or not, but imagine most cliams would get thrown out if it ever got that far.

I wish people would get real, better to get the rent at all ( if a bit late ), than tennant not paying at all and staying there rent free for about five months until they get evicted and all the stress, court costs etc.

[raydetinu]

Another thing a punitive fine IMO would be unenforceable or at leat unfair without some damages resulting in the contravention of any act or non act. ( I dare someone to take it to court to try and collect it ) laugh!!!

What you could do is charge interest on the late rent ( work the amount out first though at 8%pa on say £500 at 14 days late = £1.53 ) is it worth it!!

[Ed999]

My comments apply only if the premises are entirely within England and Wales, and only if you were granted a shorthold tenancy (under which you - and your spouse/partner/children, if any - had exclusive use of a seperate dwelling, which was not shared with another tenant nor with the landlord), and only if you were over 18 years of age when the tenancy was granted.

 

This posting is supplemental to the information in this forum's "sticky" threads and is NOT to be read in isolation.

 

 

Bear in mind that if you are a shorthold tenant, you can be evicted from the premises by simply being given 2 months notice, in writing, taking effect after the initial six months ends (expiring on the last day of a rent period). No reason has to be given. Where a dispute arises, concerning any matter, the landlord can simply end the tenancy in that way.

 

 

Administrative charges

 

Where the landlord is purporting to impose administrative charges on the tenant, the starting point is always the tenancy agreement, i.e. the contract. On its true construction, does it give the landlord the express right to impose the charges in question?

 

It is unlikely that a court would find there to be an implied right to impose charges on the tenant; but a court would probably feel bound to uphold any such clause that had been expressly agreed by the parties to the contract.

 

The statutory issue in doubt is whether the contract clause - if there actually is one - amounts to a penalty, and therefore is unlawful; or whether the charge amounts merely to a genuine pre-estimate of the loss. The larger the charge, the more likely it is to be held to be a penalty. A small charge, such as £10 per default, might well be so small as to be a reasonable estimate of the actual cost to the landlord of a late payment, and therefore not invalid.

Edited June 18, 2011 by Ed999

[raydetinu]

I think you are agreeing with me ED?

[Ed999]

My reservation is the part about it being a genuine pre-estimate of the damages: I think the court would look at it as a question of actual expense to the landlord - such as bank charges on an overdue account, or for a bounced cheque. I don't think the court would treat it as a case for assessing damages, i.e. compensation.

 

I racked my brains to try to recall where I had come across this type of penalty clause before, but I couldn't remember. Do you happen to know where the law on penalty clauses derives from?

 

But I don't see any relevence in the amount of interest lost on the unpaid rent. It really can't amount to £10 in just a short time.

 

The figure of £12 was approved by the OFT. So I think on that basis it is reasonable for the landlord to recover such a small amount as £10, if the contract permits it, given that £20 is now the usual item charge imposed by a bank if I go overdrawn because the rent I'm expecting to receive doesn't get paid on time.

[Snorkerz]

Is there any mileage in the fact that if a landlord goes overdrawn because the tenant is late paying rent (tenants poor financial planning) then that is partly the landlords responsibility because it is a foreseeable occurrence and therefore also his poor financial planning? Also, it is not the lack of money going IN that makes the landlord overdrawn, it is the payments that the landlord authorises/has authorised to go out after the rent is due. Didn't my mother always tell me not to spend money I didn't have? So it is the landlords actions that cause the overdraft. Perhaps as part of the reference process tenants should ask for verification that landlords have sufficient reserves or authorised lending to keep their business running smoothly. As a T, I would be worried that a LL who goes overdrawn so easily won't have the cash in hand for emergency repairs if required.

 

===================

 

I throw the above in for debate only - my personal opinion is that a reasonable fee to reflect the fact that the landlord incurs extra work (and possibly extra cost) is perfectly acceptable. My personal modus-operandi is to have a fee per letter, and a letter is sent every week the tenant has rent unpaid - to both tenant and guarantor.

Edited June 19, 2011 by Snorkerz

[raydetinu]

It does not really matter what WE think is fair/ok, the only way is to test it is in court and as we all know courts/judges can make the strangest of decisions.

It all comes down to the relationship between the tenant and LL as I have said above; why upset either for a few quid.

but if if it is a continous problem both have the the solution if they want, evict or leave.

[Steve__M]

It does not really matter what WE think is fair/ok, the only way is to test it is in court and as we all know courts/judges can make the strangest of decisions.

It all comes down to the relationship between the tenant and LL as I have said above; why upset either for a few quid.

but if if it is a continous problem both have the the solution if they want, evict or leave.

 

As I said, in the case of my partner's tenant the relationship was improved simply by *threatening to enforce* the contractual charge.

 

Surely it is equally valid to ask why the *tenant* should upset the relationship by not paying rent when due and (in reference to snorkerz point) why the *tenant* should allow themselves to be so short of money that they cannot pay their rent. There is no rule that says landlords are sloshed with money while tenants are poor - we know that my partner's tenant had over £100000 in the bank (from his house sale).

[raydetinu]

Exactly, all people are different and act/do things that may seem odd and dont make sense, just a polite word or message in the first insatnce is often all it needs to get things back on track; but threat of FINES, Late FEES would have some paoples backs up and you are on a slippery slope.

Just like when you get a parking ticket, you hate them!, even tho you know their right and just doing their job, its human nature.

So next time you get a parking ticket, pay up and smile!! its in the contract.

[Ed999]

Is there any mileage in the fact that if a landlord goes overdrawn because the tenant is late paying rent (tenants poor financial planning) then that is partly the landlords responsibility because it is a foreseeable occurrence and therefore also his poor financial planning?

 

 

No, IMHO there is no mileage in that argument.

 

A bank charge will be imposed on the landlord by his bank if he pays into his account a tenant's cheque that bounces EVEN if the landlord's account is in credit. This is not a discussion of the landlord going overdrawn, merely a discussion of what his actual expense will be if the tenant gives him a bad cheque.

 

No doubt the tenant might give him no cheque at all.

 

In either case, the landlord must then chase the tenant for his rent. A bank will charge a minimum of £20 for writing to a customer to give the customer a notice of default. Why should any other business charge less?

 

Remember: we are only discussing a case where the tenant has AGREED to the imposition of administrative charges in the tenancy agreement.

 

Remember: we are NOT discussing the Regulations - UTCCR - as they do not apply where the landlord is another individual, rather than a multi-national corporation like a bank. It is the notorious 'printed form' contract that the Regulations seek to deal with, not a contract individually negotiated between two people face-to-face.

Edited June 20, 2011 by Ed999

[Xenia999]

No, IMHO there is no mileage in that argument.

 

A bank charge will be imposed on the landlord by his bank if he pays into his account a tenant's cheque that bounces EVEN if the landlord's account is in credit. This is not a discussion of the landlord going overdrawn, merely a discussion of what his actual expense will be if the tenant gives him a bad cheque.

 

No doubt the tenant might give him no cheque at all.

 

In either case, the landlord must then chase the tenant for his rent. A bank will charge a minimum of £20 for writing to a customer to give the customer a notice of default. Why should any other business charge less?

 

Remember: we are only discussing a case where the tenant has AGREED to the imposition of administrative charges in the tenancy agreement.

 

Remember: we are NOT discussing the Regulations - UTCCR - as they do not apply where the landlord is another individual, rather than a multi-national corporation like a bank. It is the notorious 'printed form' contract that the Regulations seek to deal with, not a contract individually negotiated between two people face-to-face.

 

In my situation, the landlord is a company who are acting as landlords on behalf of the owner of the house.

[raydetinu]

the 'owners' are either leasees or acting as agents; what does it say on the agreement.

Is this 'FINE' clause actually in the contract?

It is up to you if you pay it, what can they do take you to court? 'laughable' even if it is in the contract.

if you are up to date with the rent, they can issue a section 21, which would come into affect at the end of any contract bterm and would take about 4 months to evict.

[Steve__M]

I should have dug this out earlier. The OFT issued some guidance on tenancy contracts.

 

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

 

As to whether the guidance would apply in your situation they only say:

 

In the event of a dispute as to whether an individual small landlord is a supplier, it will be for a court to decide whether the Regulations apply in that case.

 

With regard to charges, it would seem that they would regard the charge as unfair.

 

3.46 We regard a requirement to pay unreasonable interest on arrears of rent, at a rate substantially above the clearing banks' base rates, as an unfair penalty. We regard the imposition of a fixed daily or monthly charge for overdue rent, and regardless of the amount due or the surrounding circumstances, as being penal rather than compensatory in nature, and unfair. Tenants would have to pay more than the cost of making up the deficit caused by their default.