My tenant is late with their rent. Can I charge a late payment fee?

Question

My tenant is consistently late with their rent payments. Can I instigate a late payment charge?

Answer

A tenant paying their rent late can have a real impact on your cash flow, so it is understandable that you would want to do everything in your power to make sure that this doesn’t happen.

Whilst it is understandable that on some occasions, financial hiccups are unavoidable, if you have a tenants who is regularly late or behind with their rent payments, it can be tempting to add on additional charges to try and act as a deterrent for further late payments.

If you are starting a new tenancy, many landlords choose to include a late payment charge into their tenancy agreement from the very start. This is perfectly acceptable, and as long as your tenant fully understands the document and signs the tenancy agreement, this becomes legally binding.

It is harder to apply a late payment charge if you haven’t notified a tenant that this will be the case from the start. In fact, if you have an existing tenant who is struggling to find the money for their rent, it could actually be counterproductive to put another charge on them – after all, if they cannot pay their rent they are hardly going to be likely to be able to find the money to pay yet another bill, you would probably just be adding to the problem. Your end goal is to make sure you get your rent, not to punish your tenant, so by charging them further you are in fact just making their financial situation even more difficult.

You may find that talking calmly to your tenant and working out a repayment plan which works with their finances is more constructive for both of you. If you are able to maintain a healthy relationship between you and your tenant, you are much more likely to eventually get your late rent, and hopefully avoid the unpleasant situation of having to eventually serve a Section 8 on your tenant.

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