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Alex J., Solicitor
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# Hi please explain to me what this means In the event that

Hi please explain to me what this means 'In the event that any instalment of rent or any money payable under this Agreement remaining unpaid after the same becomes payable then the Tenant shall in addition thereto pay the Landlord interest at the rate of 12% per annum above Bank of England base rate from time to time on all outstanding monies from the date upon which the same became payable until payment'
Hi,

Thank you for your question and welcome.

My name is ***** ***** I will assist you.

This clause means that if you do not pay the landlord any sum of money that is owed to him under the agreement on the date it is supposed to be paid then the landlord is allowed to charge interest on that sum of money at a rate of 12% per annum above base rate (base rate I believe is 0.5% so 12.5%).

By way of illustration. If you owe your rent on the first of the month and it is £100, say you do not pay until the 14th of the month the landlord could charge interest for these 14 days. To calculate 14 days interest:

12.5% of £100 is £12.50. £12.50 is what you would pay if you were late paying this £100 for a whole year. Therefore to work out one days interest divide £12.50 by 365 days (i.e 1 year) which equals - is 3.5p.

There if one days interest on £100 at a rate of 12.5% per annum is 3.5p, 14 days would be 14 multiplied by 3.5p = 49p.

Therefore if you paid your £100 rent 14 days late, the landlord would be entitled to charge you 49p.

Can I be of any further assistance?

Kind regards

AJ