RENT ARREARS -INTEREST? HOW TO CALCULATE

[pugsy]

I know I'm really showing up my math skills here but, is there a formula for calculating interest on arrears?

[plym77]

Hi Pugsy

I do not believe that there is any set formula. I would however suggest that you calculate it on a daily basis at a market rate (although I do not know the legalities of that when taken in conjunction with a tenancy agreement, which I guess deals with arrears).

So for example, £300 outstanding for 20 days would be something like:

£300 x % interest = ? x 20/365 days= answer

If it is a reducing balance, something along the lines of:

Assume £300 outstanding, after 10 days £100 paid off leaving £200 outstanding for another 20 days:

£300 x % interest = ? x 10/365 = A

£200 x % interest = ? x 20/365 = B

A + B = Answer

Do remember that if you do charge interest, that this is 'income' and must be declared on your tax return.

I am sure someone else can provide advice regarding the tenancy agreement and whether you can charge interest if it is not dealt with in the agreement - I am afraid this isnt my field.

Regards

Sherena

[pugsy]

thanks alot for that, appreciate it. Actually I have just looked on the possession order from the judge and he has awarded fixed costs and interest. So that's good. Whether or not I actually get paid any money is another story.