Late rent interest
Late rent interest is interest you charge a tenant when they pay rent late, treated as a tightly controlled default fee rather than extra income. Under the Tenant Fees Act 2019, carried through into the Renters’ Rights Act, you can usually only charge:
Interest at up to 3% above the Bank of England base rate,
On the overdue amount only,
And only after the rent is at least 14 days late, check your tenancy agreement and latest guidance.
Late rent interest is mainly a deterrent and cost recovery tool, not a profit centre. Demanding higher rates, daily admin fees, or multiple stacked “late payment charges” will normally count as prohibited payments and risk enforcement action.
Good practice is to:
Spell out the interest rate and trigger clearly in the tenancy agreement.
Send a polite written reminder when rent is missed, explaining any interest that may apply.
Consider reasonable repayment plans first, especially where the tenant is in temporary difficulty.
In disputes, ombudsmen and courts will look for fair, transparent handling of arrears, not aggressive fee chasing.
Also see our landlord blog article.
