{"id":43987,"date":"2025-10-09T09:20:22","date_gmt":"2025-10-09T09:20:22","guid":{"rendered":"https:\/\/www.citylets.co.uk\/blog\/?p=43987"},"modified":"2025-10-09T09:20:22","modified_gmt":"2025-10-09T09:20:22","slug":"interest-awards-in-payment-orders-by-the-first-tier-tribunal","status":"publish","type":"post","link":"https:\/\/www.citylets.co.uk\/blog\/interest-awards-in-payment-orders-by-the-first-tier-tribunal\/","title":{"rendered":"Interest Awards in Payment Orders by the First-tier Tribunal"},"content":{"rendered":"<p>Whilst the sector\u2019s interest is almost entirely focused on the debate around the Housing (Scotland) Bill, and at the time of writing the Scottish Parliament are debating Stage 3 amendments, this blog will focus on a slightly more mundane subject and that is the question of awards of interest on First-tier Tribunal payment orders. We will certainly come back to the Housing (Scotland) Bill in the next blog when the stage 3 debate and amendments should have been completed.<\/p>\n<p>The Upper Tribunal in a recent appeal against a decision of the First-tier Tribunal, looked at the issue of awarding interest on payment orders. The decision itself can be found <a href=\"chrome-extension:\/\/efaidnbmnnnibpcajpcglclefindmkaj\/https:\/www.scotcourts.gov.uk\/media\/qmcp3z0s\/upper-tribunal-decision-knight-v-lowther-homes-2025ut64.pdf\">here<\/a><\/p>\n<p>What the Upper Tribunal looked at awarding interest where the tenancy agreement specified interest would apply on late payments as well as the contractual rate itself.<\/p>\n<p><a href=\"https:\/\/www.citylets.co.uk\/blog\/no-plumbers-no-beards-what-are-acceptable-exclusions-in-renting\/gavel\/\" rel=\"attachment wp-att-2616\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2616 aligncenter\" src=\"https:\/\/www.citylets.co.uk\/blog\/wp-content\/uploads\/2017\/04\/gavel.jpg\" alt=\"gavel\" width=\"592\" height=\"362\" srcset=\"https:\/\/www.citylets.co.uk\/blog\/wp-content\/uploads\/2017\/04\/gavel.jpg 592w, https:\/\/www.citylets.co.uk\/blog\/wp-content\/uploads\/2017\/04\/gavel-400x245.jpg 400w\" sizes=\"auto, (max-width: 592px) 100vw, 592px\" \/><\/a><\/p>\n<h2>What power does the First-tier Tribunal have to award interest?<\/h2>\n<p>Unlike the courts, the tribunals cannot award what is called the \u201cjudicial rate\u201d of interest, which is currently 8 percent per annum. What power the First-tier Tribunal does have in relation to awarding interest can be found in Rule 41A of the First-tier Tribunal for Scotland Housing and Property Chamber (Procedure) Regulations 2017 (the Regulations). Put briefly, that allows interest to be included in a payment order at either at the rate \u201c<em>stated in the relevant tenancy agreement\u201d <\/em>or another rate \u201c<em>ordered<\/em>\u201d by the tribunal. Incidentally, this power to award interest was not initially in the Regulations but was added by later amendment to the Regulations.<\/p>\n<h2>Does the First-tier Tribunal have to award interest if the lease says it is to apply?<\/h2>\n<p>The short answer to that is \u2013 no. The Upper Tribunal said that the wording of Rule 41A of the Regulations made it clear that \u201c<em>the inclusion of interest is discretionary in every case<\/em>\u201d including whether or not the lease provided for contractual interest to be charged. What the First-tier Tribunal requires to do is to determine first whether it is reasonable to award interest in the circumstances and then to look at what interest rate to apply.<\/p>\n<h2>What if there is a contractual interest rate provided for, will that always be awarded?<\/h2>\n<p>The short answer to this question is \u2013 probably! Perhaps somewhat unhelpfully, the Upper Tribunal stated that, when faced a claim based on a contractual right to seek interest and a specified contractual rate, there was \u201c<em>no general rule<\/em>\u201d. However, what the Upper Tribunal did say is that, when a First-tier Tribunal has exercised its discretion and decided that interest is to be applied and there is a contractual rate specified in the lease, there would have to be \u201c<em>cogent and compelling reasons to justify\u2026departing from applying the contractual rate<\/em>\u201d.<\/p>\n<h2>What did the Upper Tribunal say about the rate of interest charged?<\/h2>\n<p>In this case, the rate applicable to late payment of rent was set out as 4 percent above the base rate of the Bank of Scotland. The tenants tried to argue that this was \u201c<em>excessive and unjustified\u201d. <\/em>The Upper Tribunal judge did not agree and stated, in the absence of any arguments about this rate being \u201c<em>some way out of kilter<\/em>\u201d with rates found in leases generally, that there seemed<em> \u201cto be nothing remarkable about the rate agreed between the parties<\/em>\u201d.<\/p>\n<p>If you require any further information or advice, please contact us or watch our blogs for further updates.<\/p>\n<p><a href=\"https:\/\/bkf.co.uk\/\" rel=\"attachment wp-att-8443\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-8443\" src=\"https:\/\/www.citylets.co.uk\/blog\/wp-content\/uploads\/2023\/10\/In-association-with-BFK.jpg\" alt=\"\" width=\"317\" height=\"158\" srcset=\"https:\/\/www.citylets.co.uk\/blog\/wp-content\/uploads\/2023\/10\/In-association-with-BFK.jpg 436w, https:\/\/www.citylets.co.uk\/blog\/wp-content\/uploads\/2023\/10\/In-association-with-BFK-400x199.jpg 400w\" sizes=\"auto, (max-width: 317px) 100vw, 317px\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Whilst the sector\u2019s interest is almost entirely focused on the debate around the Housing (Scotland) Bill, and at the time of writing the Scottish Parliament are debating Stage 3 amendments, this blog will focus on a slightly more mundane subject and that is the question of awards of interest on First-tier Tribunal payment orders. We &#8230;<\/p>\n","protected":false},"author":1,"featured_media":2616,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[162,176,1],"tags":[],"class_list":["post-43987","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legal","category-legislation","category-property","legal","legislation","property"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Interest Awards in Payment Orders by the First-tier Tribunal - 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