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Applying Interest and Recovery Costs to Late Payments in the Property Sector

Applying Interest and Recovery Costs to Late Payments in the Property Sector

Late payment of invoices is a persistent challenge across the UK property sector. Whether you’re a commercial property management company, chartered surveyor, architect, or estate agent, overdue invoices can disrupt cash flow and waste valuable time.

The good news is that the Late Payment of Commercial Debts (Interest) Act 1998 gives businesses in the property sector the right to claim interest and debt recovery costs on overdue payments. Understanding how this legislation applies to both B2B and B2C clients is key to recovering what you’re owed.


B2B Late Payment Debt Recovery – Property Firms, Surveyors, Architects & Agents

When your debtor is another business, UK law allows you to recover not only the original invoice but also statutory interest and debt collection fees. This applies whether you’re managing commercial rent arrears, unpaid professional fees, or overdue service charge invoices.

You can recover costs in two ways:

  • Contractual rights – If your signed contract or Terms of Business (Terms and Conditions) include a clause on late payment charges and recovery costs.
  • Statutory rights – Even without a contract, you can rely on the Late Payment legislation to apply statutory interest (8% above the Bank of England base rate) plus a fixed late payment charge, depending on the size of the debt.

For example, if a commercial tenant fails to pay service charges on time, or if a developer delays payment to a surveyor or architect, statutory interest and compensation can be added to the outstanding balance.


B2C Late Payment – Private Landlords & Residential Clients

If your debtor is a consumer, such as a private landlord or residential client, the rules differ. The Late Payment legislation does not automatically apply to B2C debts.

This means:

  • You can only recover additional charges if your contracts or Terms of Business clearly state that late payment and recovery costs will be applied.
  • Without such a clause, you may request payment of recovery costs, but the consumer has no legal obligation to pay them.
  • You cannot threaten legal action for recovery costs unless the right wording is in your terms.

For property firms that regularly deal with residential landlords or homeowners, we recommend including clear late payment provisions in your contracts. This protects your business and ensures you’re not left out of pocket when pursuing overdue invoices.


Why Sinclair Taylor?

For over 25 years, Sinclair Taylor has been a trusted partner for businesses in the property sector, helping them recover overdue invoices quickly and compliantly. Our services include:

  • Reviewing your contracts and Terms of Business to ensure you are legally protected.
  • Advising on when and how to apply late payment interest and recovery costs.
  • Professional, effective recovery of commercial rent arrears, ground rents and service charges, unpaid professional fees, and residential invoices.

We understand the pressures of late payment in the property sector — from managing tenants who delay rent to clients withholding fees for surveyor or architectural work. Our specialist debt recovery team ensures you get paid while protecting valuable business relationships.

👉 Speak to us today to find out how we can support your business with property sector debt recovery in the UK.

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