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Reduction in the Prescribed Rate of Interest and the Impact on Arrear Levies
Category Newsletter: Article 2
Reduction in the Prescribed Rate of Interest and the Impact on Arrear Levies
Section 1(1) of the Prescribed Rate of Interest Act, 1975 provides that if a debt bears interest and the rate at which interest is calculated is not governed by any other law or agreement, such interest must be calculated at the prescribed rate. From 1 August 2014, the prescribed rate of interest reduces to 9% per annum from 15.5%.
The Prescribed Management Rule 31(6) of the Sectional Title Act, allows trustees to determine the rate of interest on arrears due to the Body Corporate from time to time. It is important that a resolution is passed by the trustees in order to implement a rate of interest, however, should they wish to charge a rate higher than the prescribed rate of 9%, this higher rate should not be unreasonable and excessive .
The majority of buildings managed by Wakefields Property Management charge interest on arrear levies at a rate in the region of 15% per annum, which is considered to be reasonable.
Author: Wakefields Property Management
