Default interest provisions and legitimate interests (Houssein v London Credit Ltd)
Commercial analysis: On 23 October 2025, the High Court handed down judgment in the case of Houssein v London Credit Ltd re-determining whether a contractual term allowing the lender to charge a default interest rate of 4%, compounded monthly under a one-year bridging loan agreement (the Default Rate) constituted an unenforceable penalty. Richard Farnhill, sitting as a Deputy Judge of the Chancery Division, held that the Default Rate was not a penalty and was as a result enforceable, by the lender, London Credit Limited (LCL) following an event of default. Written by Annie Harvey, senior knowledge lawyer at Taylor Wessing.