I Haven’t Protected My Tenant’s Deposit, What Should I Do?

For a general overview and background on tenancy deposits, please refer to the tenancy deposit guide. For those of you that are familiar with the legislation but have failed to protect your tenant(s) deposit for one reason or another, you’re in the right place.

Brief reminder of what is required to comply with the Tenancy Deposit Legislation

To be in compliance with the Section 213 Housing Act 2004, any money taken from a tenant as a security deposit must be protected in a Government approved scheme with in 30 days of receiving it. Just to clarify, it is NOT a legal requirement to take a deposit, so this legislation only applies to those landlords that do (which, quite frankly, is most).

After the deposit is protected, the tenant must be given the Prescribed Information related to the protection of the deposit, also with in 30 days. NB. Make sure you have evidence that you have done it.

It’s also worth noting that ALL deposits ever taken must now be protected– even those taken before 2007 when the original deposit legislation was introduced (that was previously NOT the case). Landlords had until the 23rd June 2015 to protect deposits!

Once the deposit is protected and the proscribed information is served with in the allocated time, you have complied with the law until the tenancy ends – even if you allow it to roll on (known as Statutory Periodic Tenancy) after the fixed term has ended.

I didn’t protect my tenant’s deposit!

Mr Forgetful
If you are one of the many landlords or Letting Agents (yep, they screw up too, but that’s probably no surprise) who have not protected your tenants deposit you’ve got a problem. Well you know that otherwise you wouldn’t be reading this. Hello, welcome.

There have been so many changes to Deposit Protection Legislation, since it was foist upon us in the Housing Act 2004, it’s not surprising that so many landlords get it wrong– but unfortunately ignorance is no defence in law.

I am going to do this backwards because it is when a problem shows its ugly face that most landlords realise that they have screwed up, so let’s look at some of the most common scenarios (sadly, none of which will save you), and from my experience, when most landlords frantically start becoming concerned about their non-compliance…

1) My tenants are threatening me
Your tenant(s) has discovered they can prosecute you and potentially make a quick buck by seeking compensation for your failure to comply with the law. Either you pay compensation or face legal action.

This is unbelievably common, which is pretty sad. More about what to do in this scenario below.

2) I need to get rid of my tenant but I can’t serve a Section 21
The penny usually drops when you reach for a Section 21 Notice and read the notes which tell you what you have to do to serve a valid Notice on your tenant.

If the Deposit Protection Legislation has not been followed, you’re screwed – meaning your only option is the hassle of a Section 8 Notice where you must prove grounds for eviction (which you may not even have).

3) The Judge threw out my Section 21 because I had not protected the tenants deposit
Most savvy tenants will take advice when they are served with a Section 21 and one of the first questions they will be asked is “Did your landlord protect your deposit?” Followed by “Did he send you the legally required information about your deposit protection within 30 days?”

If they cannot answer YES to both questions they will be told to contest the Section 21 in court. That’s when the Judge will most likely look at the details and throw the case out of court, so here you are.

4) A bloke in the pub told me that I should have protected my tenants deposit – what is he talking about? I didn’t have a clue!
This is a typical case where the landlord has just one property, from when he moved in with his girlfriend, and hasn’t a clue about the landlord legal requirements. You have also heard through your sources that the tenant can gain compensation… and now you’re scared, wondering if it’s all true.

Yes, it’s true.

5) I forgot!
You forgot to protect the deposit and/or serve the prescribed information (not sure how many people will believe this one!).

Any of the above sound depressingly familiar? If your case is not one of the above (or similar), please leave a comment with the details…

I didn’t comply with the tenant deposit legislation– what can I do?

Now, let’s get to the crux of the matter.

As it stands, these are your options:

  • Recommended solution: Protect it now and serve the prescribed information hoping that if an issue arises and it goes to court the Judge will take the view “better late than never”
  • Pay the deposit back to the tenant and hope that he doesn’t find out that he can get compensation, although it might be difficult to explain *why* you’re giving it back.
  • If you’re trying to get rid of a rogue tenant, use a Section 8, with grounds for eviction.
  • Do nothing, but sit tight and pray that your tenants don’t realise protecting the deposit and serving the Prescribed Information is a legal requirement and/or they don’t care enough to seek compensation because you’ve been an amazing landlord.

If your tenant hasn’t mentioned anything…

There’s a good chance your tenant isn’t aware of the tenancy deposit legislation or the ramifications of failing to comply. It’s also not unusual for tenants to be aware, but waive their right to prosecute because their landlord has been reasonable throughout the tenancy.

The point here is that you don’t want to give your tenant a reason to look into the legislation or exercise their right to claim compensation.

  • The most common reason why tenants proceed to take legal action is because they feel screwed about the return of their deposit (i.e. when landlords try to make deductions over trivial and menial damages, which actually, quite often fall under wear and tear). So when it’s time for them to vacate, forget the temptation to deduct £90 for carpet cleaning, or £50 for picture hook repair, just let it go. Otherwise they may start looking into their rights. Generally speaking, biting your lip and absorbing those costs is the safest and cheapest option!
  • The second most common reason is failure to complete repairs promptly, or making repairs at all. Ignoring your duty to maintain and repair is a sure-fire of pissing your tenants off, consequently giving them reason to prosecute given the opportunity. So with that in mind, and ethics aside, it might be sensible to ensure your attend to repairs and maintenance issues promptly, and generally be a good landlord all round (you should be anyways, mind you!).

    It’s also worth noting that if your tenant does take the matter to court to seek compensation (regardless of whether you’ve been a good or bad landlord), some Judges do take into consideration how the landlord has conducted themselves during the tenancy before determining how much they should be penalised.

Can I get in serious trouble for not protecting my tenant’s deposit? What can happen?

Putting it bluntly, you have broken the law, so yes, there can be consequences.

  • A tenant, who takes legal action, can expect to be awarded compensation because his legal rights have been denied. A Judge has the power to award between 100% and 300% of the deposit in compensation and may also instruct you to return the whole deposit. This can be an expensive loss, not just because of the compensation, but also if you actually need use the deposit to cover damages.
  • Because you have not complied with the law, your rights to use legal process to remove a rogue tenant have been reduced- you can no longer use Section 21 of the 1988 Housing Act (which is often the most efficient method of removing a rogue tenant).

My tenant is threatening me with legal action, what should I do?

Ok, so presumably shit has hit the fan; your tenant has discovered you failed to comply with the deposit legislation, and now they’re after a handsome payout. Unfortunately, this is becoming a terribly familiar scenario, rightly or wrongly so.

What to do at this stage will depend on the individual circumstances, so there isn’t a simple solution for all. However, there’s more information available in the “ways you can legally end a tenancy agreement.

My letting agent did not protect the deposit…

Oh dear.

Your hired help has failed you. Common scenario.

So where do you stand in this case? Are you given the luxury of mercy? Unfortunately, you’re in the exact same position as if you have no association with a letting agent.

If you are using a Letting Agent and they do not protect your tenants deposit correctly– you’ll still ultimately be held responsible. Even if you have not touched a penny the law states that the deposit was taken on your behalf and therefore you are responsible. That’s why it’s essential to ensure that your Letting Agent is a member of a Property Redress Scheme (legally required since October 2014) so at least you will have redress if they screw up.

A Letting Agent cannot go to Court for Possession without the property owner, he can go with you as what is known as a “McKenzie Friend”. He can complete the Notices and other documents but you must sign them. Only a legally qualified person can represent you in Court.

Does anyone else have any additional tips to share? Do you have any experiences to share regarding this matter, weather you’re a landlord or a tenant? I’d love to hear your story!

380 Comments- Join The Conversation...

Showing 330 - 380 comments (out of 380)
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David 7th June, 2017 @ 22:51

@Daniel

It is hard to help you when you do not provide any detail

When did the original tenancy start?
Was this this the first renewal?
Was it a renewal or and extension of the original agreement?
When did you serve the S21?

In the absence of these I will try to answer your question, copy and paste my previous message and give it to your solicitor or tell me specifically what you do not understand.

1 cancel court date

TOO PREMATURE TO SAY, AS YOU HAVE NOT ANSWERED THE ABOVE

2 put in protected deposit £850

YES THAT IS A GOOD IDEA, BECAUSE EVEN IF COURT WERE TO FIND IN HIS FAVOUR, THE DPS WOULD STILL ACCEPT A CLAIM FROM YOU IF HE DID NOT MEET TERMS OF THE AGREEMENT, E.G. TO CLEAN CARPETS IF IN CONTRACT OR IF HE DAMAGED PROPERTY

3 re issue s21

YOU HAVE NOT GIVEN ANY REASON THUS FAR TO SUGGEST YOU NEED TO DO THAT

4 be prepared for a fine even though I never took the deposit ,the agent is bust and was the tenants brother,so I'm sure will stand to his aide.

WHAT?

NOW YOU TELL ME THAT?

WAS THE AGENT A LIMITED COMPANY OR SOLE TRADER OR PARTNERSHIP? IF IT WAS A COMPANY DOES IT SHOW AT COMPANIES HOUSE AS IN ADMINISTRATION OR DISQUALIFIED? NAME AND SHAME HERE, GIVE THE NAME OF THE AGENT, THEIR WEBSITE OR COMPANY REG

IF THEY WERE NOT A LIMITED COMPANY YOU CAN SUE THE AGENT/BROTHER PERSONALLY FOR YOUR CONSEQUENTIAL LOSS, EVEN IF HE HAS STOPPED TRADING.

5 My only worry is he also appeal on s21 by saying he didn't receive s21 with 2 clear months

WELL IF HE TOOK IT TO THE COUNCIL THEN HE CLEARLY RECEIVED IT, YOU CAN CALL THE HOUSING AND DISCUSS SOME ASPECTS OF THE CASE, YOU CAN ASK THEM WHETHER THEY HAVE BEEN INFORMED THAT YOU ISSUED A S21, LET THEM ANSWER AND THEN SAY "WHEN WAS THAT", NEXT YOU ASK THEM "DO YOU CONSIDER THAT YOU HAVE A DUTY TO THIS TENANT AS A VULNERABLE PERSON?"

6 Any ideas to make sure it is a valid s21 would be appreciated

I TOLD YOU IN PREVIOUS MESSAGE WHAT MAKES IT VALID

OTHER THAN NEEDING TO BE SERVED 2 CLEAR MONTHS THE MAIN REASONS FOR REJECTION ARE ALL BASED ON THE DATES OF THE TENANCY, PRE 2007 TENANCIES HAVE CERTAIN REQUIREMENT, POST 2007 BUT PRE 2012 TENANCY AGREEMENT HAVE CERTAIN REQUIREMENTS, POST 2012 BUT PRE OCT 2015 HAVE CERTAIN REQUIREMENT AND POST OCT 2015 HAVE CERTAIN REQUIREMENTS,

SO UNLESS YOU GIVE ME THE DETAILS I ASKED FOR ABOVE I CAN'T GIVE YOU ACCURATE INFORMATION

7. Also he put in a repair claim for minuscule things I.e shower tray need reselling Can this stop my s21

IF YOUR TENANCY STARTED AFTER OCTOBER 2015 AND HE ASKED YOU TO DO A REPAIR AND YOU RESPONDED BY ISSUING A S21 THEN HE COULD TRY TO CLAIM IT WAS A REVENGE EVICTION BUT HE WOULD HAVE NEEDED TO REPORT TO THE COUNCIL THAT HE ASKED YOU TO DO THE REPAIR AND IT WOULD PROBABLY HAVE TO BE MORE THAN JUST RESEALING A SHOWER.

THE MORE INFORMATION YOU PROVIDE THE MORE ACCURATE THE ADVICE.

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Ruben 9th June, 2017 @ 09:17

Hi,

I was hoping for some help.

I was renting a property for a year, and I believe the letting agent did not protect my deposit.
The letting agent has been rubbish concerning repairs to the flat, because it was "brand new when I moved in". I admit it was newly finished, but I doubt it was as the letting agent said.

Anyhow I had no problems on moving out my deposit was returned in full. But because I was nervous that the letting agent was gong to try and deduct whatever they could from my deposit I did some research and found out that the fact it was not in a protection scheme (I checked with all 3) means that they have acted illegally.
And I think it is my civic duty to take this further, so as to protect future tenants of this agent (in hoping that they learn there lesson)...I just don't know what action I should take.

Any advice on how to proceed would be very much appreciated.

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Max 9th June, 2017 @ 10:08

Sounds like you're after a quick buck. Forget about it and move on - you got your deposit back no questions asked.
Sounds to me as though you just love something to moan about to be honest. Civic duty to pull his pants down when he's given your deposit back in full? Don't be silly.

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Ruben 9th June, 2017 @ 10:56

That would be the opinion of a landlord!

Landlords/agents as you know are legally permitted to have a deposit protected. This was, I think, introduced to protect both parties in any disputes.

The only thing I have to dispute is that my deposit was not protected. I believe the Law needs to be adhered to. So if somebody has broken the Law, why should I keep quiet about it!

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Amanda 9th June, 2017 @ 11:31

Ruben, if you really want to protect future tenants, then there are other ways!

Unfortunately, whether they use a letting agent or not, the fact that the letting agent has not protected the deposit becomes the landlord's responsibility. . . and therefore presumably the landlord's liability too. The landlord may not know that the agent failed in his responsibility, so perhaps you should tell the landlord directly, giving him/her the option to take their business elsewhere.

You've lost nothing. You're armed with information to protect you as a tenant in the future, so why punish the landlord? Unless, of course, you simply want some money for nothing, irrespective of how much misery the process of getting it will cause everyone involved.

And yes, I too am a landlord!

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Max 9th June, 2017 @ 12:40

Ruben,
You sound very similar to my last and only tenants. Apart from the moaning.

I had to work overseas for 6 months at short notice so let out my flat while I was away. The girls were very pleasant, I let them treat it as their own, hang pictures etc, they sent me pictures of the flat and how well they were looking after it while I was away. I even had my chippy come round and put door nobs on the wardrobe which they wanted. All very amicable.
After about 5 months they asked for the deposit certificate number from the deposit scheme. Something which in my quick departure and moving abroad I forgot to do. I immediately protected it and gave them the cert number and they were fine. They then moved out and I moved back in after the 6 months. I paid them the deposit back in full the day they moved out. Even though They left a bit of a mess and I had to fix the cooker, but seeing as they were friendly tenants and I didn't really see myself as a landlord I didn't want to take any money out of the deposit especially as they were leaving to buy their own place and I know how expensive this can be.

Then, without warning two weeks later I received a "letter before action" from their solicitors and stating that as I hadn't protected their deposit within the one month stipulated thy wanted 3 x the deposit - nearly £4000. I was gobsmacked. Thy said they were incredibly worried throughout the tenancy that I hadn't issued their certificate - even though thy had never asked for it.
Basically they were pulling a fast one and had obviously done this before and knew the law inside out.
I wanted to go to court as this was incredibly unfair but I was assured the court would find in their favour and a minimum of one months deposit would be payable. So I settled out of court for that sum. It has put me off ever doing it in the future.
I think the law needs to be tweaked to protect landlords from rogue tenants as well and if protecting the deposit is so important why don't the tenants pay it in to the scheme thus saving all the "worry" they go through.

Ruben - do as you wish but don't try and hide the fact you are after easy money by saying you are doing it to protect others. That's bull crap.
You have nothing to be aggrieved by by the sounds of it. It's Friday - go have a beer and chill out ffs....

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Ruben 9th June, 2017 @ 12:51

Hi Amanda,

Thank you for your comments.

I have thought about how to help future tenants, and I am going to write a detailed blog about my experiences.

I will post a link here once it's done...

I have had lots of problems in the past. And I acknowledge that apart from my agent being rubbish concerning repairs, and not protecting my deposit, I've had no problem getting my deposit back. Maybe, and I am speculating, because the agent knew they had not protected the deposit.

Although I know the landlords name, I have no contact details for him. And this has been the case in the last 3 apartments that I have rented. All through agencies. I have on all occasions asked for details, but my requests have been ignored. So yes I would tell the LL...If I could!

My problem is that I have had some pretty rubbish situations in the past, whilst a student and as a teacher. I also hear horror stories all the time from my students...And I know, some students have absolutely ruined properties...I knew a group when I was a student that really had no respect at all for a property that did not belong to them, and to be honest I don't think it would have been any different had one of them owned it...But that is another story.

I just feel that its unfair for some agents and in my experience, some landlords to behave in an unscrupulous manner, when it is so expensive to rent and live in London.

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Ruben 9th June, 2017 @ 13:18

Hi Max,

I agree the Law does need tweaking to protect LL as well. I don't think it is fair for LL to be held responsible if an agent that they pay to managed the property does not fulfil that management by protecting a deposit.

Your suggestions of the deposit being protected by the tenant is a great idea. Maybe it should be implemented that without a deposit protection certificate number, a tenancy agreement can not be reached. Then any disputes at the end of a tenancy have to be mediated through a scheme.

As my post to Amanda said, I have no contact details for the LL other than a name. If I had more than that, then the suggestion from Amanda to notify the LL about the Agents inability to conform to Law would be what I would do.

Im not going to lie, I was motivated by the money. But understanding that it would be the LL that is out of pocket is not fair. So I will no longer pursue that.

Best

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David 9th June, 2017 @ 14:41

@Ruben

I take a slightly different approach to the others who have responded to your post.

You see I hate agents about as much as having to clean the remains of dog turd on my shoe.

I do not think you would be protecting tenants here but you could be protecting the next unsuspecting Landlord that might use this useless agent.

Your claim will be against the Landlord (as listed in your tenancy agreement) not the agent, but the Landlord can take the agent to Court depending on the kind of service they had.

I think if nothing else you should drop the landlord a line letting them know that you have just found out that they (the Landlord) should have made sure your deposit was protected within 30 days and now they are liable to a sanction of between 1x and 3x the deposit.

This will no doubt shake them, but it will make sure they take this legal responsibility more seriously in future.

Then depending on the response you get (complete capitulation to aggressive) you can decide how to proceed.

You may of course decide not to proceed in return for a glowing reference but only agree to that AFTER you have had their response.

I have had a case where we got the agent to pay the tenant the settlement, we spoke to the solicitors for the Landlord who accepted he had no defence, we then suggested they sue the agent (who was a complete toe rag). The agent paid, we all saved legal fees and the world was a bright place.

Now that Landlord will be grateful, they will tell friends who might also be landlords and so more tenant deposits will be protected.

This legislation has been around for many years now, so there is no excuse for not protecting the deposit.

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London letting agent 9th June, 2017 @ 14:57

Ruben,
I hope that is not your real name you are using if you intend renting again.
Landlords name and address is on the Land Registry website, something any sensible tenant should check before renting.
Crap tenants tend to attract crap landlords and vice versa.

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David 9th June, 2017 @ 21:08

That may be true but ALL agents are crap!!

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David 9th June, 2017 @ 21:15

@Ruben

It is a legal requirement for the Landord's full name and address to be named in your tenancy agreement. It costs £3 to get the owner of a property from Land registry website.

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David 9th June, 2017 @ 22:06

@Max

"I was gobsmacked. Thy said they were incredibly worried throughout the tenancy that I hadn't issued their certificate - even though thy had never asked for it."

Tell me, do you always go around blaming others for YOUR mistakes? It is NOT their responsibility to ask for the certificate, it is yours to provide it.

"Basically they were pulling a fast one and had obviously done this before and knew the law inside out."

It reflects on you when you berate your tenants but what would have happened if you had an accident while abroad, or if you had a big business fail and lost all your money and assets? They would have lost everything.

The simple fact is that before deposit protection legislation Landlords abused the tenants left right and centre, they saw the deposit as a private fund they could dip into to redecorate the property when it just had wear and tear.

Even after the initial legislation Landlords took the piss, they would get taken to Court, then ask for an adornment and give the Tenant a load of cash, go back into Court then get off because the deposit had been returned. So the legislation was tightened up. There are lots of amendments because Landlords did not take this obligation seriously

"I think the law needs to be tweaked to protect landlords from rogue tenants as well and if protecting the deposit is so important why don't the tenants pay it in to the scheme thus saving all the "worry" they go through."

You are actually quite lucky, initially the law said the deposit had to be protected within 14 days or the Judge had to award 3x the deposit, these was changed to within 30 days and between 1x and 3x the deposit, so you see it has already been tweaked and STILL you screw it up, so of course you deserve a smack, now you will remember, so it has done it's job, to deter you from not taking your responsibility seriously. They are not rogue tenants, YOU were a rogue landlord or rather an Amateur, again you do not appreciate your luck. You not only failed to protect the deposit but you failed to give them the PI within 30 days. SO chances are if you had gone to court it may well have been 2x the deposit, they did you a further favour by asking your for the reference number, if you had not done it by the end of the tenancy you could have been hit for the full 3x the deposit plus the return of the deposit.

Tenants had just 6 months security of tenure in this Country, Landlords kick them out and put up the rent as demand keep increasing. The tenant then faces moving costs and a higher rent, so the last thing thing they need is some dodgy Landlord dipping into their deposit.

"Then, without warning two weeks later I received a "letter before action" from their solicitors and stating that as I hadn't protected their deposit within the one month stipulated thy wanted 3 x the deposit - nearly £4000."

The letter before action IS a warning!

"I wanted to go to court as this was incredibly unfair but I was assured the court would find in their favour and a minimum of one months deposit would be payable. So I settled out of court for that sum. It has put me off ever doing it in the future."

So all in all you were lucky, I always recommend that both parties aim to settle, other landlords who have realised they are in the same position should visit the following article:

http://www.propertyinvestmentproject.co.uk/blog/tenant-threatening-legal-action-tenancy-deposit/

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Max 9th June, 2017 @ 23:58

@david

Wow. You've changed your tune since we last had correspondence! A lot of the above you actually told me - e.g. They had obviously done this before etc. You helped me with my situation last year david and totally sided with me but it's done now - I couldn't care less! Stop changing your mind you're beginning to sound like Abbott...!!

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Max 10th June, 2017 @ 00:00

@david
In fact you actually told me to offer them £75 to start with... and then keep adding £20 or whatever... ring any bells?!?!

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David 10th June, 2017 @ 09:14

@Max

I do not assume anyone is right or wrong and I help everyone I can, you are right that I gave you advice and I am glad it worked out for you, however, my point was that you can't be blaming them or saying the law is wrong when it was truly your mistake.

I am really glad it worked out for you, to make a difference in other people's lives is what motivates me.

I have not changed my tune one bit, I always suggest both tenant and landlord settle settle settle, I also say it is a game of P O K E R and so you both start with an amount that nobody will accept then meet somewhere in the middle.

I did suggest Ruben use this to get a good reference from a grateful landlord but if there was an agent involved to make sure that they pay the sanction.

If Ruben's Landlord came on here tomorrow I would be please to give them the same advice or better if it was appropriate, I would encourage Ruben to settle for a reasonable amount, I would give his Landlord the case law that might help them mitigate any loss and I would give them the law which would help them go after the Agent (if it was appropriate).

The case above where we got the agent to pay involved an agent who had phoenixed the company and had a right little scam going, I got him home address and exposed his fraudulent structure.

Max you seem to be an amateur landlord but ignorance is not an excuse for breaking the law, now you are better equipped to be a professional Landlord and would probably investigate all your legal obligations if you went into it again, so the experience has helped you. I wish you luck in all your endeavours.

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London letting agent 10th June, 2017 @ 11:37

David,
"It is a legal requirement for the Landord's full name and address to be named in your tenancy agreement."

Bullshit. And don't try twisting it to say you meant s1 L&T 1985.

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David 10th June, 2017 @ 14:40

No, Section 1 of the Landlord & Tenant Act 1985 is the bit where wanker leech Estate Agents must provide the name and address of the Landlord within 21 days of it being requested.

I was actually referring to Section 48 of the Landlord & Tenant Act 1987

This is a LANDLORD forum and many landlords are paying fines because of incompetent Letting Agents failing to carry out their legal duties or giving them bad advice, so I feel it is important to point out that you seem to be such an person (whoever you are).

Now if you want to TWIST things you say you mean they COULD give the details of the Landlord in a separate notice, but it is normal and good practice to name the parties to the tenancy agreement including the full address (for legal service).

I have see agents giving their address and that would be fine if a Landlord was prepared to to risk having such an address as an address for legal service.

However, I would caution all Landlords the obvious conflict of interest, for example, an agent does not protect your deposit, the tenant employs a Solicitor who sends a letter before action, the agent puts in in a drawer for good or bad reason. The Solicitor issues proceedings, the Agent keeps their head in the sand, a county court judgement is obtained and the Landlord is fucked.

In the event that a tenant has NOT been given the notice they may even withhold rent, the request for the address must be adhered to and if the agent refuses to provide it then it becomes a criminal offence.

So not bullshit, just my good advice vs your bad advice.

Glad we cleared that up!

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Anon 11th June, 2017 @ 10:57

Hi,

I had a property where two tenants jointly signed the agreement and the deposit was protected under their joint names.

After the 12 month mark, it became a statutory periodic tenancy, but one of the parties gave notice and left, the other party wanted to stay.

We made him sign a new 6-month tenancy agreement, but we did not notify the deposit protection scheme of this change in parties. (The new agreement was signed August 2016).

The tenant withheld rent for repairs not being carried out to the secure front door and secure electric gate of the property. This amounted to 3 months before we served a notice that Section 8 and Section 21 notices would be served if: the amount of 3 months arrears were not paid before a certain date, and the property was not vacated before the 2 month mark.

The tenant paid promptly and said he would vacate the property well in time of the final date.

Regardless of this, court letters were sent to him seeking possession and payment of one months arrears that had become due.

He then paid the arrears and said there was no need for a court date as he had already given notice that he was leaving in a few days.

The court case was then rescinded and without agreeing deductions, we sent his deposit back minus the court fees and miscellaneous repairs.

The tenant has since discovered that we did not re-protect the deposit and issue the prescribed information in his sole name. (It is still protected under the joint names from the original tenancy agreement.) (The deposit protection company have told him that we should have re-protected the deposit in his name only and re-served him with prescribed information.)

He has now served us with a letter before action stating that he will claim the compensation through the courts if no settlement is reached.

Will he win in court?
Should we settle?

Thanks in advance.

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David 11th June, 2017 @ 12:11

I am afraid he will win at least one month's deposit.

The reason for this is that the law is black and white.

The deposit that was protected was for an entirely different contract.

Ironically, you might have got away with it if you had left it periodic, depending on the year of the tenancy (yours would be fine but others not).

Now there are SOME Judges that will take your side and say they find the deposit was protected, however, most Judges do not want to be overturned on appeal, so only maverick Judges do this.

The thing is the tenant would then be well advised to take it to appeal as it is almost certainly a win AND it removes any protection of costs for you.

The solution here is to negotiate a settlement, visit the article below which explains the process

http://www.propertyinvestmentproject.co.uk/blog/tenant-threatening-legal-action-tenancy-deposit/

It may involve a certain amount of bluff but you need to get them before they go to a claim company, they are leeches, they will push up costs and aim for a high settlement. They are actually bad news for tenants too because they can't back out without a fee and if the legal issues become more complicated (e.g. breach of contract) they want a fee.

A tenant is always best placed to threaten action with a view to a settlement, the amount of which is always going to depend on the size of cojones which translates into risk appetite, they have less to lose in the situation you describe. Start with the post above, a low ball offer.

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Anon 12th June, 2017 @ 09:23

Hello,

Looking for advice for the following situation below:

I'm looking to rent a room out for 8 weeks, I've met the live-in landlord who seems nice and genuine. However, the landlord admitted that they won't be putting the deposit into a protection scheme as they'd rather not have to pay to do so for such a short period of time. I'm not the to bothered about this as long as I get the full amount back if the room is left in the same condition as it was. The landlord also wants the deposit and each months rent paid in cash. This is my first time renting from a private landlord and I don't want to be ripped off but at the same time I'm not going to report them for not putting it into the scheme as long as they're fair when it comes to returning it. Can anyone with more expeirence give me any advice or let me know if it sounds like something 'dodgey' is going on here. I've asked to a contract to be written up stating all the payments which must be made and waiting to recieve it at the moment.

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London letting agent 12th June, 2017 @ 09:24

David,

So a complete backdown on your previous bullshit now that you've googled it.

Cutting through the crap of your petulant rant;

"I have see agents giving their address and that would be fine"

Glad we cleared that up!

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London letting agent 12th June, 2017 @ 09:53

Anon,
You will be a lodger so no deposit protection is required.

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David 12th June, 2017 @ 11:02

@Anon of 12th June, 2017 @ 09:23

The deposit regulations are for Assured Shorthold Tenancies (and the Statutory Period Tenancies they may become).

So they do not cover lodgers where the Landlord lives in the building.

It is OK to pay cash as long as you have and invoice/receipt BEFORE you hand over the money.

You need a copy of Landlord photo ID, as do they you.

Do not accept no for an answer, there are people renting properties on AirBNB and doing fake lodger lets.

As a precaution you may want to spend £3 and go to the Land Registry website to download the deeds of the property to make sure that the name of the owner of the property matches the person you are dealing with. The deeds are also useful in that they will add any charges by mortgage company that may apply.

In the event that the Landlord (assuming they are genuine) does not return your deposit, you call HMRC and the Mortgage company to let them know that the Landlord is letting the property for cash. That is your only security, this landlord needs to feel safe letting you into their home, so it is entirely reasonable they take a deposit. It is also entirely reasonable that you take steps to secure yourself, photo ID is the most basic thing and the only way you have if things go pear shaped.

I suggest that you arrange with the Landlord to have a meeting to signup and pay the deposit, where you will sign an agreement but you will need an invoice/receipt before you pay. I would also suggest that you ask them to email you any agreement they ask you to sign so that you have time to consider the terms.

Be prepared to cross out anything that is not acceptable, make sure that there are two copies on the day and that you keep one.

What is most important is the inventory and room state, you should film the room, make note on the paperwork of ANY damage at all to the walls, carpet and furniture.

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David 12th June, 2017 @ 11:06

@London letting agent

Not at all, I quote good practice and the law.

You are nothing and nobody, you add no value to the thread and are just polluting it.

If you are a letting agent then your demise is only a matter of time, the industry is changing, either go with it or find another way to earn money.

I expect to see you driving an Uber car in the next five years or maybe one of those cheap Yodel or MyHermes drivers earning 65p a parcel.

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London letting agent 12th June, 2017 @ 12:04

http://www.propertyinvestmentproject.co.uk/blog/5-tenancy-agreement-facts-that-are-bullshit/

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John 12th June, 2017 @ 14:29

I have been renting a flat to two women on a shared tenancy basis for 2 years. One tenant is two months in arrears whilst the other is up to date.
I now need the property back to live in.
Unfortunately I didn't protect their deposits so although I can issue a section 8 to one, I understand that I can't issue a section 21 to the other
Can I move in with the remaining tenant once the other has been evicted?

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David 12th June, 2017 @ 14:52

The first thing to clarify was the type of tenancy, I want to make sure whether you have ever lived with them or you just intend to move back in to take the place of the one you seek to evict.

Assuming these tenants were/are on an Assured Shorthold Tenancy (or one that ended and carried on into a Statutory Periodic) then you need to protect the deposit to mitigate your sanctions.

BTW whilst you can move back in the pre-existing tenancy will apply and if she keeps living there it will roll over to Statutory Periodic (or may have already) if not renewed. You really need to formally end the tenancy and get her to enter into a new agreement that is not substantially the same as previous. Specifically, that she lives there as a lodger, you may want to give her half the deposit back. Some might advice that she move out for a day or week so that there is a clear ending.

Which one was the lead tenant? (the payer or non payer).

Section 8 can be expensive, chances are the non paying tenant is going to come after you for the sanction sooner or later, so why not use your mistake to make the best of a bad situation.

You approach the non payer, you say that you need to move back in and she needs to pay her arrears and move out. You say that you recognise she is in hardship and so are prepared to cut her a break on the arrears if she moves out quickly and agrees to signing a legal agreement so that there is no confusion.

In that agreement to agree terms including, her accepting the monies owed are a settlement for deposit and not protecting the deposit. This is a good thing for her as she does not need to go to Court and it is good for you as it gets her out quickly. Make sure the agreement is headlined as SETTLEMENT AGREEMENT, it should refer to S213, S214 S215 of the Housing Act 2004 and any amendments by later legislation or case law.

Wrap it up with dates of departure, list any damage to the property and say it also settles that, so the agreement can be seen to be in he favour.

Ideally have it drawn up by your Solicitor, at the very least draw it up and have them amend it. Overall it will be cheaper than the legal costs of S8.

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Dawn 25th June, 2017 @ 22:15

I let my house out for the first time 2 years ago. I didn't protect the deposit. I gave the tenant notice to quit and they want to know the holding company. What can I do to mitigate?

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David 26th June, 2017 @ 09:27

@Dawn

Well you need to protect that deposit immediately because you cannot issue a section 21 notice until the deposit is protected.

You do not say much about the circumstances, so it is hard to give you leverage, for example why are you giving notice, are they a non payer, antisocial, trasher, drug den?

The ideal situation is that you find something they want and you barter it into a settlement, for example an offer of £300 plus a positive reference as full and final settlement of the S213-5 legal issues.

I might be able to offer further advice if you give us a bit of history (but nothing that would identify them or you please, so change dates by a month or so etc.)

Meanwhile this article will explain some ways forward, I hope it helps.

http://www.propertyinvestmentproject.co.uk/blog/tenant-threatening-legal-action-tenancy-deposit/

As far as Court is concerned, there is a little case law that may help you plead for mitigation.

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Lee 2nd July, 2017 @ 20:01

we are going to sell our rented out house and have informed the tenant that when the tenancy comes to a end we will no be renewing it and we will be selling the property.
When they moved in they couldnot afford a deposit so we agreed to them paying the rent 2 months in advance ,they gave us one month in advance then made up the second month by paying a bit extra each month until they were two months in advance.
We all get on fine but they are wanting to get a council house as whislt being in our house one of them has become disabled so the house is old and small and not fit for a disabled person to live. They now want us to serve them with a section 8 notice so the council will re house them but we have been told by someone who has been through this that the council will tell them to stay put until the baliffs arrive. we wanted to know what we do and are we in trouble for not taking a deposit and putting it in a deposit scheme
Thanks
Lee

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David 3rd July, 2017 @ 07:06

@Lee

I am afraid you are in trouble if you have a deposit that you have not protected, the law even allows for determination of a deposit that is not called a deposit. Anything that is taken as security for the performance of a tenancy agreement is a deposit, even if it were not money.

Some Landlords have tried to suggest that what they have taken is the last month's rent, I have seen it fail several times, it is really going to depend on the tenancy agreement. Does it mention a deposit?

If you were to "remind" the tenant that they did not need to pay the last months rent, it would go a long way to substantiating any defence that is was advance rent, however, advance rent is also in effect a security against the agreement and thus a deposit.

What you need to be aware of is that the Council will ask them about their deposit status and encourage them to seek sanctions if it was not protected. They do this because it often prevents a section S21 being issued and thus delays their obligation to house a vulnerable person. This policy does vary depending on where you live, inner city areas are the worst.

Councils are behaving badly, Government guidance was for them count them as homeless risk as soon as proceedings were started (the S21 is an accelerated procedure for possession) and to not play this stupid bailiff game. It creates costs which ultimately can be recovered from the tenant, thus putting them in debt and risking their ability to service rent in the Council property. The Government produced a 400 page doc on this and still some Councils found some very thin legal basis to not take their responsibility, now new law is going through that will make them have to take on everybody for at least 6 weeks.

Section 8 is the appropriate law if you are selling, although probably a bit more expensive it is more likely to succeed, some prefer to do both. Your obligations and sanctions regarding the deposit may vary depending on when the tenancy started, whether is is one long tenancy or several. Do not provide exact month but feel free to update.

If you have 2 months before the tenancy ends I would remind the tenant they have already paid rent in advance so will not need to make the last month's rent.

I would then have a chat with the Council housing dept, do not give them the property details just ask about their policy, perhaps even call as a tenant who was disabled to see what they say. It may save you some money in getting your ducks lined up before you pay Court fees for proceedings.

Whatever you do, once you start stick to it, if you can see that your tenancy agreement works against you or if emails you sent to the tenant work against you (referring to a deposit) then you might as well accept your liability, protect the deposit ASAP and attempt to gain a settlement, see this page for further details:

http://www.propertyinvestmentproject.co.uk/blog/tenant-threatening-legal-action-tenancy-deposit/

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Annette Jones 13th July, 2017 @ 06:25

Hello please can anyone help me - the Deposit I held for a property wasn't secured -with the tenants knowledge and agreement - they have now served notice - I have now secured deposit as they are being very unreasonable - question can they take action against me for not securing in the past ??? Many thanks in advance.

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David 13th July, 2017 @ 09:49

@AnnetteJones

Sorry to be the person with bad news but I hope to help you make the best of a difficult situation.

I do not know what you mean by "being unreasonable" but you may need to bite your lip.

There is no provision in the Housing Act and other deposit legislation that allows the tenant to agree to you not complying with the law.

The ONLY way to avoid the obligation to protect the deposit is to have not taken one in the first place. Deposit legislation does not apply to lodgers living with you (just in case you failed to mention it).

To be clear that does not mean you can take the last months rent in advance, the way the law is constructed is that if it looks like a deposit and acts like a deposit, it shall be treated as a deposit.

You have to protect the deposit within 30 days, you are also obliged to provide the Prescribed Information, which is a specified amount of data telling the tenant where the deposit is held, under what reference number and so on. If you have not done that, get it done.

The position you are in now is that your tenant can make an application in the next 3 years to 6 years depending on which law they rely on.

You only hope now is to reach an amicable solution, the post below was written to help you with that.

http://www.propertyinvestmentproject.co.uk/blog/tenant-threatening-legal-action-tenancy-deposit/

If you need any further help please do not hesitate to ask.

Good Luck!

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InTrouble 9th August, 2017 @ 20:27

Hi everyone...Apologies for the longish post. I thought to share the situation l am in, so hopefully you will never make the same mistakes as me! I will try and make it as concise as possible!

I am in a terrible mess. I am an ex-pat living in France who purchased a property with an existing tenant on a 6 month AST that ended in April 2015. My completion date coincided with the end of the tenants 6 month AST and l then granted him a 12 month AST via the agent who handled the sale (who l then employed to manage the property).

l was happy when the tenant said he wanted to extend for another 2 years. He had paid on time every time with no problems at all. Rental prices in the area had gone up so we negotiated a fair rent that worked for both of us. Year 1 @ £1000pcm and year 2 @ £1100pcm. The agent said it would be better to have 2 x 12 month AST agreements (April 2016 to April 2017 & April 2017 to April 2018) with the only difference being the increased rent for year 2.

The tenant was happy, the agent was happy and so was l until 6 months after the 2 agreements were signed...

My agent retired and recommended someone he knew to replace him as managing agent. I had no problems in following the retired agents advice, after all l had been receiving rent for over 18 months without a hitch from a very low maintenance tenant and a fairly 'cheap' agent... so no problems right?

It all started to go very wrong when the tenant and the new agent fell out over some minor decoration to the property. To cut a long story short things escalated (without my knowledge) and I am now faced with the following.

The tenant works for a well known organisation as a housing adviser.

The tenant stopped paying rent 4 months ago, apparently in protest about the new agent. The agent did not tell me about his disagreement with the tenant. I would have gladly redecorated the whole property had l known. The new agent 'advised' me to start possession proceedings under Section 8 for rent arrears, which l did. The new agent advised me that l could get up to £300 more per month, which l could.

The tenant has provided a defence and counterclaim and at the hearing it did not go well at all. The court appears to have taken his side and adjourned the possession hearing for 2 months for both parties to consider their positions. The agent arranged for the Solicitor to represent me as l was unable to return to the UK due to work commitments.

I couldn't get a clear picture of what happened at the hearing from the agent and spoke to the solicitor. He advised me that l had quite serious problems and interpreted what the tenants defence and counterclaim actually was:

1. The Section 8 Notice did not contain the prescribed information & was not in the prescribed format (I think the agent used an old notice).

2. I failed to provide him with a notice under section 3 of the LTA 88 (Solicitor says this is a criminal offence & a fine of £2500!). This was the first time l had heard of this notice.

3. The previous owner apparently did not want the tenant to know his identity (for some unknown reason). The tenant has complained to the court that the (retired) agent has put himself as the landlord on the first AST and failed to provide the 'true' landlords identity. The tenant says in his counterclaim that the retired agent/previous owner failed to provide the identity and therefore the rent was not 'lawfully due'. The tenant is seeking a 'refund' from me as l have (apparently) stepped into the old landlords shoes and therefore liable for the refund!

4. I failed to protect the deposit & provide the prescribed information for the 3 ASTs (2015 to 2016 / 2016 to 2017 / 2017 to 2018). I stupidly believed the retired agent who told me that because the deposit was protected by the previous owner and the tenant was the same that l did not have to do anything!

5. The tenant has made an application for the retired agent and previous owner/landlord to be added as a party to proceedings. Apparently because l failed to serve the section 3 notice they are also jointly liable for my failure to protect the deposit and provide the prescribed information under the 3 x ASTs.

The Solicitor wants me to pay £1500 on account so l can get a Barristers opinion but has warned me that it could cost many thousands to get the tenant out and if l were to lose than l would be liable for the tenants costs as well as being without rent...

The tenant has sent a without prejudice letter asking for the payment of £6000 plus a positive reference and he would move out in 4 weeks... The Solicitor said it would be cheaper to accept the tenants offer.

Confused? YES / Stressed? Definitely! / Losing sleep? Yep & turning grey! / Can you help to shed some light? HOPEFULLY!!!

Any tips would be much appreciated...

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David 9th August, 2017 @ 22:43

@InTrouble

First and foremost, I must recommend you speak to your own solicitor, not sure if the one you mention was ever yours and matters are clearly beyond his/her ability hence the suggestion to get Counsel opinion. It is a bloody cock up that it was allowed to get this far and I do not believe in rewarding incompetence with further work. In a complex multi issue case you need a specialist in this area of law who can think on their feet.

Not sure what part of country your property is in but in London Anthony Gold Solicitors are very good and may not require Counsel's opinion (albeit that they may just say settle settle settle).

At the same time it has to be said that with the typical cost of Solicitors at £250 an hour you can run up £6k quite quickly.

Still that does not mean that there isn't room for negotiation.

I feel that a Housing Officer will have known his deposit was required to be protected, it is the FIRST thing a Housing Officer will ask a tenant when they have been asked to provide housing. As such it may be argued that he deliberately negotiated multiple 12 month tenancies to try to increase your exposure. On a slightly positive note the law for recent tenancies that are "substantially the same" tend to view the three tenancies as one, albeit that they are likely to give you a 3x penalty. This is especially true since Deregulation Act 2015 (October) for periodic tenancies, but it is a roll of the dice, a Judge can decide to view them all separately. To clarify, until October 2018 they have to view pre 2007, 2007-2012, 2013-15 onward under the law as it stood at the time of the breach.

Now in many ways you were an innocent party and if you read through the comments on this and the other Deposit not protected page you will see I have quoted case law for mitigation, especially for novice landlord when an agent was involved. It does not protect you but gives the Judge the right to apply the law as they see fit, they may for example decide to sanction you for 1x the deposit for each tenancy.

My feeling in this matter is that BOTH agents are culpable, if the first agent was a limited company and that company has closed you are not going to get any redress, however, if they were a sole trader, trading as XYZ agents, they are still liable. It is a matter of professional negligence IF note I say IF, you had a full service contract.

Also helps if their website says they would take care of all your legal obligations (check archive.org if old agent site is gone). Either way you had a reasonable expectation that they had a duty of care to you professionally under the agency contract.

So I would be firing off a letter asking them for the name of their professional indemnity insurers and put them on notice that you will be holding them liable for all your consequential costs in this matter. To that end tell them that you have been offered a settlement of £6k and as you will be holding them responsible for your costs and sanctions in this matter. However, in order to mitigate their loss you are giving them opportunity to settle the case with the tenant for £6k and you will still be seeking your legal fees for work done so far thereafter.

To be absolutely clear on the issue of not providing the Landlords address, there are two laws covering this, but I feel he is exaggerating them.

FIRST, a tenant has to explicitly ask the agent for your address.

SECOND, the address can be an address for service, which could be Agent address.

THIRD, the tenant can only withhold rent for as long as the address for service is not provided, but they must pay the arrears once it has been provided.

There is no question of them being entitled to a refund of rent in my mind but you must get your own legal opinion on that, the laws in question are

Section 48 of the Landlord & Tenant Act 1987

Section 1 of the Landlord & Tenant Act 1985

The latter is indeed a criminal offence that must be brought to magistrates not County Court, however, the Police are unlikely to bring action as they see it as Civil and were the Council to instigate it you would immediately suggest to the leader of Council that this would be a gross conflict of interest as the tenant is their employee. I doubt they would be bothered to anyway, the matter was resolved as soon as the true Landlord was established and information provided.

AGAIN, I can't help but feel that you are being played, this is not an innocent tenant, it is a professional Housing Officer who knows your obligations, who seems to have engineered the situation and has not mitigated the costs, in fact he has done the opposite.

It IS a mess and I can see why the Judge asked you to both step back and consider your position, this is because there is risk on both sides. The matter is likely to be multi track and expose you both to the risk of each others costs. The Judge may feel that the tenant should pay their own costs as they did not mitigate their loss. One can argue that as a professional who probably asks members of the public EVERY DAY "did your landlord protect your deposit" that they should not have entered into agreements where they knew the deposit had not been protected or the PI served because they knew the law in this area, one could even suggest THEY are the experts in this area.

The usual situation with a S8 claim for rent arrears is that as soon as they bring the account up to date your side of the claim is done.

Personally I would want to be rid of the tenant, so I would agree with the Solicitor that it would be better to pay them off, but I would add that I would be coming after the agents for your losses.

Let me be clear, they acted in a professional capacity to be YOUR AGENT in all matters relating to the rental of your property, the second landlord hid matters from you, the first agent put themselves as Landlord and exposed their firm to sanctions as Landlord of record, albeit that Land Registry docs would contradict this.

You need a hard nosed litigator in professional indemnity if the agents do not agree in writing to indemnify you immediately for your losses in this matter. After a letter of warning and letter before action, I would instruct Irwin Mitchell who I am fairly sure are the UK's largest law firm in Professional Negligence matters. A letter from them will scare the agents to death and their own solicitors will be telling them to settle with you.

You may be liable by law to the tenant but the agents are culpable and liable to you. Get the tenant on side, tell them you have been completely oblivious to events, you are sorry and totally understand their position and will of course be pleased to provide them with a positive reference.

However, as you are holding the agents liable you have to give them the opportunity to mitigate losses and so give them 7 days to agree the £6k, however, as they may be paying for the claim they may want to take their own advice or negotiate. Ask him if, too this end, he would accept £4k for a settlement within 7 days, he will probably say no but come back with an offer of £5k.

If he does bite his hand off and let the agent(s) know that they have 48 hours to agree or you are instructing Solicitors to prepare claim against them. Although, it would be reasonable to expect the rent account to be brought up to date and for this to be full and final settlement of all matters between the parties.

Fact is the tenant has all the cards and they know it, you can argue this to a Judge and with the right one you might reduce the claim but pay higher legal fees in preparing the brief.

What is the point of exposing yourself to that stress.

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InTrouble 11th August, 2017 @ 21:33

@David

Thank you David for your reply! You have provided light on the situation, more so than even my own Solicitor!

I have now received copies of the court order and the tenants defence/counterclaim. After reading them more than 5 times, it seems like things are worst than l thought!

I am a newbie here and after checking out the rest of the site, l wish l had found this site earlier. Still better late than never!

I realise that l had posted my problems into your blog instead of the forum. Oopps!

I have copied my post into the forum (& updated it with the correct facts).

Thank you again for your input, it really is much appreciated!

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David 11th August, 2017 @ 21:47

@InTrouble

This is not my site, I think I better let people know that in future.

I do not remember accessing a forum on this site, too busy to be honest.

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Fazzy132 14th August, 2017 @ 20:47

Hi,

I have a tenant who is in arrears by 3 months so i wanted to serve him a section 21. Lo and behold at this time i realise i did not put his deposit in a protection scheme. I have done this now, but in the process of this, he too is now aware that his deposit was not protected, hence wants x3 his deposit. What are my options?

The lease started on Jan 1 2017 as an AST and now is rolling over. The rent is 500/month and the deposit is 500. Does this mean if he takes me to court, the worst case scenario is i pay him 3x deposit (1500) but he will have to pay the arrears (1500), so we are even? Or actually i will only pay him and his paying back his dues may not be ordered by the judge?

I know the advice here is to SETTLE, so my best option is to say i will pay him 1month and he pays me 2 out of 3 months of arreas? Or something along these lines?

Thanks for any advice!

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David 15th August, 2017 @ 17:59

@Fazzy132

It depends on how you file your papers, strictly speaking S21 is a no fault eviction, S8 is to be used for rent arrears. This page explains the differences and when they are to be used:

http://www.propertyinvestmentproject.co.uk/blog/difference-between-section-8-and-section-21-notice/

I would suggest consider both, the issue is timing. If you do S8 and he pays the arrears it stops the case, but if he does not have the money then he will end up paying your costs and you will get a CCJ that can be enforced. He can do a counter claim but if you use a good Solicitor and Barrister he will end up paying their costs and the Court fee.

So now we know his downside, your downside is that you could pay the Court Fee for S8 and he comes up with the money at the last minute and you are left with the costs, you can still ask for the costs but for some reason they are often not offered. I think that once CPR warnings have been provided then costs should always be applied.

The S21 is an accelerated NO FAULT procedure, which means it is heard within 6 to 8 weeks on average, some less some more. S21 does not deal with the arrears, you can come after him for that later. Of course you can't issue a S21 unless you have not only protected the deposit and served the PI but also a EPC, Gas Safety and the How to Rent Doc (there is some overlap between PI/How to Rent and the papers the Deposit Holders provide). All of these are part of Deregulation Act 2015 which luckily for you means even if it rolls over to periodic (ie. he does not leave when tenancy expires) you do not get hit twice.

So YES it makes sense for both parties to settle BUT that does not mean you need to grab your ankles. It means you have to find what you want and what he wants and what you want, then work out the terms of the settlement.

If you are a novice Landlord and this is your first and only property then you may well only face a sanction of 1x the deposit. Judges do not like tenants who owe money to Landlords, or who have been antisocial or wrecked a property. They also do not like Landlords who have not carried out repairs, in fact if he has reported repairs to you and the Council and you do a revenge eviction it can get the S21 thrown out.

He is unlikely to leave in the short term so one strategy if you want to go S8 is to let his debt built up higher in the hope that he will not be able to find the money to pay it off. Most Landlords just want bad tenants gone, but it does not mean you can't bluff.

The link below is all about negotiating with the tenant in these situations.

You need to engage him, ideally in person BEFORE he goes to a claims company, because otherwise it will be YOU facing Court fees. That is a LOSE/ LOSE situation.

I would explain to him that under case law in the High Court it was clarified that Judges can decide that their is mitigation and you will be seeking it and so likely he will only be awarded 1x deposit, however, he could potentially face your costs.

Okadigbo & Anor v Chan & Anor [2014]

http://www.bailii.org/ew/cases/EWHC/QB/2014/4729.html

You explain that if you take him to Court you WILL be instructing Solicitors and Barristers to present the case and you will be seeking your costs which may exceed £3000.

You can say that you would rather reach a settlement with him as follows:

1. He leaves at the end of the tenancy
2. His deposit goes towards the arrears
3. He enters into an agreement to repay the remaining arrears over 7 months at £100 a month.
4. That the £1200 paid (£500 deposit and £700 in repayments) gives him a £300 discount in lieu of S213 sanctions.
5. That by signing this agreement he agrees is full and final settlement of any Housing Act S213 sanctions.
6. That you reserve the right to seek recovery of any outstanding debt if payments are not maintained in accordance with the agreement.
7. That you will provide him with a positive reference to help him obtain a new property.
8. You agree not to come after him for damages to the property subject to an inspection and inventory to be carried out in the next 7 days.

Have a look at the page below for further suggestions on negotiating. He may push back but as in any negotiation you do not give something up without getting something back in return. He may want the £500 and you might settle at £400, he might want some cash in which case you could extend the length of the repayment and give him the £300 out of the deposit.

http://www.propertyinvestmentproject.co.uk/blog/tenant-threatening-legal-action-tenancy-deposit/

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Ruth 17th August, 2017 @ 11:18

negotiating, providing good reference, are landlords encouraged to allow the scrupulous tenants move on to their next unsuspecting target/landlord and trap each other by giving a false reference?

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InTrouble 19th August, 2017 @ 01:34

@david

Thanks again for your help so far David!

I was wondering whether you had any advice/thoughts about my liabilities in this situation: -

1. Tenant takes out 6 month AST in October 2014 and the agent names himself as the Landlord on tenancy agreement.

2. The same agent protects the deposit after 32 days but has employed another letting agency solely to protect the deposit with the DPS and explained "it was because l did not have an account to register the deposit".

3. The same agent failed to provide the prescribed information to the tenant, though the agent claims they have provided it but cannot find the paperwork.

3. The same agent is employed by the vendor (the real landlord in law?) as an estate agent to sell the property to me in April 2015.

4. The same agent is employed by me as managing agent (I didn't know the history at that time!) and agrees a 12 month AST with tenant on my behalf and the tenancy agreement is in my name.

5. The same agent then told me that all legalities are in order and that the deposit had already been protected and the prescribed information served, so that l didn't need to worry... "it's all in safe hands" were the agents exact words... - was this advice correct?

The deposit was/is protected, although 2 days late and protected 6 months before l even purchased the property and the deposit is not in mine or my managing agents name. Would this make a difference? Could l argue that the tenants deposit has always been protected from October 2014, albeit not in mine or my agents name?

The tenant has put in his defence that the deposit is still being held in the name of the original letting agency (see 2 above) and as the deposit had not been closed by the previous landlord and re-protected in the new landlords or agents name then l (the new landlord) am liable for sanctions of 3x the deposit.

6.The tenant is also claiming that the failure to provide the prescribed information is a separate and independent breach that stands on it's own legislation and therefore the landlord is liable for sanctions distinct from that prescribed for failing to protect the tenancy deposit - is this correct? Is there a separate penalty for each 'offence'? Such as...

AST 1 - The first tenancy (April 2015 - April 2016)
3x deposit penalty for failing to protect deposit (£3300)
3x deposit for failing to provide prescribed information (£3300)

AST 2 - New 12 month AST (April 2016 - April 2017)
3x deposit penalty for failing to protect deposit (£3300)
3x deposit for failing to provide prescribed information (£3300)

AST 3 - New 12 month AST (April 2017 - April 2018)
3x deposit penalty for failing to protect deposit (£3300)
3x deposit for failing to provide prescribed information (£3300)

6. The tenant is also claiming that l am liable for the previous landlords failure to protect the deposit and serve the PI as apparently l "stepped into the old landlords shoes" and therefore inherited his liability for breaches of the tenancy including under s213? Do you know under what law results in my stepping into the old landlord shoes and am then liable? I can't find specific law/act/regsabout this anywhere online, though it appears to be a well used phrase. Can you shed any light please?

The tenant claims l am liable for the previous landlord breaches for: -
(Oct 2014 - April 2015)
3x deposit penalty for failing to protect deposit with 30 days (£3300)
3x deposit for failing to provide prescribed information (£3300)

7. The claim against me states stuff like the landlords agent harassed the tenant by sending rent demands via email (sadly true!) to the tenants place of work with "rent Arrears" in the subject section (I didn't authorise the agent!) and that the agent served a s21 as a weapon of harassment in breach of his right for peaceable enjoyment and security of tenure.

8. The'tenant'aka Housing Officer has also claimed that l failed to provide the notice under s3 of LTA 85 (assignment of landlord) within 2 months and that l have committed a criminal offence and am liable for a £2500 fine in a magistrates court!

9. Now it gets to the interesting part... under s3 of the LTA 85 the tenant claims (& appears correct) that because l failed to serve the notice under s3 of LTA 85 then the previous landlord is jointly & severally liable for any breach committed by the new landlord (me).

The previous landlord was the vendor whose name was not on the tenancy agreement and the agent put his own personal details on the tenancy agreement. Now l am a bit peeved with the previous owner and agent as l feel they took advantage of my trusting nature (aka stupidity) as they could have prevented much os the stress l am enduring.

Sooo... what if l did not serve the assignment of landlord notice under s3 of the LTA 85 and the tenant then enjoined the old landlord/owner to the claim. Would that mean that l would have a better chance of reducing my liabilities if l can show that the previous landlord/owner were the main culprits? hmmm... l wonder?

And now as l sign off & get ready for bed (it's gone 2am again!) l can't get the thought out my mind of the 'tenant' aka housing officer making an £1100 'investment' (the deposit) and is now trying to cash in for over £45,000... That's some markup!

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David 19th August, 2017 @ 15:26

@Introuble

I do not use the forum, so this is first I have seen of this.

I will look at it later as am nipping out, hopefully have a reply by end of weekend.

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InTrouble 21st August, 2017 @ 10:34

@David
Hi David,

Just a very gentle bump on your thoughts on the issues raised in my last post.

Many thanks!

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David 21st August, 2017 @ 22:09

@InTrouble

I will reply tomorrow, but first can you please advise what you have done since post 365 on 11th Aug?

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David 21st August, 2017 @ 22:16

@InTrouble

Just so you sleep, forget that crap about double there being a sanction for both PI and Deposit.

A penalty can only be applied once per AST, between 1 and 3 times the deposit. Think of it as two ways to trip the fuse, not protecting and/or not Issuing PI.

Sleep well!

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David 22nd August, 2017 @ 16:50

@InTrouble

Just a very gentle bump on your response on the issues raised in my last post.

"but first can you please advise what you have done since post 365 on 11th Aug?"

I need a proper update, did you do any of the things suggested above?

I have spent a lot of time of this but I need it to be up to date and relevant.

So please advise what you have done since post 365 on 11th Aug?

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InTrouble 22nd August, 2017 @ 19:18

@david
Hi David,

Sorry l have just seen your message as l have been with clients since early this morning scoping out a project for my employers... l will be back home in a hour or so & l will update you then.

Thank you so much David for taking the time to consider my situation!

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Flash 22nd August, 2017 @ 20:40

@David,

I really need your advice and help here. I am a new landlord having taken a lodger into my house on Oct-16. We signed a 12 months fixed period lodger agreement at that point and he gave me a £500 deposit. From May-17 onward i was travelling with my girlfriend most of the time and staying over her place. In June-17 the Lodger invited the council around when i was at work (around 12 midday) and claimed that i was a living out landlord. The council sent an email informing me and the lodger that i was indeed a living out landlord and that they are assured that they are on an AST. The lodger and i have signed a lodger agreement fixed for 12 months and the council said that this was not the correct contract. They complete took me by surprise.

Long story sort.

The lodger left end of June-17 without giving me formal notice to terminate his agreement. He left the house on a fixed agreement expiring end of September. So 3 month rent due is not paid. A few days before he sent me some threatening emails asking money to leave me alone.

Now he has hired solicitors and they ask for 3x the deposit + the original deposit back. I have 16 days to reply. What course of auction shall i take ?

Many thanks in advance

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David 22nd August, 2017 @ 23:41

@Flash

Based on what you have said and assuming that you did indeed reside at the property then in my opinion the matter is quite simple.

The claims company want to you admit to something so avoid engaging them on the phone. If you do not want a Court to see your letter write Without Prejudice at the top.

The Council is merely stating an opinion, it was a smart move by your tenant to do that, but it is the Judge that decides such things, not them.

For the Judge to decide someone has to pay to put a case before them, to take a case they need evidence.

Remember it is for them to prove the matter, not for you to defend it.

However, also consider pre-action conduct, bear in mind this does not mean you have to help them by incriminating yourself.

https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct

People work on long term contracts away from home, on oil rigs, in the city and many other things, it does not mean they do not live at their home.

If this did get to Court you prove this is your Principal Primary Residence with the following:

Council Tax in your name at the lodgers address
Utility bills (gas, electricity, Telephone, TV, Broadband, water) in your name at the lodgers address
Registration on the voters role at the lodgers address
Bank account and perhaps credit cards at the lodgers address
A copy of your credit record which will cost you £1 and would show transactions at the lodgers address.
Registration with the Inland revenue at the lodgers address
etc

The lack of the above at any other address (which the solicitor would need to obtain but which are all confidential if they did exist) unless you are in fact guilty!

If you sent emails to friends from the address in the evening the recipient would be able to show in the email header that the IP address matches the broadband supplier and that would add to the fact that you slept at the property as and when you were not away.

Now the last time I looked there was not a law against spending a lot of time at your girlfriends or vice versa.

So in the first instance you drop the claims company a letter along the lines of

"Dear Sir/Madam

I am writing in response to your false assertion that I needed to protect the deposit of my lodger (your client).

I am aware that my lodger made this ludicrous suggestion via the Council while I was at work, in an effort to make a false claim via firms such as yourself.

You should be aware that your client is only doing this because they have rent owing and I myself and considering bringing action against them in the small claims court.

Your client signed a fixed term lodging agreement, he left in breach of that agreement without providing notice, with 3 months left to run.

You should also be aware that your client sent me threatening emails effectively demanding money with menaces, a matter that I am considering reporting to the Police.

Your claim has no merit and is without any foundation whatsoever; I am prepared to accept that you were not in possession of all of the facts, but I must warn you that should you proceed to bring this matter to the attention of a Court it will be defended vehemently.

I will of course be able to show the Court that this was indeed my principle primary residence with all the relevant documentation that would prove the same.

You should warn your client that your conditional fee arrangement does not indemnify them from my legal costs to defend this bogus claim and I will be instructing my own Solicitors to issue a counter claim should you waste any more of my valuable time on this natter.

For the sake of clarity, I reject your assertion that deposit protection regulations applied as your client was a lodger and I lived at the property.

I trust that this will be the end to the matter, but if not I reserve the right to seek costs of my time spent on this matter.

Having been informed that there is no actionable claim, should you persist with this spurious claim I will be making a complaint to the claims regulator and the SRA regarding the conduct of your firm.

Yours faithfully"

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Flash 23rd August, 2017 @ 20:16

@David

David - your help again here. At the moment i would like to avoid any risk of going to court as the cost and fees can go up to 8k in total, which i cannot afford in any way. Question is, will the solicitors negotiate anything less than 3x the deposit ? How do i go about without risking court action and further legal costs?

Also the solicitors of the ex-tenant want the deposit back in cash from me. The deposit is currently held on hold by the DPS. How can i take the deposit out of the negotiation table so i can claim potential damages ?

Many thanks in advance

Flash

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