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

I Haven't Protected My Tenant's Deposit

For a general overview and background on tenancy deposits, please refer to the tenancy deposit guide. For landlords 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.

If you’re a tenant that’s trying to figure out what your rights are because you suspect your landlord hasn’t protected your deposit, you’re also marginally in the right place. But bear in mind, I’ve written this blog post from the perspective of a landlord, so you may need to backward-engineer the information so it’s relevant to you. Alternatively, you can just jump over to my tenant deposit guide for tenants.

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

To be in compliant 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 is presumably the vast majority of landlords).

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! HELP!

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 you can’t serve a valid Section 21, and your only option is, possibly, serving a Section 8 Notice where you must prove grounds for eviction (which you may not 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.

    Suggestion: just come clean, say you didn’t follow the proper procedures and you’re trying to rectify the situation. Don’t mention the entitled compensation.

  • If you’re trying to get rid of a rogue tenant and you have grounds for eviction (e.g. your tenant is in 2 months rent arrears), serve a Section 8 (as already covered, unlike with a Section 21, you don’t need to comply with the tenancy deposit legislation in order to serve a Section 8.
  • 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 over by how the deposit has been handled (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 matters of repairs and maintenance are attended to 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 it’s of any consolation (which it probably won’t be), the law was specifically changed in the Housing Act 2004 to allow tenants to sue the agent as well as the landlord for the penalty for non compliance of protecting the tenancy deposit.

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, whether you’re a landlord or a tenant? I’d love to hear your story!

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Showing 777 - 827 comments (out of 827)
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Anna 16th November, 2020 @ 15:40

I am a landlord and my tenant has left and I was not given the deposit but now the tenant has sent me a letter before action to pay them the money and more compensation. I need to claim for damages to my property. I need your help with this.

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David 22nd December, 2020 @ 02:02

@Sam

Sorry for the late reply, not been getting notifications from the site.

Living Rent is part of Scottish system, so not qualified to go into too much detail, however, most of the law mirrors the rest of the UK.

From what you said I guess it is a question of what exactly was agreed about not taking action with Tribunal. Also, did the £150 claim break the agreement not to take things further.

You did not say how much the deposit was, but if it was also £700 then no point.

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David 22nd December, 2020 @ 02:11

@Trace

Sorry for the late reply, not been getting notifications from the site.

You refer to them as tenants and as lodgers, to be the latter you have to live with them in the property. Deposit Protection only applies to tenants on an Assured Shorthold Tenancy or deemed AST if none provided or an SPT.

Had I read your comment when you sent it I would have advised extending the existing contract BEFORE allowing it to go to SPT.

You should always protect the deposit as soon as you realise, if you protect it within the term of the first tenancy and fully comply with all the provisions such as serving the PI within the first tenancy, then the SPT would have been deemed as protected.

One thing for sure, no matter how "difficult" tenants are they are worse once you have no relationship. I hope you have protected that deposit now.

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David 22nd December, 2020 @ 02:26

@Jash

I am not clear what you mean when you say "I had tenancy agreement with the agent who was than subletting my property where the agreement came to an end in August 2020."

Usually you would engage an Estate or Lettings Agent to rent your property, you would have a commercial agreement for them to act as letting agents and that agreement would determine their obligations.

If you let the property to a person and they sublet the property under their own agreements stating they were the landlord, they liable to those tenants. There are some obligations that can go through to superior landlords, there has been some recent cases where the intermediate landlord was a sham created to avoid this obligation, needless to say the Court saw right through it.

You say that you were "informed" they would secure your deposit, it is not your deposit it is the tenant's deposit, but this can help you if you have that in writing.

I am not clear what you mean by agent not giving it back, is this "agent" really a tenant?

Did they live in the property with these sublet tenants, if so, unless you gave a tenancy with him as lead tenant and authorised him to find co-tenants, then they were probaly lodgers and no obligation to protect deposit if on a licence rather than AST.

As the situation is ambiguous I will need to see what documents you DO have to answer your questions.

I am happy to take a look at the paperwork, but I suggest you contact me via the forum as these are public comments.

I am sure I can work out a way to cover you and get this sorted out.

See post 757 for how to contact me.

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David 22nd December, 2020 @ 02:30

@Anna

I am not clear what you mean by "I was not given the deposit"?

If a tenant does not give you a deposit there is no need to protect a deposit that does not exist.

If you mean you did not give it back then you would make a claim with the deposit protection company you gave it to.

If you did not protect the deposit you may be liable for sanctions but you can counter claim for the damages or file them first.

See post 757 for how to contact me.

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Janey smith 4th January, 2021 @ 22:33

I am 2 weeks late registering my tenants deposit, due my hubby being ill with covid.. I have not registered and sent prescribed info to tenant...would it be possible to end the tenancy at the end of the 6mth contract and refund deposit to tenant... Then start a new 6mth ast without deposit?? I'm now constantly worrying and don't want this to bite me in years to come.. I'm stressed enough with my hubby being ill, do need any more grief, would rather just give deposit back and if there's damage then that's my own fault

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David 5th January, 2021 @ 07:17

@Janeysmith

no No NO!

Get it protected immediately, the law allows mitigation and I can help you reduce any claim but for now get it protected and get the PI served properly.

The law does NOT allow for Covid or the 1000 other excuses, do not admit anything in writing, just get it protected TODAY and serve the PI, have them sign one copy. Send it via recorded delivery at the least. Enclose an SAE and in a few days send it via email with a BCC to another email address and a receipt request in the email.

JUST DO IT!!

Returning deposit does not help you, if you took a deposit and did not protect it and serve PI with the 30 days you could face a sanction.

If you wait until the end of the 6 months you may pay more.

There is no point worrying about things that have not happened yet and may not happen at all. Most claim firms will search online and see it protected (if you protect it NOW), it is only the tenant who will know the exact date but as long as you do not make a grab on their deposit they are likely to be fine.

Do not give any favours on damage or arrears, these are things that can be leveraged in a claim.

Make sure your deposit is NOT more than 5 weeks rent as it would be a breach of Tenant Fees Act, also make sure you are licensed if it is a requirement of the property.

As you forgot the deposit I will remind you to also give the tenant the Energy Performance Certificate, Gas Inspection Certificate, Electrical Installation Condition Report (see right) and how to rent.

Why are you still reading this?

The DPS custodial scheme is FREE.

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Emma 15th January, 2021 @ 00:45

Dear David, I hope you are well. Thank you for running your website, it's really interesting.
As background, I've been renting for two years and living in a property in a terrible state of disrepair - the day we moved in the boiler was condemned and there was a gas leak.
Since then, there's been a catalogue of disrepair.
The final straw last week was the boiler breaking (same boiler which was broken the day we moved in), and being without electricity for 6 days with no heaters provided in the interim.
I am looking into the deposit as part of my deposit isn't protected - I initially paid £2,600 deposit, 6 weeks before moving in, plus one month's rent.
A month later I was told that I had been rejected as a tenant so I paid another 2 weeks rent, equating to £900 which was never protected in a tenancy deposit scheme - although the initial £2,600 was.

I've read some of your advice to other people, and I'm interested in the case which you mention, where the judge decided to award two times the whole amount of the deposit - as opposed to the amount of deposit which wasn't specifically protected.
Is this case in the public domain and if so are you able to share details please.

I was also interested what you say about being able to make a claim against the landlord and the agent - I would be interested to do this as both parties have behaved abysmally. Are you able to let me know please, what is the process for this - do I file simultaneous claims against both?

Also are you able to let me know if making a claim now will affect whether the landlord could later serve a S21 on me please. I would also have potential protection against that because there was no Gas Safety Certificate on possession of the property, and the gas safety certificate now doesn't include the gas hob.

Thank you so much

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James 17th January, 2021 @ 10:13

What a brilliant thread.

I have an assured shorthold tenancy signed in 2018 which was initially for 6 month and was not renewed but just ran on. The deposit was bonded within 7 days, but the pi was not given until after 30 days, so from what I have read there was a breach - stupid me.

The tenant is in arrears of around £800, so I can not use a s8.

I have read that one approach would be to refund the deposit to the tenant and then serve a s21.

As an alternative, am I able to agree in writing with the tenant that their deposit may be refunded directly to their rent account. Ie. Could I transfer the deposit directly to to my account to offset some arrears ? My thinking here is that it would offset arrears and also enable me to serve a s21 in future if arrears grow again. I understand that this would not stop a potential claim for the none protection, but it would at least get the arrears down and reinstate the s21 option?

Or - does the deposit have to be physically refunded to their account to be classified as refunded?

As a second question, as the pi has now been given correctly, can a s21 now be used?

Many thanks James.

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David 18th January, 2021 @ 20:42

@James

I do not know how many times I have said this but NEVER RETURN THE DEPOSIT until the contract is ended, it is held for the performance of the contract and tough to get out of schemes anyway.

Most importantly you are giving up leverage with no guarantee that they don't claim and still damage your property

As the live I recommend we take this to private message via forum to avoid you prejudicing yourself

I don't know if you noticed but there is a pandemic on, current S21 require 6 months notice plus 6 months to get to Court (assuming no mistakes). So yes if you have rectified the error you may serve a S21 but that would put their back up and from what you say you may be facing two breaches of at least 1x the deposit, but we can negotiate a settlement.

A section 8 takes as long unless there is a year of arrears or serious antisocial behaviour with authorities involved showing a long history.

I am sure I can help you negotiate a mutually beneficial outcome for you and your tenant.

It will start with a really friendly letter crafted by me which will help them get their head out of the sand and help get the additional financial support to cover the rent or most of it if you charge over the going rate.

The key thing is we will reach a settlement and turn off the tap that is leaking your money.

The fact is that there is a psychological state of mind of a tenant in trouble, they tend to avoid comms if they do not have a solid offer but we need to get them before they are at the stage where they have just given up.

See post 757 for how to contact me, be quick because the dreaded lurgi has me.

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philip 7th February, 2021 @ 09:07

HI David

I have two rental properties side by side.
one has a tenant in of only three months and the neighbour has complained he is making excessive noise .
I have looked into my options and if i eventually served a section 21
i have realised that although i paid his deposit into a scheme the next day after recieving it i did not provide him with prescribed information which i always thought the scheme got intouch with them.
so whats my best option provide it now, and if i do can i then be able to serve a section 21. would a judge still throw the court order out. i want to remedy it now than have the problem down the line please.

thanks philip

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David 7th February, 2021 @ 14:01

@Philip

My general advice to Landlords faced with issues of noise and disputes between neighbours is DON'T GET INVOLVED and refer them to the Council.

You will know that pandemic or not you can't end a tenancy until 6 months, but you can issue a S21 two months before it is due to end or if there is a break clause at 6m, however, currently the notice is 6 months and likely to be a further 6m to 1y to get a hearing.

There are faster track evictions for 12 months rent arrears and for antisocial behaviour, however the latter requires strong evidence. Excessive noise by itself would probably not cut it but if there was aggression from the tenant and/or visitors, plus evidence from several sources, it might happen.

Start by formally informing the tenant in writing that there have been complaint(s) about excessive noise, asking them politely to try to keep it down.

Get the neighbour to contact the Council for the diary form, get them to record examples of the antisocial behaviour.

If there is real antisocial behaviour rather than someone just playing loud music occasionally, you can pick up cheap individual battery operated wireless CCTV cameras for around £70, putting one in communal area may help capture some evidence, they are activated by movement and can save data to the Cloud via internet if there is wifi, others have an a memory card.

Once the diary has enough evidence the Council will provide recording equipment and get involved. This all provides evidence.

Also if they are having parties and the neighbour suspects that there is drug dealing then have them call 101 and get the reference number for the call. If Police bother to attend have them film any confrontations and audio record too to aide memory to provide notes.

However, if it is just noise I would stay out of it, maybe send a letter if you get complaints but no more.

Your deposit will show as protected on the appropriate scheme the issue of the PI may never come up. See post 757 for how to contact me privately if you need to discuss PI further.

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Matthew 8th February, 2021 @ 12:54

Hi David,

Thanks for writing this.

I have read through everything above and am wondering if you could shed some light on our situation, please.

We moved in to our rented property in June 2019. We have received an email today to say that our deposit has now been put into a protection scheme as of today. We have had no correspondence about a dps other than this.

The property is through an established letting agent who has so far ignored our complaints about our back gate being broken, despite twice reminding them.

Can I ask what our position is legally with the letting agent not complying with the 30 day dps period?

Many thanks in advance.

Matt

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David 8th February, 2021 @ 14:52

@Mathew

First of all, your primary case would be against the Landlord named in the Assured Shorthold Tenancy Agreement (since 2015 the agent can be added, or the Landlord can take action against them), if the tenancy does not contain the address of the Landlord you are entitled to temporarily withhold rent if the Agent does not provide you with the address of the Landlord when asked. Alternatively you can spend £3 at the Land Registry website and get a copy of the title deed.

Now it could just be that they moved it from one scheme to another or It could also be that the Agent updated their computer system and it triggered the notifications, however the law requires that you are provided with the prescribed Information within 30 days of them receiving the deposit.

Assuming that they forgot to protect it there is no rush to make a claim, you have up to six years and claiming now will not only sour the relationship but likely to trigger claims on the deposit when you leave. This is why it is critical to jointly take an inventory when you move in and again when you move out.

I also recommend that once you have left you contact me to help with your claim, I do not charge anything and more often than not both sides are keen to avoid Court. Claim firms will take one third of your settlement but also many rack up their charges and are unreasonable.

You say you moved in in June 2019, so I am guessing that you had an initial tenancy that expired, it being an agent it is likely that they were fleecing the landlord and yourself with new tenancies every 6 months or one year so they could charge a fee, rather than letting the tenancy become Statutory Periodic. Either way, you may be entitled to a sanction of between 1x and 3x per tenancy, the amount of this depends on case law and the interpretation including an assessment of the circumstances of your tenancies.

Bringing a claim requires that you follow Pre-Action Conduct and Practice Direction under Civil Procedure Rules, again I can help with that, but I strongly recommend you do not bring claim until you have left, Especially as each new tenancy adds more. Usually in cases like this we seek a settlement with the agent, some are right cowboys and throw up all sorts of nonsense but the last one I dealt with paid the full sanctions, if he had not bothered with all the BS we might have settled at 1x.

As this is a public blog and you have a potential live case I suggest you do not discuss the specifics of your case here but contact me via the forum. See post 757 for how to contact me privately via the forum. I may take a day or two responding as I am still recovering from bad bout of Covid with lung damage.

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Liz 11th February, 2021 @ 11:36

Dear David,
On vacating my rented home the landlady accused me of damage to her property which was minimal wear and tear and attempted to claim over £800 when contacting DPS about the return of my £550 deposit.I contacted lawyers on a no win no fee basis when I realised that she had been late in placing my DPS deposit and she had failed to provide me with any info of prescribed documentation anytime during my 5 year tenancy.
I was a great tenant, houseproud, no pets, live alone , very few visitors, paid rent in full on time and Im a very quiet 68 year old lady. She got £33, 000 in rent and only paid £42000 to buy the house and spent little doing it herself up with her brother, new kitchen doors on old carcasses etc but missold as " new high gloss kitchen" and other exaggerations!
The lawyers were great at first collecting my bank statements and photographic evidence ,contacting her lawyers who admitted nothing, denied everything and assassinated my character questioning the voracity of my evidence before it was being presented. Eventually months later they offered 2x deposit still not admitting other than saying they agreed that the prescribed info was 5 days late.! A huge lie as I didnt get it at all!
Then ....DISASTER! I couldnt get hold of my lawyers by phone I believe they were taken over and I got mixed messages stating that my case had cost them greatly! Then I fell seriously ill for ages having to appoint my ex- husband as Power of Attorney. The greedy landlady requested DPS return the deposit to her as she hadnt heard anything for a long time from my lawyers but DPS had put a hold on it as they believed I was going to court.
Now Ive found out that DPS have returned the deposit to the landlady as I failed to get a court date within their 6 month deadline!They knew I was ill!
Im outraged! What can I do as its been over 6 years now since I paid the deposit but its dragged on because of lawyers still seemingly unwilling to provide service and my ongoing illness? The new management just arent helping or communicating despite our contract.

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David 11th February, 2021 @ 12:58

@Liz

I think the first thing will be to track down the original Solicitors which I can do for you.

As you have a live case I suggest we do NOT discuss it here on the blog.

The DPS have done nothing wrong, they have terms of the scheme and with lack of response they will have given the Landlord your deposit, they would have given it to you if it was the Landlord not responding.

It does not really matter whether what people deny, it is what they can prove, which is why I tell Landlord after Landlord to include the PI in their pre-tenancy stages and get a signatures on the PI provided to the tenant(s), with two copies.

In the past I have seen claims successful within 12 years on the basis that the tenant was not aware within six years specifically because the Landlord did not protect the deposit.

Your case should be easier because the claim firm started the pre-claim practice direction and told the Landlord's Solicitors they had a claim.

They will bleat, but it will be for the Judge to decide, their lawyer may ask for a directions hearing to see if they can get it kicked out, that is no bad thing.

If you contact me via the forum I will help you take this forward, if she got £33k in rent then I suspect that there may have been more than one tenancy and so any sanction awarded will be per tenancy.

Our goal will be to reach a settlement but if they want to try their luck in Court then so be it, in fact I have a way you can bring the claim very cheaply to avoid the directions hearing, before I get a million tenant enquiries, this is because of the circumstances of your case as you have described above.

See post 757 above for how to contact me via forum.

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Liz 15th February, 2021 @ 10:42

Hi David
Ive sent you a response re problem 792 DPS returned deposit to landlady, dont know if you got it?
[ Computer problem!] Did you get it?
Thanks so much
Liz

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mr.spacemaker 17th February, 2021 @ 10:25

Asking for a friend!

Tenant is due to move out and currently owes approximately the same as the (protected deposit). He doesn't have enough wiggle room in his overdraft to send the rent payment and receive the deposit straight back, so he's asked if the deposit can be used to settle the arrears. Good relationship, no deductions for damages, landlord is keen to oblige if possible.

What would be the process for using the protected deposit to cover the current rent arrears?

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David 17th February, 2021 @ 10:56

@mr.spacemaker

If the tenancy is at it's end then the the Landlord simply asks the scheme to give him the deposit in lieu of rent arrears, that kicks off an email to the tenant who must agree to it. If tenant does not reply to scheme notification they usually release it quite quickly, two weeks if memory serves, but you need to look at the three sites to check.

If tenant does not agree then then there is a choice of Scheme ADR or Court.

If Deposit is not protected then my advice would be to protect it as soon as one becomes aware because no matter how late it is, it looks worse if it was never protected.

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James 19th February, 2021 @ 10:48

Hello, I've just found out that my deposit was protected on the exact day when I got a notice to end tennancy. How does this work. It was paid by my wife and tenancy was in her name pre 07 renewed pre 07 and every 6 months until we got divorced in 2010. I stayed as named tenant 2010, no monies changed hands, just a verbal agreement the deposit is in place and actually says on tenancy a deposit is protected in a scheme. some time in 2014 ish, the tenancy moved to periodic. Is the notice valid? I have rang all 3 schemes and they have no record of a deposit ever being protected prior to 2021.

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David 19th February, 2021 @ 17:18

@James

First thing to check is the notice period included in the S21, Government extended restrictions on evictions until the end of March 2020, so it should be 6 months notice but if it isn't do not worry, you can tell them the notice is invalid when the notice he has given expires (e.g. in 2 months if it has 2 months notice on it.) Of course he may hold off to see what happens at the end of March, I doubt it will return to 2 months overnight.

Your deposit claim is very old, normally it would run out after 6 years but I have seen cases where the Court approved 12 years because the claimant pointed out that the only reason that they were not aware of the legislation and deposit not being protected was because of the failure of the Landlord to protect the deposit in the first place. So that would be the first hurdle, but worth a shot, but probably only for the 2014 SPT.

I would be happy to review your evidence and draft you a letter to reach a settlement with the Landlord.

See post 757 above for how to contact me via forum, I am running a bit behind as I had pretty bad Covid infection, but there are some things you could be doing meantime so message me via the forum.

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James 19th February, 2021 @ 17:52

Hello David. Thank you for your response. I have been in touch with citizens advice. They informed me that the notice is valid, but, if the tenancy changed hands in 2010, then the deposit would have needed to be protected. As it was not, then any claims to deduct monies can be counterclaimed or can be individually sued against the landlord for breaching of s213-214 housing act.
I'd also like to know if any wear and tear claims are fair as been such a long time since the tenancy began?

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David 19th February, 2021 @ 21:42

@James

See post 757 above for how to contact me via forum.

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Simon 24th February, 2021 @ 14:14

Quick question: I previously had a joint AST with two friends. A single deposit amount for all of us was paid to the landlord, as stated in the AST, which then wasn't protected. One of the friends isn't bothered about making a claim - can the other two of us still claim for compensation based on the deposit amount as a whole, rather than just for 2/3 of it?

Thank you,
Simon

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David 24th February, 2021 @ 18:58

@Simon

There is case law and CPR that may hinder your claim, so it really depends on how the claim is brought and whether you and defendant have the funds to escalate it, I would seek a settlement.

No you can't bring a claim for the whole amount, well you can bring the claim but the Judge will very likely kick it out, if it even gets that far.

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Janie 24th February, 2021 @ 23:47

Hello David,

Can you please help with my mess.

A tenant and his partner moved into my property in March 2019 I asked for a months rent and a I think upfront but there was no bind stipulated in the tenancy agreement. The tenant who signed the contract left after a couple of months without our knowledge. The other tenant continued to live in the property and then informed us in the October that his girlfriend no longer lived there. He subsequently signed a new 12 month tenancy agreement in his name with again no deposit stipulated.

Skip forward 6 months and he was in arrears of over £2000. We put together a payment plan and allowed him to stay. He did not pay the arrears and unfortunately occurred more. His girlfriend then moved back in (although she is saying she doesn’t live there) and the rent but non of the arrears started to be paid.

In December he failed to pay his rent again and as was now on a periodic tenancy we decided letting want not for us anymore and decided to sell up. He originally said he didn’t blame us he would do the same and allowed the house to be valued.

However as soon as the property was advertised for sale and viewings arranged he has become resistant to leave and said he will want his deposit back and taking legal advice because it wasn’t put in a protection scheme.

Does he have a deposit with us? I haven’t put anything in a scheme because I didn’t think we had a deposit or is the fact that I asked for 2 months rent upfront classed as a deposit even if is not on a signed tenancy agreement? Also the first tenancy was signed by his girlfriend not him who says she doesn’t want anything to do with the it?

Many thanks in advance

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David 25th February, 2021 @ 11:34

@Janie

What a mess, I am sure you are pulling your hair out over this but let me break it down for you.

There are some facts that I would need to clarify, but it is best not to do this on an open blog platform, but for the sake of other Landlords let me provide a general answer.

In legal judgements you will find terms like "if it looks like a duck and quacks like a duck it is a duck" or "we have to call a spade a spade we can't call it a fork because we want to".

These mean that you can't pretend something is not a deposit just because you call it a different name, or say it is the last month's rent and all the other tricks that some unscrupulous landlords tried when deposit legislation first came out.

So if money is taken for the performance of a contract in the way a deposit is, then it is a deposit under the law.

However, there are a couple of financial structures that might give you the same (or better) security but definitely not be classed as a deposit.

However, in the situation you describe you might have not have to worry, I think it wise to take that aspect offline via the forum PM for me to confirm a few things.

At this point I would be suggesting Landlords have a "sanity check", when there has been a problem with the tenancy, don't go giving a tenant who just happens to live there a new tenancy because it is easy and quick. Say to them, "I need to put you through tenant referencing" and it if is not the most glowing report, give them a S21 and find new tenants.

However, you are where you are, so see post 757 above for how to contact me via forum and I will see if I can help you.

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roby 28th February, 2021 @ 16:47

Dear David,
thanks for your help.
I would like to understand more about the timing for the compensation claim.
I know the letting agent deposited the amount after nearly 60 days instead of 30 so I would like to claim compensation.
I am wondering when should I inform them about the proposed claim: once the tenancy is over but before the deposit will be refunded (within 10 days) or once the deposit will be back I claim the 3x compensation?
If will be a problem about not agreed deductions from deposit, should I first resolve this matter with the deposit scheme provider or can I do 2 parallel claims, one for 3x compensation and one for refund of partial deposit?
Thanks

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David 1st March, 2021 @ 10:46

@Roby

I strongly advise AGAINST raising any sort of claim BEFORE you leave the property, you have up to 6 years to bring claim (some possibly have 12 years although probably not yours). In my experience when a Landlord sees such a claim they find all sorts of new damages, the cooker suddenly does not work, the washing machine too and you have damaged the carpets etc. etc.

There is a prescribed procedure for claiming, it is not that difficult once you know it but get it wrong and the defendant can have your case thrown out, you lose your fee and have to start again.

You have not yet determined that the agent is culpable under the law or case law, nor the Landlord.

The Deposit Protection legislation and the laws that amended it (plus subsequent case laws) are not a get out of jail free card for damages or arrears, the deposit is taken for the performance of the contract.

You suggest that there will be deductions, the Landlord will be able to put in a claim at the DPS/TDS/Mydeposits, that is entirely separate from your claim, they may be over the top in their claims and that is what might have set you down the road for a claim. Deductions cannot be applied to "fair wear and tear", your deposit is not a redecoration fund. There should have been an inventory at the beginning and at the end. I always advise all parties to take video and photo evidence at both.

Deposit Protection failures are NOT handled by the schemes, they must go to Court or be settled directly with the culpable party.

Your claim is not compensation, it is a sanction and statutory penalty, based on the minor infringement of it being just a month, the level of culpability might be just a month, but there may be other failures which take it nearer 2x or even 3x.

I am happy to evaluate your evidence, help you prepare your case, but at the same time seek a settlement, which would be the best outcome for all parties. The wording needs to be done in such a way that it does not damage your claim potential and at the same time be seen to be serious. If upon seeing your evidence I determine that they are being unreasonable about the deductions I may advise factoring them into any claim, but again it is about timing.

I am wary of discussing detail on a public forum, so see post 757 above for how to contact me via forum and I can help you seek a mutually agreeable settlement.

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Gary 1st March, 2021 @ 20:36

Hi i have had the same tenant in for 12 years but i need my property back as i need to sell it, i started with a basic tenancy agreement and let this roll into a rolling agreement. But i have come up short in other areas(deposit) and wish to talk to a experts regarding my situation and get professional advice on how to resolve my issues

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David 1st March, 2021 @ 23:34

@Gary

To your tenant, your property will be their home of long standing. They may have a family who are in local schools or other connections to the community.

Right now in this Pandemic unless there is a year of arrears and/or anti social behaviour you are looking at 6 months notice and potentially 6 to 8 months after that to get a Court date.

Keep it friendly, do not do things via email but ask to see them, maybe buy them a coffee, you could tell them you are going to sell and offer them first dibs on the property, if they can raise a mortgage.

If they are not interested in buying, then ask them if they would prefer to move or wait to see what the new landlord is like.

You could reach a settlement that includes the potential deposit sanctions, you would need to speak to a local agent to determine what the price difference would be of selling it with a sitting tenant vs with vacant possession. I suspect after 12 years it will require some decorating and staging so any price difference may be eaten up.

I have it on good authority that the Stamp Duty deal is going to stay until June (but who knows if that will be pulled) and I can't see the limits on evictions changing much before then, maybe a few concessions, but the time to get a hearing will not change for ages.

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Gary 2nd March, 2021 @ 04:55

Hi David

Firstly and for most thank you for your time in replying.

Yes i understand that it is there home in there eyes and sympathy with that.

I see the biggest issue being the cheap rent they have enjoyed as it is only 700 mouth compared to the market rate off 1100. I've never been greedy as my total bill for property is only 250 after all bills n taxes.

My tenancy agreement was with him all them years ago and he has since got married and has two little boys and i understand that kids cost so i left everything as it was.

If im setting to move them out would it be wise to do a new update contract with her on it as well or keep it between myself and him only and update the contract again with a opt out claus(ps ive also just purchased your recommended contract anyway)

Kind regards

Gary

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Gary 2nd March, 2021 @ 06:31

Hi David

Firstly and for most thank you for your time in replying.

Yes i understand that it is there home in there eyes and sympathy with that.

I see the biggest issue being the cheap rent they have enjoyed as it is only 700 mouth compared to the market rate off 1100. I've never been greedy as my total bill for property is only 250 after all bills n taxes.

My tenancy agreement was with him only all them years ago and he has since got married and has two little boys and i understand that kids cost so i left everything as it was.

If im setting to move them out would it be wise to do a new update contract with her on it as well or keep it between myself and him only and update the contract again with a opt out claus(ps ive also just purchased your recommended contract anyway)

Kind regards

Gary

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David 2nd March, 2021 @ 10:32

@Gary

You need to protect the deposit as soon as you become aware of the failure, failure to do this may affect mitigation in a Court. You cannot issue a S21 until this fault is rectified, along with Gas Safety, EPC and you will need to give them the latest version of the Government How to Rent document.

You have dug yourself into a common hole, whilst it has been very kind of you to keep rent low it will make it very difficult for them to move from your low rent to market rent.

The only way they might manage financially in the same area is if they get into social housing which is as rare as rocking horse dung or for them to move to a cheaper area which generally means moving to out of commuting distance.

If they leave of their own accord the Council will deem that they made themselves homeless and some Councils still insist that tenants wait until they are evicted by Court order rather than when the S21 notice expires.

So I would have a chat with them, let them know that they have rights to be housed if homeless as they have kids but the Council will try to put them off, tell them to seek property in the private sector etc.

They may have to move into a temporary accommodation facility provided by the Council, they will then bid on properties on the housing list and be housed according to their priority vs other families in the area. They will have a few days each week to evaluate properties. At the best of times they may not get more than an outside picture (this is no Rightmove or Zoopla). Due to the Pandemic some Councils are not even doing the front of the property. So tenants have to use the postcode and various online sites to figure out the area, schools, crime, antisocial behaviour etc.

It is not a great journey but the destination of social rents gives them a tenancy that is far more secure the the usual 2 months.

S8 can be used if you were seeking to move back into the property and had the appropriate clause in your previous tenancy agreement that indicated this was an option that may happen. This is not a mandatory ground so the Judge will consider all parties, more information on S8 ground are on the page below

https://www.propertyinvestmentproject.co.uk/blog/section-8-evicting-tenants/#grounds

I should make you aware that the Government has said it will be scrapping S21 and improving S8, so use it before you lose it.

I would have the chat, issue S21 explaining that it is a 6 month notice due to the pandemic and it may take longer a year by the time they go to Court due to pandemic.

The details of Covid aspects are below, the page has a link to the 6A S21 form, make sure you comply with all the prerequisites listed therein or the notice will be invalid.

https://www.gov.uk/government/publications/covid-19-and-renting-guidance-for-landlords-tenants-and-local-authorities/technical-guidance-on-eviction-notices

Inform the Tenant that you may issue another notice to replace this notice if the Government reduces the 6 month limit back to 2 months in the next three to Four months.

The most important thing if you want to reach a settlement on the deposit is to be open and communicate with the tenant. Remember that people need a nights sleep to digest bad news.

When you issue the S21 have two copies and get the tenant to sign a copy.

Signing them up to a new tenancy will be substantially different and may complicate deposit issues, plus give them more rights. If you do sign them both onto a new tenancy make sure that it is a contractual periodic so that although it has a fixed term it never expires until it is terminated after the initial fixed term has passed.

Do not think that a new tenancy will be a get out of jail free card for the failure to protect the deposit on the current tenancy. The tenant will be asked about their tenancy history by the local Council and encouraged to take action. So get it protected TODAY if not done already and then seek a settlement with the tenant, the minimum you would be liable for in Court is 1x the deposit for each tenancy.

Another thing to watch out for because of the age of your tenancy is the ratio of your deposit to the rent, it must not exceed 5 weeks rent (£807) under Tenant Fees Act (2019), again this affects the validity of the S21. So refund any difference and protect the rest.

One other thing to consider is a rent increase, so you have the chat, you explain that your circumstances have changed substantially due to pandemic so you must increase rent in line with market value and must sell the property to deal with your financial issues.

You explain to them that they are a valued tenant and you want to do right by them so you want to work out an agreement where you lessen the impact of this. Explain that in 2019 the Tenant Fees Act came into force and in 2020 it was applied retrospectively to existing tenancies. So you will be refunding the difference and also putting the deposit in the deposit protection scheme and because you protected it late you want to agree a settlement of 2x the deposit as a credit to their rent account with you.

So your proposal is to increase the rent to £975 (which is still low compared to the £1100 market value) but to give them a settlement of 2x the deposit as a credit against the increase over the next X months. To calculate X you divide the two times the deposit settlement by the difference in Rent (£275), e.g. if deposit was £1000 the settlement would be £2000, then 2000/275=7.27 months, so rent will not cost them any more for 7 months plus you will refund the different of deposit £1000 and 5 weeks rent so a further £200.

It is important to refund them the difference in deposit as a payment and pay it via a method such as bank transfer. One could say the same for the deposit settlement but this can be documented in a settlement agreement.

The increase to £975 will increase the sale value of the property for investment purposes and this is likely to be the kind of buyer you want.

This page explains the rent increase form

https://www.propertyinvestmentproject.co.uk/blog/notice-of-rent-increase-form/

You may decide that the rent increase delays your need to sell, issuing the S21 (having first complied with or rectified failures) will keep your options open.

You could increase to your stated £1100 market rent but that would likely see the tenant advised to refer to the tribunal.

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roby 2nd March, 2021 @ 12:30

@ David,

many thanks for your answer.

Once I will give the notice I will be in contact with you privately for your kind help.

Many thanks and kind regards

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Gary 2nd March, 2021 @ 19:17

Hi David

Once again im blown away with the quality of advice you are providing and am so grateful.

Lucky for me the deposit is the only issue ive left myself facing.

Im not looking for the new tenancy agreement to get me out of jail as i understand im bang to rights at the moment.
As my deposit was only 700 im inclined to just settle for the full amount.
But what im after with the new agreement is to have a up to date agreement that covers all aspects of our job but lets me proceed to reclaiming my property with the least stress for me. If you have any recommendations regarding a professional that can advise on this id be greatfull.

After a chat with a estate agent today im am favouring selling the property with them so as to provide them with a home still and to save on the issue that would arise and time wasted off such. Would you have any recommendations or advice on doing this estate agents that specialise in this please

Id just like to finish on how amazed i am with your time you put into this.

Thank you

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Michael 7th May, 2021 @ 16:50

Dear David,

We were tenants In a tiny studio for 1 year and 6 months. In the end of our tenancy the landlord starting making unreasonable claims on deposit deductions and we even offered as lightly smaller amount to move things along but then they increased the deductible amount... That lead to us proceeding to dispute their claim with DPS. Only to find out our deposit was late to be protected by over 35 days (only insured over 2 months after we paid it). Also we never received any information about our deposit protection or etc. When we contacted DPS, what happened is the managing agency gave wrong contact information for us, and they relied on DPS sending us relevant information so the information about the deposit protection only reached is after we moved out (over 500 days past the deadline).

We came. forward with letter of legal actions and gave 14 days. They refunded deposit without saying anything the same day and we advent heard from them until last day of the deadline. They threatened with counter action for damages... We said that's fine and said we will proceed with the claim. They offered £250 in compensation which we refused. They then came back last second with 1 times of our deposit. We refused that offer asking for 2 times of the deposit amount as they broke many rules: insuring deposit on time, providing relevant information on time, and frankly providing information at all as it was only after we left the property, attempt to cover up and telling us everything was insured on time, and also only insuring it for 1 person despite two people in contract).

We wondered if its reasonable for us to not accept the minimum compensation amount and proceed with filing the form and going into court after what they have done.

Also we will be representing ourselves as we think it is fairly straight forward and very personal at this point.

Please let me know your thoughts.

Sincerely,
Michael.

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David 8th May, 2021 @ 11:29

@Michael

So many Landlords cause these claims by making unreasonable claims on deposits and the behaviour since does not help.

It is straight forward if you know all the rules, but there are some law revisions and case law that may trip you up. Also how you frame it in the statement of truth can make the difference between the amount of the sanction.

The first question I would be asking you is what was the term of your first tenancy (do not answer here), 18 months is unusual term, so might be you started with 6 months then 1 year or that after a year they allowed it to become a Statutory Periodic Tenancy (SPT) or the terms of the contract are such that it is a Contractual Periodic Contract (CPT).

Why does this matter?

Because despite the Deregulation Act (2015) usually protecting a Landlord from multiple claims if they protect the deposit late, this protection only applies if they fully comply with the legislation.

The information they should have given you is called the Prescribed Information (PI), some Landlords include some of this in their tenancy agreements, but it will rarely suffice.

So your Landlord may have protected a little bit late, but because they did not serve the PI for the whole duration of the tenancy they seriously risk a 3x sanction FOR EACH TENANCY. An SPT is a second tenancy a CPT is rarely a second tenancy, depending on terms.

I am happy to draft you a letter that will make your Landlord realise that you are now getting professional advice and if not then help you create the forms and file them properly in Court.

I can help you with these but providing more detail on a live case is not advisable on an open forum.

So I suggest you contact me via the forum using the forum link below

https://www.landlordforumproject.co.uk

Join the forum

Confirm the email (note hotmail/outlook addresses rarely work)

Once fully registered and logged in use link below to see my profile and there will be an option bottom left of page to send me a private message

http://bit.ly/davidpip

and hopefully I can help you seek a mutually agreeable settlement.

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James 2nd June, 2021 @ 20:35

Dear David,

Really love this blog, and this entry in particular. As a landlord, this encapsulates many of the frustrations I have with the present state of regulations.

I just have one question.

The scenario is a shared tenancy (AST) with multiple tenants (4) defined collectively as the 'Tenant'.
Deposit was registered in an insurance scheme with MyDeposits and prescribed information served within 30 days of receipt.
One tenant now wishes to move out and be replaced by another incoming tenant.

MyDeposits recommends a deed of assignment for this process, which is no problem, and that the deposit protection certificate be updated to reflect the tenancy exchange. They also recommend that the prescribed information be served again.

Does the 30 day time limit apply in this case, for the certificate to be updated and PI served?
If so, at what point would the deposit be legally defined as 'received' and the 30 day time limit regarded to begin?

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David 4th June, 2021 @ 16:15

@James

One thing that trips people up is that the Housing Act legislation for deposit protection often refers to the rules of the scheme.

So I imagine MyDeposits gave you that advice to avoid any confusion or conflict with the legislation.

The Deregulation Act 2015 says that as long as you protect a deposit in the first tenancy and serve the PI, thus comply with the law, then your deposit is protected for subsequent tenancies.

Superstrike and the underlying the Case Law referenced is the Case Law that most deposit claims are made, the Deregulation Act updated legislation, but Superstrike is still the default in cases where the Deregulation Act does not apply, unless the age of the tenancy means other Case Law applies.

Strictly speaking the deposit will remain protected for the whole time, the new tenant's deposit will be paid to the departing tenant, but via you. However, for the purposes of the Act the new tenant will still need to be informed within 30 days and it would not do any harm to re-issue PI to all the tenants being careful to mention that it is a copy of the PI they were served previously, especially if it was the lead tenant as named at MyDeposits that departs.

Yhat 30 days starts from the day it is received, if it were late any claim would only apply to that percentage.

It is important that the the new tenant makes a bank transfer so you have evidence of the transaction and the same applies to the outgoing tenant, you always need evidence and downloading PDF's of bank statements is suggested to avoid bank fees later.

The deed of assignment is really going to depend on how your tenancy agreement is written, many Student Tenancy Agreements have a sheet in the appendix that accommodates a deed of assignment with a list of the coming and going of tenants.

For the sake a clarity it is always a good idea to write to each tenant informing them of the change of liability for the performance of the lease have changed with Jenny Jones replacing the liabilities of Peter Smith from the specific date, but that they remain collectively joint and severally liable.

You should do an inspection of the property because you can bet the new tenant will make a video and take photos of the condition when they take occupancy and you will not be able to rely on a previous inventory inspection.

Remember that there are hardly any fees allowed since the Tenant Fees Act of 2019, which applies to all tenancies now.

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A Brandt 6th June, 2021 @ 10:30

Dear David,

I am in a pretty much identical situation with James above, with one tenant moving out and another moving in in a shared tenancy.

It's in London with an agent managing the deposit (with an insurance based scheme in My Deposits) and the handover between outgoing and incoming tenant. The deposit was protected and PI served correctly within 30 days of deposit receipt at the start of the tenancy.

I had a look at the deed of assignment the agent used and it specifies that the incoming tenant must pay his or her share of the outgoing tenant directly. In that case, the agent (acting on landlord's behalf) would not be involved in any deposit transaction as part of the handover, and it becomes an internal matter between the tenants. The Housing Act specifies that PI should be served within 30 days of the landlord (or agent acting on his/her behalf) receiving the deposit from the tenant.

This appears to be a pretty standard deed of assignment, for London at least, but does the 30-day PI rule still apply when the landlord (or agent) does not actually receive any deposit money in the handover?

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David 6th June, 2021 @ 17:46

@ABrandt

It is entirely up to you how you do it, I just come at it from what makes you able to get a case dismissed before having to go to Court or run up fees with a claims company.

A few weeks ago I took over a case that was over 400 pages of back and forth, imagine you are the Judge having to quickly make sense of all this.

As I recommend above you look carefully at the scheme terms & conditions, which are often different for the insurance version.

I work from the basis of a claim has come in from a former tenant, what evidence do you have that you are not liable?

How much can you depend on the goodwill of the remaining tenants who may now be best mates with the departing tenant.

I know of student lets where the Landlords leave it all to the tenants. Several years ago I helped someone who had a massive drama with false accusations made, the stress it caused was incredible. They basically invented a load of BS to try to turn the Judge and the fellow tenants corroborated the lies.

If you do it as I advised above, you are merely creating evidence of the receipt and payment, you give all parties a copy of PI (stating for existing tenants that the deposit has remained protected and is in the same scheme) for the incumbent you get them to sign the PI and for the outgoing you get them to sign a copy of a receipt. So you then have evidence of money going in and out of your bank and a letter from the Deposit Scheme will confirm it remained protected the whole time. Case dismissed.

With regard to Agents, it is common knowledge in these pages that I have very little love for them, except where my clients have a rock solid contract that says everything is the agent's responsibility.

I find the biggest Agents are sloppy in procedure and paperwork, while the small ones are often oblivious. For example an Agent can be booted off a scheme because of a poor credit record, suddenly the insurance void and YOU are liable! Except the Agent do not even know, never mind inform you. Many small agents use deposits as a cash flow mechanism and several have disappeared and done a phoenix under a similar name.

I advise people to use a custodial scheme, that way there is no question, no cash flow risk, everything is done properly. If you have an insurance scheme and there are damages or the tenant requests their deposit, you usually have to immediately pay the money to the scheme, at a time which may not be convenient. I mean who would have predicted the Country would be a pandemic with evictions taking 12 to 18 months on top of previous timescales.

To me these things are best done yourself, this is a business with serious liabilities if things are not done correctly, so either you have the agent contracted to take care of all and indemnify you or you do it yourself in a well documented procedures system. Just bear in mind many Agents have terms that flip the obligation to you even if they do the donkey work.

As I explained, the deposit must be protected within 30 days of deemed receipt, that means from the date the new tenant paid it.

In a situation of assignment where you did not handle the money the date the deed of assignment was signed and came into force would apply because it will be a virtual receipt and payment, but that has so many risks, which is why it is not my preferred way of doing things.

It is like when you take a deposit on 2nd viewing and get the tenant to sign the tenancy agreement on the day they take occupancy, but the occupancy got delayed, just too messy. Again it is all about processes and procedures, you can use email and electronic signing to reduce voids, but all the time think evidence evidence evidence, because that is what you will need to file in Court. If you collect the deposit you can protect it online in minutes, Create a PI and have the tenant sign it (either in person or electronically).

The PI should be dated and include the reference number plus all additional prescribed information so that there can be no doubt.

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Sunshine 17th June, 2021 @ 08:09

Hi David,

You helped me out massively some years ago, unfortunately my brother now has a problem and I was wondering if you could also help please? It's a different renting topic this time so I know I am writing in the wrong titled section and I am sorry but I just needed advice please?

My brother relocated for a new job, so he was looking for flats virtually due to the distance. He signed an agreement for a property just based on the pictures and the description, after seeing it for the first time, he realised he's been misled and the property is full of mould and theres exposed wires etc i.e. the property is just not up to scratch. He's only been there less than 24hours, what can he do please? Ideally to leave the property and get his money back? (or most of his money back)

Unfortunately he signed the contract before seeing the property due to cunning sales tactics (its a good property for a good price, it will literally go if you don't pay deposit now), he's paid the deposit and months advance rent. I have read up that homes should fit to live in as a standard but being misled as well, he has lost faith in the landlord and estate agent

To note he was greeted by the landlord who gave him the keys, he asked him to sign the inventory which he did but the landlord took it away with him saying he had 7 days to review. It just seems all quite dodgy

Any advice would be massively grateful, thank you in advance

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David 17th June, 2021 @ 14:04

@Sunshine

He needs to reject the property, if the property is not as described he has been mis-sold, so it is a breach of contract.

In addition to this to be rented a property needs to be fit for human habitation under Homes (Fitness for Human Habitation) Act 2018, based on what you say it is not, it is also in a dangerous state, probably breaching Housing and Health & Safety legislation.

https://www.gov.uk/government/publications/homes-fitness-for-human-habitation-act-2018/guide-for-tenants-homes-fitness-for-human-habitation-act-2018

He would be advised reject this immediately, I mean TODAY! I would spend £3 on a Land Registry search on the property to make sure that the person he is dealing with is the owner. He needs to return the keys as soon as he has gathered evidence.

At the very least he should video and photograph closely all issues in the property, he can post them as a hidden video on YouTube which will date stamp them and give him a URL he can point relevant parties to.

If he wishes to stay in the property but get it brought up to standard he should contact the Council and ask for a Housing Officer to visit the home on the basis that the property is not fit for habitation, has fire safety issues and he would like them to issue an improvement order.

I have drafted email below so he can use it immediately, if there are other issues with the property have him use the instructions on post 814. He needs to be seen to be acting quickly and he needs to email rather than call to create evidence of this.

"
WITHOUT PREJUDICE SAVE AS TO COSTS

Dear Landlord

Re: 11 Downing Street, London W1A 2AA

I am writing with regard to the above property to inform you that I am rejecting the property for the following reasons:

1. The property has been mis-sold and is not as was described to me, so you are in breach of contract.
2. The property is not fit for habitation due to mould and is in breach of the Homes (Fitness for Human Habitation) Act 2018
3. The property is in an unsafe condition with exposed electrical wires and fire safety issue, which in breach of a plethora of separate Housing and Health * Safety laws which can be enforced by the Local Authority.

As such the contract between us is void and I now require the immediate return of my rent and deposit.

I would like to get these back TODAY and return the keys to you immediately, failure to do this will require me to seek emergency accommodation in a local hotel, the rate for this is around £65 per day plus service costs, if this is necessary I will be seeking all my costs including additional food and any extra travel expenses.

I would like to resolve this matter amicably TODAY but if you do not provide me with an immediate refund of my rent and deposit, I will also be speaking to the local authority regarding your breaches of the law.

Needless to say I reject any costs with regard to rent and I reserve my rights to claim my out of pocket expenses for your mis-selling of this property.

Please email me back by return to confirm you have repaid my money by bank transfer to the following account and with a time to meet at the property to return the keys.

Sort code:
A/C No. :
A/C Name :

Yours sincerely

Moonlight"

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Sharon 18th June, 2021 @ 05:03

Hi David,
I lodged the tenants deposit within 30 days with correct Scottish deposit scheme. It turns out when I (and tenants) went to look into releasing deposit -that it was never actually allocated to the tenants specific ID and therefore I believe 'not protected'. A complete admin error! (But held in correct scheme).

For only the 2nd time in 7 years, I actually want to retain the whole deposit (£550) for 3 issues where the tenants have breached the tenancy agreement and left me out of pocket. I have been an excellent landlord to them and they seem quite decent people (with wealthy parents supporting them).
Should I just return deposit to them in full in the hope this will not make them take the 'protected deposit' thing any further - or see it as a separate issue and go to a dispute for the deposit and then deal with being taken to court (if they choose) for the protected deposit/late protection.

I feel its two separate issues and if they are going to go after trying to get money from me, I should at least try get back the deposit? Otherwise I could be screwed over twice?!

Look forward to hearing from you.

Thanks

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Sunshine 18th June, 2021 @ 09:15

Hi David,

Thank you for your timely reply, I can't tell you how much our family appreciate it, it's been a nightmare but we are getting through it all with your help. The manager of the estate agent said the following (I chuckled knowing what I know from you now):

"I am sorry you feel you have been misled, I have rechecked the listing and there was nothing misleading in the description, the property was indeed refurbished a few years ago, unfortunately, it does certainly look as though it needs an additional clean, with particular attention to the cooker and washing machine, and some mould treatment in the affected areas (which consists of a fungicidal wash and redecorating). This can all be done tomorrow."

The original add stated "the property was refurbished a few years ago and is still good condition"

I don't see how extreme black mould in different areas of the flat, with the place smelling of damp goes in line with good condition?! And nil pictures on the add to represent this mould and damp?! Also when we went to see the manager yesterday before I had read your comment, he wanted to wash his hands of us, stating not to discuss but to follow his complaints procedure with emailing him a complaint (which we have done and that was his response as per above) and then he proceeded to say he had not seen the property at all himself, yet he was the one who closed the deal on the tenancy agreement.

We just want out now and have sent a response to his email stating we don't want repairs but want out including the things you stated above.

What happens if they refuse to give my brothers money back? We are currently in the process of sorting out moving his belongings to put into storage asap so we can hand back the keys today. Can we claim the expenses of the removal guys and storage? He literally has wasted so much money with paying for the original removals and now these costs too.

P.S. I previously gave charity in your name for all your help, and yesterday I gave £50 in your name.

You David are a undercover rockstar!!

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David 18th June, 2021 @ 11:45

@Sharon

I do not practice in Scotland so my comments below are generic to England and a short perusal of Scottish Gov website. I do know that whilst their deposit protection laws are very similar there are some differences, for example in the schemes.

I can tell you upfront that a deposit protections failure does not overcome the obligations of the Tenant to be liable for the performance of the contract, so if your Tenant caused £20,000 of damage to a kitchen with a sledgehammer while drunk or due to a mental health condition, then they are still liable. However, such a claim would need to be brought before the Court and the Tenant would need to pay the fee to bring their counterclaim or you bring the counter claim and pay the fee.

If we look at the situation generically it is the same, a Tenant comes at this from the angle of "free money for the mistake of a Landlord, yes please I will have 3x the deposit for each tenancy please and thanks very much".

The Landlord comes at this from the angle of "There was a mistake so I deserve some mitigation and should pay nothing or no more than 1x the deposit for a single tenancy" what I do is see if there is a middle ground, I look for case law and changes in the law that may help my clients, I also point out to all parties that Court should be a last resort and you can pay legal costs if you do not settle for what you might get in Court or if you decline a suitably structured offer and get less in Court.

Whether Tenant or Landlord I always suggest a settlement, but some Tenants are greedy, some landlords may prefer to let a judge decide, this can be expensive for both sides.

I would not be exaggerating if I told you that over 80% of my claims arise because of a different dispute between the Landlord and Tenant and the vast majority of those come from unexpected deposit deductions.

The key word there is unexpected; if a Tenant causes a flood because they overflow the bath and you have to replace the flooring, when you immediately say “I am sorry but I have to hold you responsible for that and I need you to pay me £300” they know they made a mistake, they know they are due to pay.

However, if you say nothing they hope you forget or they forget themselves and either way they get annoyed. This is why the best advice I can give any Landlord is to be organised and be professional, do not put things off, get repairs done immediately, get three quotes and show the Tenant that you chose the middle or cheapest one.

The wealthy parents does not guarantee a decent approach to this, they want to protect their kids like anyone else. I had a case with wealthy occupier where the sense of entitlement to mess with my client was obsessive, we did manage to get them to drop the case but only after 9 months of gruelling torture, still they had to pay their own costs which were substantial.

So you have to ask yourself whether these three breaches of the tenancy agreement you refer to left you out of pocket for more than £1650 PER TENANCY plus costs, as a worst case scenario. Note I am not saying ignore them, just factor them in.

If the Tenant accepts the breaches and can see the real costs to you then the way to approach it is to attempt to reach a settlement agreement where you offset or reduce your claim on their £550 in return for them agreeing not to bring claim for what was an administration error. If your evidence is good enough there is a chance to plead mitigation over your culpability and it is an argument that has been accepted in Courts, but as in any case, the Judge must decide.

For example if you have 50 properties and paid 50 deposits into the scheme it would not be huge mitigation, but if you have evidence of paying £550 into the scheme on a date within 30 days and the scheme confirms they received it then that goes some way towards mitigation. However, there is the separate need to serve the prescribed information and the same penalties for failure, I have successfully argued many times and that a PI cannot be valid when the deposit it is supposed to be informing the Tenant about has not been protected properly.

I do not know the Scottish system well enough to know all the ins and outs, but there are some substantial differences according to what is published on Scottish Government website, these provide exceptions that used to be in place in England but are no longer exceptions in England, so I would advise you to seek your own professional legal advisor in Scotland to verify your position, but if I at least list them maybe you see something useful.

In England deposit protection cases are brought in the County Court under Part56 on the Part8 track, in Scotland they are brought before the First-Tier Tribunal for Scotland (Housing and Property Chamber). Such tribunals are in place to hear specific types of cases, the Judges become expert in this area of law and deal with the cases more promptly.

In England deposit protection cases can be brought for up to 6 years (sometimes 12 years in certain circumstances), in Scotland they need to be brought within 3 months of the end of the final tenancy

In England AND Scotland you put your claims for deductions to the Scheme administrator BUT IF YOU WANT TO AVOID A DISPUTE SPEAK TO YOUR TENANT FIRST and reach a settlement in writing. It is the surprise of an unexpected deduction that often triggers the bad response from the Tenant.

To understand this you need to understand the Landlord Tenant relationship, before and during the Tenancy the Landlord always has the superior hand and the Tenant is beholden to the Landlord for the roof over their head. Courts accept this all the time, especially when it comes to unfair contract terms such as illegal or excessive fees or requirements.

Once a Tenant has left the relationship changes and often the only thing you have left to barter with is a positive reference, something a Tenant getting a mortgage with support of the bank of mum & dad does not need so much.

If the amount of a deduction due to serious damage is more than the deposit I always advise clients to get the amount agreed and the Tenant to start contributing towards it immediately, ideally in one payment or 50% down and the rest split over 3 months. This gets it over and done with during the tenancy.

I have no experience of the First-Tier Tribunal for Scotland (Housing and Property Chamber), but any Judge works with what is before them in evidence. Even if the mitigation is good you should count a 1x deposit for each tenancy plus the legal costs of the Tenant in any calculation, the Tenant should also count on the same amount and factor in paying your legal fees if you need to bring a counter claim. I do not know the Scottish Courts well enough, but in UK there are options to move the claim to different tracks for different reasons, too many to list here. Either way both sides should be open for a settlement and I can help you draft a letter to your Tenant once I have seen the evidence, the goal here being to get them to see the sense of a settlement.

As I said I am not familiar with all the ins and outs of the Scottish system but the mygov.scot website below lists the following exceptions of the requirement to protect the deposit IN SCOTLAND:

You do not need to register a deposit if:

you return the full deposit to the Tenant within 30 working days of the beginning of the tenancy
the Landlord and Tenant are family members
the tenancy is a 'liferent' which means the Tenant has 'a formal right to use the property during their lifetime'
the property is a holiday home
the property is used by a religious organisation
the property is supported accommodation
it's an agricultural or crofting tenancy
you're also a resident in the property
the property is subject to control orders
transitory ownership – where ownership of a house is short-term, e.g. a house which has been repossessed by a mortgage lender or a house held for up to 6 months by executors dealing with a deceased person's estate

https://www.mygov.scot/tenancy-deposits-landlords

We currently live in a world of offensive outrage and entitlement; luckily the Courts have not been infected with this disease, just the evidence and law.

It is not a good idea to put further detail on this open blog, but you can contact me via the instructions on post 814 above if you need further help.

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David 18th June, 2021 @ 13:01

@Sunshine

It is not a good idea to put more detail on an online blog because I write very specific replies and I do not want someone to assume it applied to them in different circumstances.

I have drafted you a letter for your brother which will include the recovery of his out of pocket consequential costs.

Please contact me via the instructions on post 814 and I will email you reply he should send TODAY.

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Paul 23rd June, 2021 @ 17:32

@David

Hi. Tenant in England here. I am on my third AST in the same property. I rent a single room. My last tenancy started in October 2020. The deposit was not protected until March of 2021. No prescribed information has ever been provided to me. No gas certificate, energy performance certificate or how to rent guide were ever given either. The owner of the property is unknown to me. The letting agent is listed as 'landlord' in the TA and the TDS deposit certificate. There are no arrears. I have always paid on time and there haven't been any serious issues during the three tenancies.

Today the letting agent just informed me that after the tenancy ends in October the owner intends to seek possession of the property and that I must leave then. There was no mention of serving a section 21 notice. They seem to think it does not apply in this case and that verbal notice suffices. I was bluntly told the end of the AST automatically means I have to leave because ASTs do not have to be renewed and, according to them, since 2019 they no longer roll into SPTs automatically.

Question. Can the agent simply hand the property back to the owner and have nothing to do with it or me as a tenant at the end of an AST? If there is no renewal but I choose to remain until the courts evict me because I haven't found anywhere else to move, who do I pay rent to given that I don't know who the owner is? Who would be responsible for fulfilling the terms of the AST when it becomes an SPT, i.e. electricity, gas, broadband, biweekly cleaning service that are now included in the rent?

Also, who is liable to pay any penalty for the failure to protect the deposit and does the owner have to re-protect it under his name for the new SPT if the letting agent washes his hands off the property and the tenant at the end of the AST in October?

I will try to move before October but in the hypothetical case that I had nowhere else to go, what is my situation after the AST ends and what are my rights as a tenant vis-à-vis the owner and the agent?

Grateful for any light you can shed.

Paul

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David 24th June, 2021 @ 19:06

@Paul

I have written you a long reply but on reflection it may prejudice your legal position for me to post it here and I am too busy to cut it down.

Please contact me via the instructions on post 814 and I will email you reply.

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Paul 24th June, 2021 @ 20:54

@David

Thanks a lot, David.

I contacted you via the forum.

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