My Tenant Is Threatening Legal Action Because I Didn’t Secure The Deposit

I could throw a stone in the middle of a landlord conference (who actually goes to those things?) and I’d probably hit a landlord on the head that’s either been through it, going through it, or will eventually go through it: threatened with legal action for failing to comply with the tenancy deposit legislation!

So, what to do if you’re being threatened? Let’s talk about it…

Rightly or wrongly so, landlords are being hunted down like rabid dogs for failing to comply with the tenancy deposit legislation. We’ve become such easy and profitable targets that specialised ‘tenancy deposit claim management’ divisions are popping up all over the place, to assist in the management of dragging and encouraging dormant tenants to claim their unclaimed fortunes. How fucking generous of them.

Business is BOOOOOOOOOOOOOMING!

Every landlord should unequivocally comply with their legal obligations, even the policies that are more ghastly than the boils on your mum’s sloppy face. And while so many try to use ‘ignorance of the law’ as a defence (from my experience, that’s the most common excuse), legitimately or otherwise, it’s still (and always will be) pointless to even mutter the words. Save your warm, unsavoury and moisty breathe for your spouse.

But on the other hand, I’m finding it impossible to empathise with those dick-face tenants that are taking advantage of innocent ignorance purely out of greed. Don’t get me wrong, unscrupulous landlords deserve for their profits to be drained like a large infected cyst, and compensation should be allocated fairly to those that suffered as a consequence. But sadly, there are too many cases surfacing whereby good landlords, but foremost genuine people that are only trying to do good, have been threatened and prosecuted by an academy of asshole tenants that are sniffing around a quick paycheck. Spineless leeches!

Celebrating tenancy deposits

Introducing the tenancy deposit legislation was a good move to protect both tenants and landlords, but as it currently stands, as with many legislations that are hashed together by servants whom are completely inexperienced and have no practical knowledge of how the relevant realm works, the finished product seems like it’s lined with clunky congealed skid-marks. Who approved this shit?

It’s clearly ridiculously too damn easy for undeserving prosecution, which has resulted in a long queue of tenants rubbing their grubby little mitts together and practically begging for landlords to fall-short of their deposit obligations, because it’s like a winning scratch card. That can’t be right, not on any level.

So this blog post is aimed at helping those “good” landlords caught up in the struggle. Stay strong, my brothers! Stay strong!

The Tenancy Deposit Legislation

Ok, so let’s go over this really, really, really, really, really, really quickly, because I’ve already covered the what, where and how’s in-depth, over at the Landlord Tenancy Deposit Guide blog post.

Obviously, complying with the tenancy deposit legislation from the offset, which is covered in Section 213 of the Housing Act 2004, should be Plan A:

  • This legislation applies to every landlord in England and Wales that has taken a deposit from a tenant under an Assured Shorthold Tenancy Agreement.
  • Securing the deposit: the deposit must be protected with in 30 days of receiving it.
  • Serving the Prescribed Information: after the deposit is secured, Prescribed Information must be served to the tenant, also within 30 days.
  • Late compliance: unfortunately, you’re still a target if you’ve secured the deposit and/or served the Prescribed Information after the 30 day window!
  • Landlord’s responsibility: it’s ALWAYS the landlord’s responsibility to ensure the deposit legislation has been complied with correctly. Don’t rely on your agent for anything, they won’t be held accountable.

The penalty for failing to complySection 214 of The Housing Act 2004 states that IF a Judge is satisfied there has been a breach they MUST sanction the landlord to cough up between 1 and 3x the deposit for each tenancy and also return the deposit itself. Ouchieeeee! Not to mention, you’ll also be unable to serve a valid Section 21 notice, which is arguably a shit-ton worse on every level!

If you’re sitting there hearing screeching noises as your stomach is avalanching out of your anal-cavity, and with your hands over your eyes and gob wide open, because YOU KNOW you’ve failed to comply, you may want to read the stone-cold reality of your situation over at the ‘I haven’t protected my tenant’s deposit‘ blog post to help plan your next move. I’m sorry to say, you’re in a pretty unforgiving situation, so the options ain’t pretty.

In short, if lady luck is on your side, your tenant’s kind nature or ignorance will allow you to tip-toe away unscathed. But ya’ know, if they eventually cotton on… don’t be surprised if your ‘perfectly reasonable tenants’ quickly turn against you and suck-the-living-shit out of you after uncovering the treasures that await them. There’s something very zombie’ish about tenants turning once they become enlightened.

My tenant is threatening to take legal action against me, what can I do?

Important disclaimer: before continuing, I must clarify, the following is NOT legal advice. Say it out loud, “NOT LEGAL ADVICE”… SAY IT!!! If you’re after professional legal advice, please speak to an extortionate Solicitor that specialises in landlord law. The following is purely based on personal experiences and hearsay…

If you’re currently caught in the cross-fire, the odds are it’s because your tenant(s) has discovered you’re ripe for prosecution due to your failure to comply with the tenancy deposit legislation. With their beady little eyes firmly on the prize, they’ve probably contacted you demanding compensation, typically somewhere between 1-3x the deposit value. Of course, it’s almost always x3 because they’re ambitious, they want the jackpot, and after a chat with their mate down the pub and/or doing their ‘online research’ they probably believe that’s what they deserve can get away with. And hell, why not reach for the stars? But what’s most worrying and disappointing is that many tenant’s chase after the easy money despite the fact they’ve benefited from a perfectly reasonable landlord throughout the tenancy, so that’s why many landlords are often caught blind-sided by what is quite frankly, daylight robbery. They may as well have posted this through your letter box:

give-me-money

I can only urge all tenant’s in that position to side-step and forgive by asking for the deposit back in full, and then by then making a strong vocal point. Hopefully lesson learned.

With that said, the following advice is suitable for those good landlords that are genuinely being taken advantage of by the money-grabbing parasites that don’t have the moral fibre to put their foot on the breaks…

Ultimately, your objective at this point should be to avoid Section 214 Housing Act Deposit Protection Penalty Sanctions.

Bu…bu… BUT my asshole tenant has also breached their tenancy obligations!

Ok, I hear this all the time! What a classic.

At this point, many landlords will frantically splash around, trying to kill the situation by pointing out their opponent’s shortcomings (i.e. “my tenant has fallen into rent arrears”, “my tenant shat on the carpet” etc), hoping for a ‘get out of jail card’. Unfortunately, focusing on someone else’s wrongs to mask your own is as embarrassing and futile as it sounds.

You need to understand that you’ve been a rat-weasel, you’ve done wrong. You are liable for prosecution, so right now it’s only a question of how little you pay.

Minimising costs & Settling

Ok, so… credit where credit due, the following is largely taken from Comment #226 over at the “I Haven’t Protected My Tenant’s Deposit, What Should I Do?” blog post, by an extremely generous, experienced and knowledgeable contributor, David. So a big thank you very much! The following will be a hybrid of David’s sound advice and my own toxic interference…

The reality is, the tenant just wants paying off; they usually have no intentions of escalating the situation to court (because that can be expensive, not to mention a whole heap of hassle). What they want is some free money, and the legal threat is an attempt to reduce you into a whimpering little girl and lure you into submission.

You have three options:

  • Pay what they demand
  • Fight in Court
  • Negotiate

If they’re asking for just 1x the deposit, it might be wise to begrudgingly pay up and move on with life, with the experience of knowing better for next time. No doubt, that might still hurt like a sledgehammer to the nuts, but it really is an easy escape from what can potentially be a very firm and prickly grip. However, if the amount they demand seems totally unreasonable (you may want to assess your performance as a landlord at this point, and be honest with yourself), negotiating is usually the way to go

After receiving the threat, you should respond swiftly. You should write your response knowing that a Judge or Mediator may look at it; that means you will want the Judge to see that you are the fair and reasonable person, while the tenant is nothing but a mumbling buffoon, using the Court to decapitate your wallet for some easy cash.

You should start with a letter expressing your complete astonishment and surprise. I would send something like this:

Negotiation Response 1

Dear [Tenant name(s)],

I was most perturbed to receive your letter before action considering I felt that we had a good Landlord and Tenant relationship, with no major problems on either side.

To be honest I was in complete astonishment and surprise because your letter before action was not preceded by any claim, nor a Part 36 offer of settlement, nor any suggestion of mediation.

I do regard this threat of legal action as vexatious and without merit, but I would like to keep things amicable and avoid wasting the Courts time. I am reliably informed that a Judge would view this for what it is; a frivolous attempt to extort money from me, using their Court in an inappropriate way.

At this stage I would like to ask you to reconsider your proposed Court action and agree a settlement with me; that being a positive letter of reference and the sum of £[insert low-ball offer, less than half of 1x deposit] as a gesture of good will with no liability accepted as full and final settlement of this matter.

I hope that you give this kind offer your serious consideration.

Yours sincerely,
[Landlord]

The low ball offer is to bring the leech tumbling back into reality (assuming their initial settlement fee was OTT). They will most likely reject your offer, which should definitely come as no surprise, because you’re dealing with a donkey that’s an utter chancer. In any case, now you’re dancing/negotiating. In response, they may ask for 1x the rent, which you may want to settle with, but they may play hard ball and ask for 2x the deposit. If they do the latter, I would reply with the following:

Negotiation Response 2

Dear [Tenant name(s)],

I am in receipt of your recent offer to settle this matter for 2x the deposit. I am sorry but I cannot accept this as the facts of this matter do not reflect the gravity of such a sanction.

There was no animosity between us, any repairs were carried out promptly and overall I was an excellent Landlord. I am reliably informed that a Judge will take into mitigation the fact that I am a novice Landlord, [and that I quickly protected the deposit in an approved scheme as soon as I became aware of my unattended oversight].

I have refunded the deposit to you in full despite the fact there were a number of issues with the way you left the property that were beyond wear and tear. I did this because I thought we had a good landlord/tenant relationship.

As I explained recently, I feel it is grossly unfair that you try to extort money from me, and whilst I am keen to keep things amicable, I will only agree to a settlement that is fair and reasonable. To this end I am prepared to provide the positive reference offered previously and increase my offer to £[no more than 1x deposit] as a gesture of goodwill in full and final settlement with no admission of liability.

I hope you will give this serious consideration so we can end this unnecessary hostility.

Yours sincerely,
[Landlord]

They may accept or they may try again. In any negotiation you have to give small amounts slowly and usually in response to something given by the other side. They will no doubt give reasons for why you should pay more, but if they don’t, then they are really showing they are weak. SO WEAK. WEAK LIKE… I don’t know… weak like your stomach after digesting an out of date pork-chop.

So be ready to offer incremental amounts, and then a final offer of no more than 1x – 1.5x deposit (or whatever you’re comfortable with), because at some point you have to draw a line in the sand and be prepared to call their bluff. It is your money and your risk appetite that matters here.

A Judge can decide anything they like within the legislation, but a lot of them get pissed off when it’s obviously just about the money (which is often the case). They have a huge case load; some may even kick the case out and force you to go to mediation. They may even say the tenants have to pay for that because you have tried 3-4 times to settle (that’s why it’s important to try and fairly negotiate).

This is ultimately a game of poker, your tenants know you have a potential liability, but you know you have mitigation; depending on their case, they may not get costs unless this goes to appeal, and that is going to be expensive for them upfront with no guarantee of success. That can be a powerful deterrent for the donkey to proceed.

If a settlement is agreed

Hopefully a fair settlement can be agreed. If that’s the case, it should be documented and laid out with a heading of “Settlement Agreement”, and it should clearly state that the settlement is the ‘full and final settlement’. The document should then be signed by all tenants. I’m currently working on getting an example Settlement Agreement as an early Christmas present from me to you, so sit tight for that! It’s all about love around here.

Correspondence

It’s important to send all correspondence through assured means. That could include all of the following…

  • Sending letters with recorded delivery
  • Delivering a copy by hand through the letterbox, while video yourself doing it
  • Sending it via email with a PDF version attached for good measure. The subject of the email should be “Formal Response to Letter before Action”

Every case is different

The problem with these cases is that they can come from 20 different angles; and the law has been amended so many times by statute and case law that it is a dog’s dinner. So while the advice above may not be entirely relevant or fitting to your particular case, I think the key takeaways are:

  • If you’ve been a good landlord, negotiate… do everything you can to settle!
  • If you feel your tenant wants a reasonable amount of compensation from the offset, you’re probably better off paying and considering yourself a little lucky sausage.
  • Ensure you are being fair and reasonable at all times; suppress your anger and frustration if you need to.
  • Always respond quickly, and send all correspondence through assured means.

Before deciding to take legal action!

A word of caution to any Landlord or Tenant thinking of taking legal action; it can cost you £8k to £10k if you get a belligerent opponent who takes this to appeal, employs a barrister and wins. So to emphasise…. the purpose of this blog post is to encourage all parties to settle, settle, settle!

So, anyone going through this dilemma, or been through it? What’s your story? Can you provide further advice? TELL MEEEEEEEE! TELL MEEEEEEE! xoxo

357 Comments- Join The Conversation...

Showing 307 - 357 comments (out of 357)
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Lucy 7th May, 2019 @ 17:45

Looking for advise please, lots of very helpful comments from all members and advise from @ David

Brief history
Family friend in financial difficulties, let to to help get back on feet... bad move
.
Tenant have instructed no win no fee solicitor to act in deposit claim as deposit was not insured within 30 days. Was actually not paid in full but oversight that it had to be done from day 1 even if paid in small instalments.

Fast forward a few moths lots of issues at the property, drugs, police etc rent arrears, unauthorised pets, redecorates without concent in battleship grey and daily maintenance complaints. Property was in good order and council have visited and confirmed so. Suspect it was an attempt to avoid eviction.

Anyway,
I understand wrong has been done in non insurance of deposit from day one but what is the best way to tackle this?

Refund deposit and make a counter offer?

I want to get this sorted as soon as possible and serve notice.

Lesson learned ... don’t rent to friends or relatives

307
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David 7th May, 2019 @ 18:18

@Lucy

It goes without saying that NEVER let to friends, work colleagues or anyone other than Tenants you have referenced.

Lesson 2 is never take a deposit in instalments, not only is it messy but if they can't afford a deposit and the appropriate advanced rent then they are not likely to be good tenants

The way forward is going to depend on the relationship you have with the tenant, some shut down comms making it very hard to deal with. We can't deal with the tenant directly about the deposit claim as the claim firm would have advised you but we can deal with them about all the other matters that are usual with a tenancy.

I would be pleased to look over the letter and other evidence, it is premature to instruct a claims firm before they leave because under the terms of your agreement it will almost certainly say that the deposit will be repaid after you leave and with deductions for damages, arrears etc.

Many people mistake the clauses that say the Landlord will return the deposit to mean that they have lost the rights agreed to in the contract, this is not the case.

I would urge you NOT to return the deposit until you have determined whether there will be a counter claim for damages etc

The fact is that most claims companies operate on a conditional fee basis (aka no win no fee), they are owned by insurance companies who instruct a panel of solicitors, these solicitors do a very specific amount of work. It is very rare that they take on defence for damages or arrears, without more money. So unless they are instructed by the tenant directly and the tenant has the funds to bankroll a damages/arrears claim (usual upfront payment of £2k to £3k), then they may withdraw. It all depends on how it is handled.

I would not suggest you go into too much detail here because they may well come across it and that might prejudice your case.

Instead I suggest you follow the instructions in post 304 and contact me via the forum.

I will then look over your case and help you resolve this, I have dealt with most claims companies and their panels of solicitors.

Needless to say any claim for damages or arrears needs to be supported by evidence.

308
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Lucy 8th May, 2019 @ 08:06

Dear David

Thankyou so much for your quick and helpful response, I shall head straight over to the forum and direct message you.

Thanks again

309
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Grumpy 18th May, 2019 @ 17:41

Hi David,

Having read your advice on here regularly I have a question I was hoping you could shed some light on

We have some new tenants wanting to sign for a place stating 2nd July.
They are mainly overseas students.

Two of them WANT to pay 6 months rent in advance. In addition they will agree to pay a 1 month deposit.

The question is it seems a bit of a grey area whether this would count as a deposit (hence the need for DPS) or not.

Personally I’d avoid the risk but would appreciate a more informed opinion?

Kind regards

Grumpy

310
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David 18th May, 2019 @ 18:01

@Grumpy

There is no grey Area as long as it is defined; you are taking a 6 months rent and 1 month deposit, what matters is your tenancy agreement properly states that the rent is MONTHLY, that the tenants agree to PrePay 6 months rent and that in addition to this they will pay a deposit of X which will be protected in accordance with S213 of the Housing Act.

I would strongly advise you to take six weeks deposit, these kinds of tenancy can be troublesome and as foreign students it costs more to go after them if there are problems.

I would also seek evidence of enrolment into the places where each of them will be studying and what courses they are on. This is to stop you getting a bunch of drug dealers, Pimps or sub-letters who have cash to pay upfront but will be using it for nefarious purposes.

Call the places of study and confirm whatever the paperwork says, i.e. they are on roll studying this year, you need a signed letter from the tenants giving their consent to you making such enquiries. If not mainstream universities I would also make sure the places of study properly exist, google the address and look at streetview.

I suggest you take the deposit first and protect it so that by the time they sign the agreement you can include the certificate of the deposit protection, along with the PI and the terms of the scheme. Get them to sign a copy of those documents so your evidence of protection is Rock Solid.

As long as your tenancy agreement is constructed properly with rent period being monthly (albeit pre-paid) you will be fine, if not you will make it look as if your payment period is six monthly and if the tenancy goes SPT you will have to give a longer notice period.

In times gone by people used to try and avoid the deposit protection by taking the last month's rent upfront and so on, they got hammered because anything that looks like a duck and quacks like a duck is a duck!

311
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Grumpy 18th May, 2019 @ 18:29

Thanks david,
I appreciate your input. What you say makes sense but on the other hand the RLA think there is still too much uncertainty and seem think there is still considerable risk. Personally I don’t know, and want to avoid the risk.

https://www.rla.org.uk/landlord/guides/do-you-need-to-protect-advance-payments-of-rent-as-tenancy-deposits.shtml
I think will just take the deposit as normal via Openrent.

We have referenced them for guarantors but as is normal, students always “fail” and then being overseas parents the referencing always “ fails”. We use Openrent for all this who have been excellent for a few years and many tenancies. It works great for both landlords and tenants. Their website has some great explanations and videos that the tenants find very useful.

As for paperwork, thanks for the advice. We are currently Checking out the places of study.

We currently have about 30 pages of check in documents with signatures for every fire alarm tested, EPC received, right to rent document read and understood etc etc. Many hours for every property.

Thanks for your input on this blog, a most excellent addition to an excellent blog 👍
Many thanks
Grumpy

312
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David 19th May, 2019 @ 10:05

@Grumpy

Thanks for kind words!

The RLA are essentially confirming my advice, take and protect the deposit separately so there can be no doubt, but I would add that to define things explicitly in the tenancy is as important.

Johnson v Old is an old case from the days when you had to serve your notices on a given day with the wind blowing SSW and part of the appeal was about the tenant’s eviction.

The problem with Case Law is that once set a County Court has to follow it IF Counsel can put a case to the Judge that the case they are hearing is the same issue. Then it is all down to interpretation, even then most Judges do not like to be overturned on appeal so many will play it safe and let someone pay to take it to a Higher Court if they object. Most tenants would probably get batted down at the Circuit Court, but if the case was significant and tenant represented by the right firm or supported by the right Charity, then the case could be brought for judicial review. There would have to be a credible argument that it was significantly different.

The ambiguity here is how the lease was constructed and how the Appeal was interpreted.

In the cases I have fought It is exactly as I have said

1. It is very important that your tenancy agreement clearly defines what is what (Rent and Deposit)

2. Anything that looks like a duck and quacks like a duck is a duck!

I have never had that case used against me in handful of cases that I remember well of a Tenant prepaying 6 months’ rent but I feel they were different.

If you take a look at that case you quote you will see that the issue was with how the tenancy was constructed as a whole, they had to say that because the tenancy was a dog’s dinner with clauses that were contrary to each other.

For example in the original hearing the Judge noted:

"I have come to the clear view that this was in fact, this payment of rent in advance when the agreement only provided for rent to be paid monthly in advance, was, in effect, the taking of a tenancy deposit."

Then in first appeal

The key words . . . in section 212(8) are 'as security for'". He referred to the decision of this Court in Woods v Wise [1955] 2 QB 29 and observed that "the Court must look at the surrounding facts and construe this agreement objectively as to what the parties actually intended, and that it should also be alert to the possibility that landlords might try and disguise a payment so as to avoid the provisions of the Housing Acts". He went on to say this:

"30. Whilst accepting that this clause [clause 1.7] is not as felicitously drafted as it ought to be, and that the first part of clause 1.7 is predicated on monthly rent in advance, the Court cannot ignore paragraphs 1.7.8 and 1.7.9 and should do its best, if it is possible, to construe the clause so as to make sense, and in my judgment it is not difficult to make sense of this clause.

31. What this whole clause means is that six months' rent is payable generally in advance, but if there are suitable credit checks then 1.7.8 would be waived and monthly payments would then satisfy the rent covenant, and then at the end of six months further reference would be taken up and, if satisfactory, the provisions of 1.7.1, 1.7.3 and 1.7.4 would apply.

32. I am not going to redraft this provision but you have to construe the whole of the clause and see if you can reconcile 1.7.8, 1.7.9 with the earlier sub clauses, and in my judgment it is plain that you can and that this is an agreement which expressly requires the tenant to pay six months' rent in advance. The reason for that payment is clearly about the Respondent's or tenant's credit, but the payment is, nevertheless a performance by the tenant of a principal obligation."

At paragraph 26 of his judgment, the judge had referred to the submission advanced before him on behalf of the landlords:

" . . . the payment made by [the tenant] was not a payment to secure an obligation, but was a payment to comply with a primary obligation, namely that of paying rent. There is nothing unusual about advance rent being required and that payment being objectively categorised as rent rather than security for rent, . . ."

When an Appeal Court makes a decision they have to consider the impact on Landlords and Tenants in other contracts. If they had not decided as they did (in favour of Landlords) then Tenants would probably suffer.

So if you read the case on the link below you will see that they have decided to see Rent, Advance Rent and Deposit differently. Note it was critical in this case that a deposit was taken separately and protected, so that made it easier for them. They then considered the Rent as a liability and the advance rent as security for that liability.

Whilst I agree with the judgement because of the potential negative effect to the market, I think they might have interpreted things differently on the advance rent and helped clarify a lot of other cases.

To me, when a Landlord takes a deposit “for security of the performance of the contract” that performance is BOTH rent and damages.

There is no point saying something is advance rent in the tenancy agreement if you then take rent during the period you have been pre-paid for, otherwise it serves as a deposit (acts like a duck).

The reason for my thinking on this is S213(8) of Housing Act AND S212(8) says:

(8) In subsection (7) “deposit” means a transfer of property intended to be held (by the landlord or otherwise) as security for—
(a) the performance of any obligations of the tenant, or
(b) the discharge of any liability of his,
arising under or in connection with the tenancy.

So the Acts says a “deposit” is both

So they took six months’ rent upfront - which the agent held onto which complicates things as the Landlord was paid it monthly, BUT they then took further rent for a period they already had security for:

2010-10-01 6 months’ rent upfront so rent paid to 2011-03-31
2010-12-01 2 months’ rent paid so topping it back up to 6 months
2011-02-01 2 months’ rent paid so topping it back up to 6 months
2011-04-01 2 months’ rent paid so topping it back up to 6 months

So the tenant effectively paid the rent twice for the same period, thus the 6 month payment was in effect acting as a security deposit. However, the Court saw that as a security on a liability, that is not how I would view it, but they are obviously the Authority.

HOWEVER, the Judges had to make sense of what was intended as well as how both parties might be impacted (as well as Landlords & Tenants generally).

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

“Paragraph 1.7.8 contains two distinct limbs: "[1] The first six months rent are to be paid in advance and [2] on the First of October 2010 and thereafter on alternate months (1st December 2010, 1st February 2011, 1st April 2011 etc) two month's rent is payable . . .". The effect (ignoring, for the moment, paragraph 1.7.4) is to require payment in advance on or before 1 May 2010 of the rent for each of the months of May, June, July, August, September and October 2010; to require payment on 1 October 2010 of the rent for each of the months of November and December 2010; to require payment on 1 December 2010 of the rent for each of the months of January and February 2011; to require payment on 1 February 2011 of the rent for each of the months of March and April 2011; and so on for the duration of the statutory periodic tenancy (if any) that might arise on 1 November 2010. In that context, it is pertinent to have in mind that (as the parties must be taken to have appreciated when they entered into the May 2010 tenancy agreement) the landlords would not be entitled to possession of the flat on 31 October 2010 (at the end of the fixed term) unless they had given notice under section 21(1)(b) of the Housing Act 1988 on or before 31 August 2010; and that, if the tenant remained in possession after 31 October 2010, a statutory periodic tenancy would, necessarily, arise under section 5 of that Act.

It follows (ignoring for the moment, paragraph 1.7.4) that paragraph 1.7.8 requires (by way of examples) that payment of the rent for the month of September 2010 be made on or before 1 May 2010; that payment of the rent for the month of November 2010 (if no notice has been given under section 21(1)(b) of the 1988 Act on or before 31 August 2010 and the tenant remains in possession after 31 October 2010) be made on or before 1 October 2010; and that payment of the rent for the month of February 2011 be made on or before 1 December 2010. On a first reading, the dates for payment of rent under paragraph 1.7.8 may appear inconsistent with paragraph 1.7.4; which provides that the "Rent Due Date" will be the first day of each month. Under paragraph 1.7.4 (if it stood alone) the dates for payment of the rent for the months of September 2010, November 2010 and February 2011 would be, respectively, 1 September 2010, 1 November 2010 and 1 February 2011.

The key to resolving that apparent inconsistency is found in paragraph 1.7.9:

1.7.9 The tenant can be re-referenced at the end of the six month term. If the tenant can be satisfactorily referenced, then clause 1.7.8 will not apply and the rent can be paid on a calendar monthly basis."
That paragraph makes it clear (i) that paragraph 1.7.8 is intended to apply unless and until (after the end of the fixed six month term) the tenant receives a more satisfactory credit reference and (ii) that, for so long as paragraph 1.7.8 does apply, it has the effect of suspending the provisions of paragraph 1.7.4. To put the point another way, paragraph 1.7.4 – and, so far as necessary, paragraphs 1.7.1 and 1.7.3 – are to have effect subject to paragraph 1.7.8 for so long as paragraph

"1.7.8 does apply: that is to say, until paragraph 1.7.8 is dis-applied following a further credit reference. Given that paragraph 1.7.9 appears to contemplate that the tenant will not be re-referenced until after the end of the fixed six month term, it follows that – if clause 1.7 is read as a whole - the parties must be taken to have intended that paragraph 1.7.4 would not have effect during the fixed six month term. That conclusion is consistent, first, with the factual position that would exist if the first six months' rent were paid on or before 1 May 2010 (as the first limb of paragraph 1.7.8 requires) – because there would then be no more rent to pay until the end of the fixed six month term – and, second, with the fact that paragraph 1.7.4 itself is, in form, an interpretation provision which defines a term (the "Rent Due Date") which is only of relevance when the statutory periodic tenancy has arisen (see paragraph 2.5.2).

For those reasons I would reject the first of the appellant's grounds of appeal. It seems to me that His Honour Judge Simpkiss was correct to hold that, read as a whole, the May 2010 tenancy agreement did require that the first six months' rent be paid, in advance, on or before 1 May 2010.”

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

SO here is how I see it, the Appeal Court was thinking of WHY the Landlord took the security, was it because a tenant might not be able to afford a month’s rent or was it that there was a liability in the contract to pay more rent and what risk was there to the Landlord at the end of that six month contracted period.

MY take would be that the six month tenancy would be over and so it was acting as a deposit because if the tenant left at the end of the agreement the Landlord would need to repay them the advance rent. However, the Judges considered what would happen if she did NOT leave and her right to have an SPT if a notice was not served.

Again I would have said that they could have the top up to keep two or maybe three months’ rent security to the liability, but the Judges considered the fact that after 31 October 2010 there was no further tenancy agreement, the tenant remained in possession of the flat, under the statutory periodic tenancy.

The other reason I would have looked at it differently was because of the potential of re-referencing in 1.79, but the key problem with the referencing for this tenant was that she had no bad credit but also no income.

If you have not lost the will to live reading the above let us return to your position.

As long as your contract is well constructed to adapt to the circumstances AND the deposit is separately taken and protected, then the Landlord is safe. The reason for the RLA advice is that they can’t give blanket advice because the quoted Judgement considered so many clauses that led to the decision and their members may not have such clauses.

This is one of the things I see so many times; a Landlord gets a contract drawn up by a Solicitor but then decides to amend it themselves, not being aware that it may open doors to litigation. Then Judges have to dissect the terms of the agreement and look at what was intended.

So as I said in my previous post, if you construct your tenancy properly, possible with the core clauses referred to in this judgement, but perhaps expanded to explicitly define the prepayment as a security on the liability of rent, while it separately defines the deposit as a security for the performance of the contract, then in the event of any dispute you could easily bat down any claim with a copy of this Judgement. You would need to remove any terms that contradict so MAKE SURE YOU GET THIS DONE BY YOUR SOLICITOR as they will need to make sure that there are no terms that conflict.

Read the full judgement here:

bailii.org/ew/cases/EWCA/Civ/2013/415.html

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Teabin 5th June, 2019 @ 20:06

Good evening
What happens if one tenant screws the other tenant over, they part on bad terms, the bad tenant is now trying to screw the landlord for upwards of £5k because the deposit was not protected in time (landlord has proof she tried valiantly to protect deposit but had letting agent working against her. LL protected deposit as soon as she received it 3 days after 30 day period) and the human tenant wants no part of it? Can the bad tenant still pursue the landlord without the agreement of the nice one?
Both tenants shared cost of upfront deposit and were both refunded in full at end of tenancy
Thank you
This website is amazing.

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David 5th June, 2019 @ 20:57

@Teabin

I am assuming you are the Landlord who valiantly tried to protect deposit?

The bad tenant can TRY to pursue you but I can help you get that case dismissed, under common law all parties to the tenancy have to be parties to the claim OR to authorise the bad tenant, to bring claim on their behalf.

The reason for this is that once they start a claim all the parties are liable for any counter claim or other costs awarded by the Court.

I also have deposit protection case law on this that I have used several times, so far only one law firm was dumb enough to continue the claim, they employed Counsel for Court to intimidate and when he saw it he withdrew.

However you do not want to tell the bad tenant about this until you have snookered them, that means getting a proper legally binding settlement agreement with the nice tenant. I can help you with that if you contact me via the forum.

Follow the instructions in post 304 above to send me a PM via the forum.

BTW it does not matter who paid the deposit, or in what percentage

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Karen hichisson 12th June, 2019 @ 22:59

I failed to protect my tenant’s deposit so the section 21 I served is invalid . If I we can
agree a settlement ( say 1x deposit ) and put it in writing , would that mean that it’s the
end of the matter and they can’t pursue me for anymore?

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David 13th June, 2019 @ 00:48

@Karen

The settlement agreement needs to be explicit and aspects of it can depend on your situation.

I am happy to draft you a custom agreement if you contact me via the forum.

Follow the instructions in post 304 above to send me a PM via the forum.

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Lee 1st July, 2019 @ 12:47

Hi David. I am a novice landlord and have a story similar to what you have probably heard many times before. I failed to protect my tenants deposit due to genuinely not knowing as this was the first deposit I had ever received. Although they were particularly bad tenants and left the property in a poor state we always had a fantastic tentant/landlord relationship (so I thought) and I always bend over backwards to accommodate them. I returned almost all of there deposit the day after there tenancy ended and made a small deduction for damage at the figure that they suggested. All was good and thought I had only had my fingers slightly burnt for my shortfalls!
It now appears the temptation for free cash was just too great and all there morals have gone out the window as I have received a letter from a no win no fee solicitors demanding a large sum of money. I would really appreciate any advice you could offer on the best way for me to proceed.

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David 2nd July, 2019 @ 00:46

@Lee

Sadly the history does not come into it, although I imagine it makes you question your judgement of people.

I would be happy to help you minimise your payout or avoid it completely in some circumstances.

This always depends on the circumstances of the case and because it is a live case you risk prejudicing yourself by giving details here on the blog.

Follow the instructions in post 304 above to send me a PM via the forum.

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Katie 29th July, 2019 @ 23:17

Hello,

I'm looking for some help. I've had a tenant move out with 4 months rent arrears and a small burn on the carpet. They tried to get the deposit back 2 weeks before the end of tenancy so at this point the DPS informed them I was in breach of the deposit because I had protected the deposit within 60 days not 30.

I understand they can take me to court which as a 1st time landlord is hard to take but I understand I didn't know and therefore abide by the law. The bit which I'm unsure about is whether I can hold on to the deposit to cover some of my rent arrears and apply to the court for the rest? I need some help understanding all of the fees to know what my next step should be.

Any help is appreciated!

Many thanks,
Katie

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David 30th July, 2019 @ 00:09

@Katie

You absolutely will have the DPS hold onto the deposit and give it to you in lieu of their rent arrears AND the damages, if the tenant do not agree to release it we move to threaten them with legal action. The DPS will offer to use their mediation service but give choice to use them or they back off if the matter goes Court.

Regardless of what they may have been told, you have mitigation and we can probably get your sanctions down to 1x the deposit.

However, the idea is to negotiate a settlement, they have a lot to lose, if you bring action and they want to bring a counterclaim they have to pay the Court fee or you can get their claim not heard. Even if they pay the Court fee they can still be held liable for your legal fees. There would not be a set off as such but Judges do not like this sort of thing so they tend to be more lenient with tenants who they can see have arrears. You will be able to claim interest on the arrears from the day of each lack of payment to the day you get the Judgement. The tenant will then have a CCJ which if they do not settle within 28 days will follow them around like a bad smell for years. I will help you lay this out in a way that makes them inclined to settle.

Note, if they try to use a claim firm I have a way respond during pre-action conduct or to file a counterclaim that will make most claim firms either drop the case or ask the tenant for £2k on account. Most simply will not do it because they operate cookie cutter law on undefended claims.

As your claim is live it is best we discuss privately via the forum, please follow the instructions in post 304 above to send me a PM via the forum.

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snowy 9th September, 2019 @ 19:27

Good Evening

I have a question if a landlord failed to protect the deposit on time due to various issues from tenants being behind with their rent and not affording the deposit in full when they moved in and accepting the deposit payment over a six month period .once they move out and counterclaim for the late deposit protection do they have to send a letter before action.and if its after the six years and 30 day issue what is the chances of receiving a payout

many thanks

snowy

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David 9th September, 2019 @ 22:48

@snowy

The deposit legislation applies to the deposit as received, the Landlord should have protected the first instalment with one of the three companies within 30 days.

I would advise such a Landlord to issue an Prescribed Information within 30 days and put the full amount on the PI, the payment arrangement can be treated as what it is and there is case law to cover that.

It being 6 years later the instalments are not relevant, what matters is the protection and PI.

Civil Procedure Rules dictate that a letter before action is required, it would actually be more prudent to seek a settlement before then.

With regard to the 6 years and 1 month issue, this would depend on the case in question and there being reasonable grounds to use the extension to 12 years in special circumstances.

However, I have also had the Judge allow a case that was brought within 6 years from when the tenant became aware of the Landlord's obligation with regard to deposit protection.

Not sure if you are Tenant or Landlord but if you need my help with your case please use the instructions on post 304 to contact me via the forum.

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Amy 15th November, 2019 @ 21:23

Tenents deposit wasnt secured - paid back in full even though the house was left in terrible state.
6 months later received.a letter asking for 3x deposit £1500. Sent back offer £500. Her ‘no win no fee’ solicitor sent back counter offer of £750 plus costs of £1025 which together is more than the original claim? Don’t understand to be honest!

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David 16th November, 2019 @ 10:39

@Amy

That is the scam, a mistake is to get into protracted negotiations because the moment you do you run on their clock. Each case is different but we may be able to bring a counter claim if there is adequate evidence of your costs. This scares away the more professional claims companies as they are effectively insurance companies and work on a risk basis, plus they will not fund the counterclaim and it is unlikely the tenant will pay their £2k fee to do so (although most are not even setup to do so).

If you have sent one email then the costs are too much and can be challenged, it can also be against some CPR, I will need to see paperwork.

As your claim is live it is best we discuss privately via the forum, please follow the instructions in post 304 above to send me a PM via the forum.

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JH 1st Time Landlord 12th December, 2019 @ 09:50

David,

Thank you for your advice. Following the counteroffer you suggested I I have now reached a verbal agreement but desperate to find some words for the Settlement Agreement to make this full and final settlement for all outstanding matters and include a gagging clause to prevent them unsettling my current tenants or others

Did you get round to penning something as you described above?

Or did you locate a pro forma elsewhere which you could send a link for?

Many thanks,

JH

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David 12th December, 2019 @ 12:06

@JH

Unfortunately it was not possible to provide a template because of the potential loopholes because of housing law having so many variables, as well as the position of tenants. I can do one for you based on your explicit case if you contact me via the forum.

Please follow the instructions in post 304 above to send me a PM via the forum.

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Nick 19th December, 2019 @ 01:24

Hello, what a great forum! Advice needed please.
Tenants are 4mths in arrears due to endless stalling, fob offs and empty promises. They make a token payment here and there along with promises that they want to settle their arrears but never stick to payment plans and the debt is just getting bigger! They are in a periodic tenancy nowbtw.
Along with rent arrears, they refuse to see me to discuss the issue , ignore me when I have been to the property even though I can hear they are home.
They refuse to let me inspect the property, have been a nuisance to their neighbours and I believe they have damaged the property because they fight.I also have a suspicion that they might also have a pet which isn't allowed.
I was late paying their deposit by one day and didnt know about the prescribed information legislation. I just want them gone now so my question is do I stand a better chance of eviction with section 8 or section 21, I have mandatory grounds of rent arrears and several discretionary grounds. Having spoken to lots of eviction companies and solicitors I am receivinbg conflicting information about the best way forward.
Any advice would be greatly appreciated TIA.

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David 19th December, 2019 @ 01:57

If you go S21 without the PI, How to Rent, Gas Safety and EPR having been served then it will be invalid and you will just waste 2 months.

In your position I would go S8, the only way they can avoid it is to bring the arrears under 2 months which is still something.

Now it is just a case of accepting it is going to cost you money.

If they have kids they will go to Council for housing and they will be advised about the deposit, although the Council will likely just search that it is protected, it is only if you log into the portal that you see the date of protection. Remember if the PI is the only thing missing it is your word against theirs and very hard to prove a negative.

If the deposit becomes an issue I can probably help you get it down to 1x or cancelled completely.

S8 does not require Deposit Protection etc but some Judges play dumb on that, so be ready to remind them if it comes up.

Also if they want to bring a counter claim then they must pay the Court Fee, you can verify that before you go in and if they have not served you the Counterclaim evidence and paperwork in accordance with CPR, again, you can ask for it to be not heard.

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Nick 20th December, 2019 @ 12:04

Thank you so much for your reply! Should I rerturn their deposit to them as a matter of course ? One eviction specialist company said that it could still be used to off set some of the arrears even though it was protected late.
Thank you

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David 20th December, 2019 @ 12:34

Nick

The deposit is held for the performance of the contract, that does not change because there is an issue with protection.

At the end of the tenancy the DPS, MyDeposits or TDS will allow each side to make claim on the deposit and provide you with means to require deductions.

Rent arrears are 100% deductible and they would have to show proof they have none.

The amount therein is not used as a calculation in determining the arrears when you go to Court, in fact when you do your section 8 as well as asking for the termination of the tenancy you ask for permission to take the deposit, charge interest till debt settled (according to rates in tenancy) and so on.

This is a bit like dealing with an overflowing bath, first thing to do is turn off the tap. It may be worth your while assuming the tenant is on housing benefit or element thereof in universal credit. So start with the Council, provide a copy of the tenancy agreement, explain that they are more than 6 weeks in arrears and ask that they make housing benefit payments to you with immediate effect. They pay 4 weeks in arrears but you will get the money eventually so it cuts the losses.

If they are not on HB you will get a letter back saying so and you can try the same thing on Job Centre Plus for universal credit, but check your area to see whether UC has been rolled out, it is an absolute dogs dinner of a system with 4 IT systems no one contains all claimants.

What you can expect is that they will either Counterclaim if they are acting for themselves (I discourage this when advising tenants, they have up to 6 years to claim and they are likely to get a lower sanction), claim companies will also be wary of counterclaim because they run cookie cutter law and do not want to get dragged into defending damages claims).

So after all over you can expect a pre-action letter in accordance with CPR conduct or if you are lucky an email at which point a settlement can be agreed.

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James P 17th February, 2020 @ 12:25

David.

What a great thing finding you, I'm greatly encouraged you may be able to help me please. Hopefully this will help others too.

I've had a letter from Solicitors , with a Part 36 offer, I'll relate the circumstances.

I let out to tenants on STA in 2019 including a deposit with them knowing it was just for a short time as I was going to be demolishing most of their accommodation then selling, which I've since done. They came from the Crisis team locally so I wanted to help them in their difficult circumstances.

I was a dutiful landlord in difficult circumstances.

I didn't register their deposit as I knew it was very short term, silly me, I know now.

They in late 2019 and I returned their full deposit, I even part paid them in cash (with them signing for it as proof before they left) to help them out of the financial hole they were in, then the balance by BACS.

Out of the blue, some 4 months later I get letter from Claim Solicitors demanding compensation of 3 times the deposit twice as the STA ended after 6 months, so it amounted to 2 transgressions, and also the cash part payment which they claim I didn't pay, which I have proof I did as well as texts as proof, amounting to a ridiculous amount, though it can get resolved with a 'generous' Part 36 offer of an equally ridiculous amount plus solicitors costs.

Naturally I'm really concerned, I haven't got any money to pay them whilst the house lies empty and up for sale.

I was shocked after reading the site and blogs how widespread this is, I know I'm in the wrong though that's hard to accept after doing the right things and being a good landlord, some small consolation, and hopeful that I can get help to resolve this matter to a reasonable financial amount.
Thanks in advance for any help David.

P.S. I've got to reply to Solicitors by Friday 21 February. Thanks.

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James P 17th February, 2020 @ 12:29

To add David, they didn't leave the property perfect, not awful, I've got pictures, though I didn't withhold any money as I wanted them to go forward on the best foot to their new home.
James.

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David 17th February, 2020 @ 16:11

James P

As you have a live and very pressing case please see instructions on post 304 to contact me via the forum.

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David 19th February, 2020 @ 09:30

@James P

You said you need to reply by Friday but you have taken 2 days to do a 5 minute task.

Do not expect me to be able to resolve this in time if you do not give this matter the urgency it deserves. The instructions are clear enough

Click where is says Landlord forum at top of page or visit

https://www.landlordforumproject.co.uk

Once you register on that forum and have confirmed your email

you can click on this link to private message me:

http://bit.ly/davidpip

It will be at the bottom of left menu.

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James P 19th February, 2020 @ 09:34

David

My apologies again, I pm you earlier.

Thank you for your help.

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Natalina 19th February, 2020 @ 19:00

Hi David

I’ve stupidly not put the deposit in to a scheme and it’s over 30 days. I only looked in to everything after my tenants have started to stop paying the rent and I begun looking in to a section 21 notice. I know now that’s no defence so I have now registered with the scheme which I can see was also too little too late. Can I just give them back the deposit or take off what they owe me and give it back to them and all will be ok? Or does it not work like that? IM terrified that I’m going to be liable for this x3 deposit as I know they’ve been advised by the council to just stay in the house and not pay anything now.

Thanks in advance

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David 20th February, 2020 @ 12:28

@Natalina

Your failure to protect the deposit and serve PI withing 30 days only means you are potentially subject to a sanction between 1x and 3x the deposit.

It does NOT mean your tenancy was not valid nor affect the Tenant's liability for performance of the contract, the Deposit Company will give it all to you if you can show damages of non payment of rent.

In your position I would seek some sort of negotiation, it is always better to get a settlement with a tenant before they contact a claims company because these companies are mostly about ramping up costs, so they must be approached in a certain way to limit costs.

Ages ago you could pay it back but Landlords were really abusing that so the law was changed.

To mitigate the amount of the sanction you need to be seen to protect the deposit in one of the three schemes as the earliest opportunity after realising it was not protected. The worst sanctions come when it is done just prior to issue of S21.

So you have protected it which is good, but if they are not professional bad tenants you may reach out to them and say you want to see if there is a way to help them with a plan for the arrears so that eviction is avoided.

If you reach a settlement agreement to pay them say 1x to 1.5x the deposit (I can give you help with a letter and settlement agreement) but you have them pay you it straight back (get them to sign a receipt and you sign one too) so against the arrears.

Once that is signed and agreed so bullet proof you move to limit further losses.

If these tenants are on Housing Benefit you can have it paid directly to you at 6 weeks of arrears. This tends to make the "professional bad tenant" want to go, otherwise they are spending housing benefit on their mobile phone or Sky TV contract, cocaine habit or whatever!

You also need to establish two things from your Council; would they be deemed to have a responsibility for housing these tenants (children, vulnerable etc) and what is their general advice to tenants, do they take the obligation to house from the expiry date of the S21 or do they force tenants to wait for bailiffs and thus push the tenant a further £3k into debt. Government guidance is not to do the latter but quite a few still do.

You still have Section 8 which is not only the more appropriate eviction route for arrears over 2 months but does not depend on the prerequisites of S21.

As you case is live I would avoid providing any detail information here as that may prejudice you if they or their legal representatives read it.

I suggest you use the forum to PM me any more information or questions using the instructions in post 335 above.

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Kishore 1st March, 2020 @ 12:50

If a tenancy is ended, deposit returned ( Full ), how much time or period one has to sue his landlord that prescribed information not served??

Just for readers I am landlord here.

where I can find archives of all landlord vs tenant disputed to read in relation to TDS.

Suggest a best land lord lawyer please.

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David 1st March, 2020 @ 21:36

@Kishore

6 years or 12 years in special circumstances, for example I have seen a case where the tenant asked for 12 years because they had a long tenancy and did not become aware of deposit protection legislation until after they left the property, they were in the property for 9 years and the Judge allowed it.

Under current law the tenancy being ended and the deposit returned is not relevant except to show conduct, previously you could not bring claim if it was returned.

I am not sure what archives you are expecting, these cases are mostly heard in County Courts and these are not filed in any archive that you could search, also they would not related only to TDS but to all of the authorised deposit companies.

It is better you ask the question or if you are concerned because you have a live case then use the forum to contact me as described in previous posts. You can use google of course, or you can scroll back through years of questions on this blog post.

The best Landlord Lawyers are going to depend on the circumstances of the case, with PI it is hard to prove a negative so you as Landlord need to provide evidence which usually means a signed copy of the PI, some tenancy agreements embed the PI into their tenancy agreements but miss bits out which can make it void.

Sometimes it is better to settle a dispute before you end up paying between £350 and £750 per hour for the lawyer.

There is a window of time between when a Tenant considers bringing their own claim and when they use a claim company, once it gets to a claim company you are on their time and paying for every hour. If you write them a letter, you pay for them to read it, if they need to reply, you pay again. In fact in my opinion they drag things out to get the highest costs possible.

If a case goes to Court and you can be shown to have been a rogue landlord or if a Judge is just annoyed you let it get that far you can get 3x, it all depends on the Judge you get on the day. I had seen Landlord who have intimidated their tenants push the Judge toward the tenant, even asking them if they are asking for an adjournment to add further action.

Other Judges will look at the gravity and consider the culpability, the later it was done, or if it was not done for several tenancies or if done just before issuing a S21 notice work against you.

While if it was done at the earliest opportunity, a few days after the 30 days then the Judge is likely to award 1x

Court procedures are really important here, I have see Judges punish Landlord and Tenant if aspects of procedure or CPR are not followed.

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Najee 4th March, 2020 @ 11:54

When our tenants originally moved in we paid their deposit into DPS - but we were a little late (38 days after the start of the tenancy agreement).
Two years on, the tenants have now moved out and we've received one of those money-fishing letters from a n-w-n-f solicitors that they have hired, threatening to take us to court over our 8-day tardiness.
I have two questions, and would be very grateful for your kind help.
First, we have genuine mitigating circumstances, since the 30 days covered the Christmas period when we were on holiday with my elderly parents who both fell ill. It's true and we have proof - but is there any room for grace in the application in this law? Would a judge take the marginality of the case into account?
Second, the original contract was for a year and the tenants subsequently signed for second year. Their deposit remained with the DPS - and was therefore lodged within 30 days of the signing of the agreement. From what we can understand, according to the Deregulation Act 2015 section 215, which amended the Housing Act, the second tenancy contract supersedes the first. And therefore we are covered by 'deemed compliance', since the deposit for the latest contract was lodged on time.
So would this be a defence for us?
thanks for your help

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Rachel 10th March, 2020 @ 21:22

Hi
I am a Landlord with a tenant who has been in property in London on an annually renewed AST since Feb 2015. I have a Lettings/Management Agent handle everything on my behalf as I am not living in the UK. The agent is paid for this.
In November 2019 I advised the letting agent that I did not wish to renew for another year come Feb 2020 for another year as I planned to sell the property at end of April 2020. I asked Letting Agent to inform the tenant and give plenty of notice.
On March 2nd I found that tenant had been issued a Section 21 Notice at end of January 2020. Fine. Until I found out from the tenant that she had gone to local Housing Association to get help with finding new accommodation and had then found out that my Letting Agent had never protected the original deposit in 2015! Thus my Notice Section 21 was declared invalid.
Now I have situation where tenant is quoting me the law and saying that I can be penalised 3 x deposit. My Letting Agent has said she will refund original deposit. The tenant is saying I have to pursue a court eviction to get her to vacate.
I have been a totally reasonable landlord and provided repairs, new appliance and even paid for gardening when tenant claimed she was unable to keep on top of the weeds!
So - I have offered tenant a full refund of her deposit as soon as she finds a new place to move to.
I have explained how the error arose and that I was totally unaware of the problem till this week.
I also offered to put her deposit from my own funds into a registered DPS now through until she leaves.
But it seems she now wants to go via legal channels for both eviction from the property and any potential compensation.
What is process for:
a) getting the tenant out as soon as possible (she has not been a 'bad' tenant as such and has paid regularly)
b) seeking redress from my Lettings Agent - the original AST declared that a deposit has been held securely and the letting agent was named as Landlord's Agent on the original AST document.
I have been trying to negotiate and communicate amicably with the tenant, but now the tenant's mother has intervenes and told me I am harassing her!!
I think the tenant intends to move to a different neighbourhood and rent privately (rather than via Housing Association). I said I would provide a Landlord's reference, but am thinking differently now that the tone of the mother has become litigious!
Any advice from you gratefully received.

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David 11th March, 2020 @ 11:52

@Najee

I remember answering your post, so it must be in the moderation queue or you posted the same message on another page.

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The Landlord 11th March, 2020 @ 11:53

@David
Nothing currently in moderation from you.

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David 11th March, 2020 @ 13:42

@Rachel

First let's get the bad news out of the way, because a whole tenancy has passed it is likely that the award will be 3x the deposit, PER TENANCY (if you allowed the tenancy to roll over into an SPT that also counts as a tenancy. Thus you are looking at

Feb 2015
Feb 2016
Feb 2017
Feb 2018
Feb 2019

You might still be within the 30 day limit for protection with the Feb 2020 tenancy, either way protecting the deposit as soon as you become aware can help in mitigation, but probably for that tenancy.

There is a chance for better news if your Agent provided a full service or told you in an email or contract that they would protect the deposit or if their terms say they will protect it.

If they have taken responsibility it brings two things into play, first is a liability for negligence, so you can sue them for the consequential loss you have suffered, including legal fees. There are some things to do before contacting the agent about this.

Getting the tenant out under S21 means either rectifying ALL failures first, these are shown on the front page of the S21 notice. The most important of these is the Gas Safety which needs to be done within 28 days of the beginning of the tenancy or have an existing one in force that does not expire in those 28 days.

Section 8 is also an option IF your tenancy includes the appropriate notice in your tenancy agreement.

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

As you have a live case it is better you contact me via the forum, there we can discuss the best way to deal with the agent, seek a settlement with the tenant and try to avoid this going to Court.

I suggest you use the forum to PM me any more information or questions using the instructions in post 335 above.

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Najee 16th March, 2020 @ 06:52

@David

No, we didn't receive your reply. We were looking forward to it.

I checked and nothing has been received. We posted on March 4.

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David 16th March, 2020 @ 13:33

@Najee

The law does not provide a means not pay at least 1x the rent, there is mitigation and culpability is a factor hence the Judge can vary the amount to between 1x & 3X.

The judge WILL take it being just 8 days and we have case law we can use to show lower courts that it is a factor, but it needs to be worded right.

Dates are critical in this area of Law, generally to make Landlords aware of their risk I advise that if the original tenancy was not protected then it follows that Superstrike applies because one must fully comply with the Deposit Protection for tenancy 1 to get the deemed compliance for tenancy 2.

I have seen this argument made and won in Court, however, a few have won on the deemed compliance.

I can help you draft a reply to the claim firm if you contact me via the forum, please use the instructions on post 335.

Do NOT enter into protracted discussion with the claims company, because in any settlement they will try to charge you for reading and responding to anything you write.

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Hodge572 16th March, 2020 @ 19:21

Hey David, could you contact me? I think I messaged you but I really need to use your services with a tenant taking me to court.

Thanks

Oli

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David 16th March, 2020 @ 21:09

@Hodge572

Sorry just realised that the forum is not sending me notifications for some reason

It seems to have a problem with my mail provider, I will try using another.

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Kishor 17th March, 2020 @ 12:03

Can we not make a awareness campaign and also try to high light this issue and run a petition for the law to be amended.

How can a tenant who leaves happily and after sometimes decides that his deposit was not secured and he gets worried.

We need to raise this at all possible forums that some people who had no physical emotional and financial harm sue a landlord.

Even if Law need to penalise landlord they can fix A token amount like £200 max for no harm so that all such petitions to go down and court can take up serious stuff.

Or we all victims can collect funds and file a petition and get a decision to challenge this law.

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David 18th March, 2020 @ 11:49

@Kishor

Actually I think the law has it about right just now, when the original legislation originally came out you had 14 days to protect, it is now 30 days, the law has been amended numerous times, there are now 4 laws and statutory instruments that govern Deposit Protection and a plethora of other related laws that also impact it, such as gas regulations. The most recent change (which made it better for Landlord) was enacted in October 2015.

This legislation has been in place since 2007, that is 13 years of awareness, Landlords have a plethora of legal obligations and it is their responsibility to make sure that they comply to all of them.

Judges recognise that any tenant can be the weaker party in the landlord tenant relationship, they are often so desperate for accommodation that they will sign anything and then so worried about being evicted that they will not complain. Anyway the Limitation Act applies and gives them 6 years to file a claim and 12 years in some special circumstances.

It is NOT the tenant who "sometimes decides that his deposit was not secured" it is a legal fact, if the deposit was not protected the sanction which is a statutory penalty applies.

You are wrong to say the tenant has no harm, it costs NOTHING to get your deposit protected with the DPS or a small fee if you wish to keep the money and use an insurance based scheme. The harm is firstly that a law that was designed to protect tenants is being flouted, secondly that something might have happened to the Landlord and/or Agent who have their deposit. So they were at risk and that is the harm.

If you drive a car without insurance you are still liable for prosecution, you can't say "I did not hit anybody" as your defence.

What I am STILL seeing every week is landlords who think the deposit is a redecoration fund, an improvement fund or just something they can dip into. I had one recently where the deposit was over £8000 and the Landlord wanted £9000 of repairs that were literally fair wear & tear for the most part.

In another case the Landlord did not protect for three tenancies until after the 3rd one expired and the tenant had left the property, they then took 2 months to pay it back. This caused financial hardship and to add insult to injury they helped themselves to some of the deposit and would not communicate when it was disputed.

A token amount will mean token compliance and make it far far worse. Such a comment Kishor suggests to me that you do not take your legal obligations seriously. Yet the serious penalty you pay WILL make you take it seriously.

If you start a petition to change the law you might see it being changed to make things more draconian, so be careful, because for every landlord organisation there is a tenant organisation and they are far more professional at lobbying Government.

The solution to this problem is to get professional, comply with your legal obligations.

Is there room for improvement, perhaps yes, by biggest gripe are the claim companies who are using this legislation to put a gun to the heads of Landlords which says "pay up now or pay £8k in legal costs by the time we are done with you". When you trace these claims companies who each use a panel of solicitors what you find is that they are insurance companies, they are essentially gamblers.

I think these companies and the firms they use bring the legal industry into disrepute, what I would like to see is for the Government to extend the remit of the claims regulator to ALL "cookie cutter" type legal claims.

I would also like to see the SRA take a much firmer stand, I regularly see claims from firms who are generating legal fees by doing unnecessary work and charging obscene rates for it. The problem for Landlords is that is costs money to fight these and because you did not protect the deposit they know you will lose the case.

That is why I have a prescribed way of dealing with these firms, but you still get maverick firms or vexatious tenants, honestly I could tell you about cases that would terrify you.

Also you should be aware that there is something far more worrying than deposit protection and that is licencing failure. Previously this was a matter for Councils and it was usually Councils that brought the cases.

Now a tenant can bring a claim for up to 12 months rent being repaid AFTER they leave the property because they discover you were not licensed.

Again I have no problem with this in principle except how it is being used by certain firms and some individuals.

The critical point for Landlords is that you may have a property that has recently become part of a zone that the Council deems requires a licence or more worryingly that you inadvertently have a change in the configuration of a property or the relationship of tenants is misleading.

Previously if you made a mistake on licencing the Council would give you a smack on the wrist, usually they would be fine if they could see the requirement was recent and/or if there was something they could see was not your fault. Worst case used to be a £500 odd fine for the involvement of the Council, while now you might see a property renting for £2500 a month giving you rent repayment order of £30,000.

So the answer is to make sure you comply with the law or employ and agent and make sure you have an extremely tight contract with such an agent about their obligations.

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Rebecca 30th April, 2020 @ 09:57

Hi David,

I'm hoping you might have some advice for me. My husband and I were renting a place where we prepaid 6 months' rent, but the lease was rolling, so we were assured many times by the real estate agency that we would be refunded additional rent if we moved out early.

We ended up having to leave early when coronavirus broke out (we had come from overseas and needed to get home before borders closed), leaving 3 months' rent due to be refunded after our 28 days notice. It is now a month past the end of the 28 days notice, and we have heard absolutely no response from the real estate office, even though we've contacted four separate people from that office as well as from the head office. No confirmation that they retrieved the keys we left in the flat, no confirmation that we would be refunded our additional rent, no confirmation that the inspection had gone ahead and we would be able to receive our bond back (which is also a month overdue now).

From our understanding, some branches have closed completely due to covid, and inspections might not be possible to carry out at the moment. However, we really do need the money back (about 2k total) since finances are tight on our end, and we think it's unreasonable that we haven't even gotten an email back so far.

We want to take action if the company continues to ignore our attempted communication, but we don't know what the next step would be. What would you advise?

Many thanks.

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David 30th April, 2020 @ 11:50

@Rebecca

I am going to proceed on the understanding that this is a UK property and UK Estate/Letting Agent.

I see two serious mistakes in your story so far

"we were assured many times by the real estate agency that we would be refunded additional rent if we moved out early."

This is really unusual unless it was a holiday let tenancy agreement, if it was an Assured Shorthold Tenancy they almost always have a minimum term and break clauses.

Whilst verbal contracts are legally binding you do need some evidence, an email confirming what was said

"are you sure the landlord will refund us rent if we moved out early as you suggested in our viewing today"

They will deny it and refer to the contract you signed, so if it has a minimum term that contradicts what you allege you will have a problem without evidence.

Normally if you abandon a property a Landlord can only hold you for their actual costs to replace you, this might be a small amount, agent fees etc.

However in the lockdown they may well try to argue they could not rent it as the agent had furloughed their staff. One might argue they could rent it in a week after a deep clean (that you would pay for) and putting the property on Open Rent.

The second problem you have is that you abandoned the property without first making some sort of engagement with the Landlord or Agent. You have no evidence you sent the original email (unless you cc'ed it to another email you control so message headers may be used as evidence of sending, you left the keys in the flat, so they can say they never received your notice, had no reason to contact you or enter the flat.

You might try to trap the Landlord into an admission of being informed of your departure. It would need to be a very vague message like

"Dear Andy

Sorry to bother you, we emailed XYZ agents on X date, but have had no response, have you heard from them? I even contacted their head office with no reply."

That is all you say, keep it as brief as possible so he fills in the gaps.

Right now it is in their interest to not respond and deny receiving any notice from you.

Depending on the response of the Landlord you have several choices, if they deny knowledge of anything, you can issue your notice by snail mail and email to him now, making note that you are reserving notice already provided to his agent.

If he says they got the notice, but it was invalid as the contract has a minimum 6 month term and cannot be terminated except under terms of the contract. I would need to see that contract to say more, so you would need to contact me via the forum to do that, (please use the instructions on post 335).

If he says he got the notice but Agent holds the money or he can't pay you as he is broke then you can use that to justify a letter before claim, then issue a money claim online.

If your tenancy was an AST and you paid a deposit then that deposit will need to have been protected in accordance with the S213 to S215 of Housing Act. If not done properly then you have access to a claim. These do not apply to genuine holiday lets.

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Rebecca 30th April, 2020 @ 22:44

@David

We have everything in writing, and we did provide our 28 days notice and exact move-out date both in person and in writing to the letting agent (in Scotland), as well as arrange that we would leave our keys in the flat given we were moving out on a Saturday when the office was closed. I just think we have gotten no communication because the office may have closed due to covid starting that very weekend, so things have been redirected to the head office and possibly overlooked.

And the refund we are due is laid out in our contract. The wording is as follows:

"This tenancy may be ended by:
* The tenant giving notice to the Landlord--the tenant giving the Landlord at least 28 days' notice in writing to terminate the tenancy, or an earlier date if the Landlord is content to waive the minimum 28 day notice period. Where the Landlord agrees to waive the notice period, his or her agreement must be in writing. The tenancy will come to an end on the date specified in the notice or, where appropriate, the earlier date agreed between the Tenant and Landlord."

And later on, "Notwithstanding the Principal Terms in respect of the rental payments, the Tenant agrees to pay the sum of (...) in respect of the tenth day of January two thousand and twenty to the ninth day of July two thousand and twenty.

It is hereby agreed between the parties that should either the Landlord or the Tenant wish to terminate the tenancy in accordance with the conditions of the Agreement prior to the ninth day of July two thousand and twenty, the Landlord agrees to refund any overpaid rent to the Tenant on a pro rata basis."

Our deposit was properly protected (it was a residential flat, not a holiday let), but the terms of receiving our deposit back was that the letting agent had to conduct an inspection at the end of the 28 days, after which point they would start the process to release it--so we can't currently do anything until they confirm they've done the inspection, which might not be possible at the moment.

We actually just got an email back from the head office yesterday, after two months of zero contact, so we may be making some headway. Thanks for your help!

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Lewis 25th July, 2020 @ 00:13

Hi, I’m a landlord and and I recently received a letter from a solicitor, stating that my former tenant is claiming the deposit plus 3x for not protecting the deposit. The tenant and I had a really good relationship and they always paid their rent and kept the flat tidy and left everything in good order when they moved out. Now I hold my hands up here, my tenant had an initial 6 month AST agreement, which I protected, then after that it rolled on as a periodic agreement I forgot to protect it. Fast forward 1 year, my tenant moved out, because they caught me going into her flat during lockdown without getting permission first. Embarrassing I know, but I apologised but the tenant said she didn’t feel comfortable remaining in the property. They have also added on a claim for council tax as I agreed to pay this bill if she paid a higher rent, but as I am in dispute with the council over the banding, I haven’t paid it for six months. The tenant has since paid the council directly as she said she was concerned because the council were demanding payment and the account was in their name.

I have been a bit slack recently due to personal issues and the tenant tried to contact me via phone, text and email but I never responded. They were trying to reach an agreement with me because they wanted to break their tenancy early but I never responded and I kept the deposit as they didn’t give the required notice period on their notice to quit.

What are my options here as in total their solicitor is claiming for the deposit, even though they didn’t give the right notice, 3x the amount, the council tax bill and solicitors fees and interest. Can I argue that my tenant didn’t give me the correct notice?

Any advice would be appreciated.

Lewis

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David 25th July, 2020 @ 10:59

Hi Lewis

How we deal with this will depend on the actual evidence, but I can give limited advice based on what you said above.

To be honest yours is a case of what NOT to do.

The tenant is entitled to quiet enjoyment of the property and your sneaking in is totally unacceptable for ANY reason. I am not surprised she felt the need to leave and I would not be surprised to see a request for her costs in this regard.

The fact that you have not returned deposit already is a guaranteed way to piss her off and push her into the arms of a claims solicitor. Especially when by your own admission she left everything in good order.

You say that you say that you protected the initial 6 month agreement, if you did this properly and served the proper Prescribed Information BOTH within 30 days of receiving the deposit then as long as the tenancy started after Oct 2015 the Statutory Periodic Tenancy would not need to be protected.

It is all going to depend on your evidence of her receiving the PI, because if you fail in full compliance of the law in the first tenancy and do not rectify such a failure within the term of the first tenancy, then the failure applies to both with a sanction for each.

Again the claim for Council tax is your screw up, your dispute with the Council is not her problem and may lead to bailiffs turning up at her door with huge extra costs.

You then made the fatal mistake of sticking your head in the sand when she tried to contact you.

You had no right to keep the deposit, in fact I would not be surprised to see her bring further claims against you. These days you can get a new tenant in hours or days at worst, especially as you say she left it in good condition.

You made this poor tenant feel unsafe in her own home, you exposed her to one of the nastiest debt recovery tracks and they allege that you did not comply with the law with regard to her deposit. You held onto her deposit with no apparent tenancy damages. Then when she tried to resolve it out of Court you do not even give her the courtesy of a reply.

A bit slack is an understatement, if you are not going to be professional then get out of the Landlord game or employ an agent on a full service agreement, so any failure is theirs.

You can argue that your tenant did not give you the correct notice but if I was claiming against you I would be bringing a claim for her costs for having to find a new property, if she left the property immediately she may have claim under a daily rate of £350 per day until she was able to secure another tenancy. If your property is in a licensed area or had a requirement to licence and you failed in that she can claim 12 month rent repayment order.

You screwed up and now you are quibbling about the lack of notice, you have already seen their costs. If you get into a discussion with them the costs will exceed the deposit and you will end up paying it anyway.

If this goes to Court there it is highly likely you will get the maximum 3x sanction as your culpability is on that level and the witness statement is likely to paint you as some sort of pervy landlord sneaking into her home to smell her knickers and breaching her quiet enjoyment of the property. I know one Solicitor in London who has claimed all previous rent paid on this basis and got it.

Normally in these cases I am able to negotiate the claim down to 1x the deposit per tenancy based on certain case laws. However, it will depend on the evidence I see. So far it does not look good, unless there is evidence (including PI's signed by her) of full compliance within 30 days or at least within that initial 6 month term.

Usually the claims firms stick in a part 36 offer, if they did this and based on what you have said I would bite their hand off by accepting the offer, returning the deposit, paying the Council tax and their costs. I would add a heartfelt apology once the settlement is concluded.

As this is a live case, if you require further advice I suggest you use the forum to PM me any more information or questions using the instructions in post 335 above.

I hope other landlords can learn from your mistakes.

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Grumpy 25th July, 2020 @ 11:22

David,
I was waiting For you reply to that, you were too kind to him 😆😉 An example of why landlords get a bad name, yet to still offered to help him. You must be related to mother teressa.
Great advice as usual.

Grumpy

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