Payment required to Tenancy Deposit Scheme?

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    Payment required to Tenancy Deposit Scheme?

    I am in dispute with a former tenant for approx. £11,000 of damage to my flat. I am in the process of issuing legal proceedings. I have withheld the entire deposit of £3,500. The former tenant has opened a dispute with my Tenancy Deposit Scheme. My Scheme is now telling me that "the law requires that the Tenancy Deposit Scheme, must hold the Disputed Deposit Amount whilst a deposit dispute is ongoing". Is that correct? I have already spent the full amount of the deposit on redressing some of the damage. Any advice greatly appreciated.

    #2
    The money was not yours. You can only use it with the tenant's consent (possibly indirectly by consent to adjudication which decides in your favour), or if a court orders it to be used.

    You are obviously using an insurance based scheme. I've never understood why this option was ever allowed, as it encourages landlords taking risks with the money. I believe agents now need to use a client money account for this, so they cannot use it themselves.

    Are you sure you have used the original cost price of the damaged items and written them off over their useful life in a rental property, and have also excluded fair wear and tear?

    Comment


      #3
      There is very little reason to collect a deposit these days -- just charge a significantly higher rate of rent.

      Comment


        #4
        Originally posted by joconno2 View Post
        My Scheme is now telling me that "the law requires that the Tenancy Deposit Scheme, must hold the Disputed Deposit Amount whilst a deposit dispute is ongoing". Is that correct?
        I'm not sure that the law requires this, but scheme rules certainly do; they need to ensure that any money to be returned to the T is actually paid to the T.

        The money is not yours to use until
        1. The tenant has agreed that it is yours, or
        2. The scheme dispute resolution process has decided that it is yours, or
        3. A court has awarded it to you.
        If you do not lodge the money with them, then it is likely that you will be barred from using the scheme (and possibly other schemes).

        Comment


          #5
          Originally posted by MdeB View Post
          I'm not sure that the law requires this, but scheme rules certainly do; they need to ensure that any money to be returned to the T is actually paid to the T.
          Kinda both. It's the scheme rules that require it, but the scheme rules requirement is in turn required by the Housing Act 2004.
          I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

          I do not answer questions through private messages which should be posted publicly on the forum.

          Comment


            #6
            I know someone who has over 100 properties and never takes a deposit as its got beyond a joke he just charges a little higher

            Comment


              #7
              Originally posted by KTC View Post

              Kinda both. It's the scheme rules that require it, but the scheme rules requirement is in turn required by the Housing Act 2004.
              Appears to me the Act does not require it, but allows the scheme to require it and requires the LL to comply with the scheme requirement (Schedule 10 5(2)).

              Comment

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