Letting Agent or Landlord Liable for deposit theft - with complications

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    Letting Agent or Landlord Liable for deposit theft - with complications


    I moved into my new flat a few months ago. Upon moving in the letting agent (LA) asked us to pay a deposit equivalent to 6 weeks of rent. Not being aware of the tenant fees act 2019 that limits the deposit amount to = five weeks deposit, I happily obliged. A week or so later the LA emailed me to say they had overcharged me and would return one weeks worth of what I had paid.

    Two months later they have still failed to do this, and our deposit still hasn't been placed into a DPS (although an account has been opened). After lots of emails and text messages to the LA they disappeared. The company website no longer exits, emails to their company email address bounce and they do not return text messages/calls. We have one email address - a hotmail address for LA - that does not bounce but have not received a response.

    Last week I checked Companies House to try and find more information about the LA company. I saw that they had applied to be struck off (aka dissolved).

    We have been in contact with our landlord, and he has been supportive. However, he is implying that we should pursue the LA for the money (e.g. County Court claim, Fraud Action; police etc.) From reading other posts on the internet I understand that it is landlord who is responsible for the LA actions, and, therefore, the landlord who should be pursuing him (e.g launching county court claim) and if he is unable to get the money from the LA, he is still liable to return it to us. I have checked the tenancy contract, and it is between myself and the landlord with no reference to the LA being responsible for the deposit.

    I wanted to check that this understanding is correct? I have read elsewhere on the internet that the tenancy deposit is one of the only areas where the LA can also be held legally liable.

    Thank you for any help/advice in advance.

    Urgently write to Companies House and any liquidator named, requesting that the company not be struck off because of their outstanding debt to you, or failing that, that you be recorded as a creditor.

    Please be careful about the use of the term theft. As they are an estate agent, if they used an insured scheme, they would have had to have operated a client money arrangement to protect your deposit from other creditors. If they have failed to do that, there may be criminal offences involved, but they are unlikely to be that of theft. Generally state facts, not assumed motive. Generally crimes require mens rea, which means that what was done has to have been done with the intention of causing the effect that it had. A company can go broke without intending to do so. You risk libel actions if you suggest mens rea and they can prove there wasn't.

    The reason you overpaid was that new legislation limits deposits to 5 weeks' rent.

    For the actual 5 weeks deposit, I think any liability that the agent has is to your landlord, not to you. From your point of view, that part is treated as though it had been paid directly to the landlord.

    Failure to protect the deposit creates a not quite criminal offence, by the landlord, and you can take action against the landlord for that, however, it has to be done using the full County Court process, which is not really suitable for litigants in person. It is not quite criminal, because the landlord doesn't get a criminal record as a result, although they, effectively, have to pay a fine (but to you, rather than the State).

    Generally deposit protection breaches are things to keep to yourself, unless things go wrong at the end of the tenancy. If you threaten them with such claims, many seem to try and inflate their damage claims at the end of the tenancy, so you end up with the stress of defending against those, as well as the stress of taking action to be paid the penalty). Also, if they don't return the deposit first, they cannot use section 21 to evict you, so there can be advantages in leaving the landlord in the dark about their deposit breach in that you can delay an eviction by forcing them to start the process over again, after returning the deposit.



      (Also, if you are alleging a crime, you should generally wait for the criminal conviction before starting a civil action, as the criminal conviction will make the civil case a walk over.)


        leaseholder64 Thank you for your advice - it is much appreciated.

        So moving forward, a sensible course of action would be to 1) contact companies house immediately and 2) inform the landlord that it should be him pursuing the LA for putting our deposit into a DPS and returning the excess charge?



          I think you may have a case with the overpayment, but I'm not sure, as the agent could say they were acting as agent of the landlord.

          The landlord should also be requesting a hold on the strike off.


            Originally posted by jimjom123 View Post

            I wanted to check that this understanding is correct?

            The agent was the landlord's agent, was acting on their behalf and their actions or inactions are the landlord's actions or inactions.
            The landlord needs to be more than supportive, they need to "return" the overpaid deposit and protect the rest that they have "received".

            Any issues they have with the agent they selected they should sort out with the agent directly

            They should probably be advised to seek legal advice if they fail to accept this situation. Or point them to here (or another landlord forum like Property Tribes).

            There's no point the OP contacting companies house or anyone but the landlord.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


              If you like living there I would leave it for now. As long as you have evidence of paying this deposit then the landlord will have to refund it to you at the end of your tenancy. He will also be unable to serve you any s21 notice until he does refund it. You can also sue him for a penalty of 3x the deposit + the original if you choose so you hold most of the cards here and there is no immediate urgency for you.


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