Tenancy Deposit Scheme. How much might I lose?

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    Tenancy Deposit Scheme. How much might I lose?

    I'm afraid I have not picked up all my statutory obligations and I would like to understand the likely (as opposed to theoretical) penalties I might suffer.

    The house that I rent out as a landlord has made the transition from being something for my kids and their friends while at university, to being occupied by people I don't know. I have been distracted by various issues in my personal life and have not kept abreast of my legal obligations in terms of tenancy deposits. I have always kept deposits separate and available and have always repaid them in full. I have - perhaps foolishly -allowed tenants to fall behind in their payments when they have been out of work, and they have usually worked to catch up when they can.

    However one of the tenants, is now asking for his deposit certificate and I am in the process of organising that. However this will involve, in effect, my admission that I have broken the law by not providing one to him and other tenants within the required timescales - the house has four individual tenants in it

    The question is this: in the event of the tenant taking action against me for not protecting his deposit, even though I have proven to be a supportive and sympathetic landlord in other aspects of the tenancy, what is the likely award he might receive? Is there much case history here?

    Are there any recommendations as to my best course of action?

    Thanks in advance for your help

    #2
    If T gets to Court, he can obtain an Order that you must:
    a. protect/return deposit; and also
    b. pay to T an amount equal to three times the deposit.
    That you are a nice/supportive/kind person is irrelevant! You had a duty; you failed to comply with it.

    Best advice: protect/return it right now, so T cannot obtain such Orders at all.
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


      #3
      Originally posted by mypension View Post
      Are there any recommendations as to my best course of action?
      (1) Protect any protectable deposit*. You can still protect the deposit late without any penalty, under the custodial scheme, using The Deposit Protection Service.

      (2) Provide the tenant with the prescribed information, using the: Prescribed Information template.

      It may also help if you:
      (3) Joined a reputable landlord's association (e.g. NLA, RLA), as they can advise on landlord and tenant legislation and your obligations as a landlord, as well as other related matters.


      * If the tenancy was an AST in England or Wales which started on or after 6 April 2007 and the annual rate of rent is less than £25k.
      The information in my posts is provided 'as is'. This is not intended to be legal advice. Legal or other professional advice should be sought before acting or relying on this information or any part of it. I will not be held responsible for loss or damage arising from errors in the information or the way in which a person uses the information on this . For more information on your query use the '' link at the top of this page. Agreements, Forms & Notices can be found .

      Comment


        #4
        Originally posted by mypension View Post
        The question is this: in the event of the tenant taking action against me for not protecting his deposit, even though I have proven to be a supportive and sympathetic landlord in other aspects of the tenancy, what is the likely award he might receive? Is there much case history here?

        Are there any recommendations as to my best course of action?
        In addition to Tom999's exemplary advice, I would like to add that any claim against you for protecting the deposit late with the custodial scheme, the Deposit Protection Service, as he recommends (and is why he recommended it) is bound to fail.

        This is because there was a recent high court ruling, therefore binding on the lower courts, which established that the 3x penalty does not apply in these circumstances. It would take too long to explain why, but if you want to know, see the following link and read the actual judgment which is linked to therein -
        http://blog.painsmith.co.uk/2010/02/...cision-on-tdp/

        Comment


          #5
          Thanks for the replies, but I understood that any current or past tenant whose deposit I had failed to protect could take action against me. Did I misunderstand this? Does this only apply to T's whose deposits I currently hold unprotected?

          And does a custodial based scheme have different obligations / liabilities than an insurance based scheme?

          I used to belong to the SPLA until it tied itself in knots and have just joined NLA and was going to use the insurance backed scheme, but it sounds as if I should go for a custodial scheme instead - with regard to the existing tenants at least?

          Comment


            #6
            Thanks Westminster - we posted at the same time. I'll go and read that judgement now

            Comment


              #7
              Originally posted by mypension View Post
              Thanks for the replies, but I understood that any current or past tenant whose deposit I had failed to protect could take action against me. Did I misunderstand this? Does this only apply to T's whose deposits I currently hold unprotected?
              It is possible that previous tenants might claim, but if you have, as you say, returned their deposits in full, such claims would be unlikely to succeed, because of the 'must also' defence. See
              http://nearlylegal.co.uk/blog/2009/0...it-gets-worse/
              It's not a failsafe defence, but I wouldn't worry about it given that no previous tenants have actually issued a claim against you. And are unlikely to since they've got their deposits back.

              And does a custodial based scheme have different obligations / liabilities than an insurance based scheme?
              Yes. See my post above. The TDS, for example, has changed its initial requirements to include protection within 14 days. The DPS has no such requirement.

              it sounds as if I should go for a custodial scheme instead - with regard to the existing tenants at least?
              Most definitely.
              Last edited by westminster; 22-03-2010, 19:39 PM. Reason: random cut 'n' paste error

              Comment


                #8
                Maybe I'm not reading DPS' Ts & Cs correctly, but in section 9, Deposit Submission, para a) says "The Landlord or Letting Agent is responsible for ensuringg the deposits are submitted for protection within 14 calendar days of the date of receipt by the Landlord". Is this DPS simply stating the law, as opposed to their own Terms?

                And I am concerned that the mandatory requirement detailed in that same section requires me, in effect, to admit guilt, in that I took deposits and didn't protect them within the timescale. I have to state when the tenancy started etc.

                Is there any sense in repaying the tenant's deposits now and then starting a new tenancy with them? The orginal SHT has expired for two of the three tenants and I haven't done anything about putting in place any new agreement with them. I had, however, intended to give these tenants notice, as I think that students - with guarantors - might be more productive for me

                I appreciate your help ...

                Comment


                  #9
                  Originally posted by mypension View Post
                  Maybe I'm not reading DPS' Ts & Cs correctly, but in section 9, Deposit Submission, para a) says "The Landlord or Letting Agent is responsible for ensuringg the deposits are submitted for protection within 14 calendar days of the date of receipt by the Landlord". Is this DPS simply stating the law, as opposed to their own Terms?
                  See paragraph 29 of the judgment.
                  http://www.bailii.org/ew/cases/EWHC/QB/2010/217.html
                  Please read it before asking questions.

                  Is there any sense in repaying the tenant's deposits now and then starting a new tenancy with them?
                  No.

                  I had, however, intended to give these tenants notice, as I think that students - with guarantors - might be more productive for me
                  You cannot serve a s.21 notice seeking possession unless the deposit is protected. It's another sanction for not complying with deposit protection. See s.215 of HA2004
                  http://www.opsi.gov.uk/ACTS/acts2004..._en_19#pt6-ch4

                  Comment


                    #10
                    Thank you for all of that ... I'm starting to understand it now!

                    Comment


                      #11
                      Originally posted by mypension View Post
                      Thank you for all of that ... I'm starting to understand it now!
                      It takes a LOT of reading before it starts to sink in, and you begin to see quite how open to interpretation the statute is... Well done if you've begun to grasp it already

                      Comment

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