Deductions when deposit not protected

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    Deductions when deposit not protected

    Hopefully a quick question.

    It says here: http://www.landlordlawblog.co.uk/201...sit-deduction/

    A landlord cannot make ANY deductions to a deposit if it has not been protected.

    Can anyone point to where this is from or what it's based on?

    Thanks?

    #2
    If a LL has not correctly protected deposit, he cannot issue a valid s21. Perceived wisdom is if LL returns deposit in full. prior to service of s21, then there is no deposit exists and s21 should be valid. Even if deposit is returned in full, LL can sue T for T damage in County Court, prob resulting in CCJ against T, if unable to pay.

    Comment


      #3
      Thank you but my question was not relating to s21's.

      In the situation I am thinking of the tenancy has already ended with the tenant giving notice.

      Comment


        #4
        The landlord can indeed make deductions, however if they are disputed by the tenant it could end up in court (as with any deposit dispute). If it ends up in court then the landlord runs the risk of a major counterclaim.

        Comment


          #5
          s212-215 Housing Act 2004 - this is good factsheet on it: http://www.letlink.co.uk/letting-fac...uirements.html

          Basically, not using the scheme is unlawful, therefore the money you are holding is not a 'deposit' as must be returned to the T or protected. As your tenancy is ended you cannot now retrospectively protect, so you must return. If the tenant takes you to court you will be fined up to 3 times the deposit amount.
          caveat emptor
          If it sounds like I know what I am talking about........I don't.

          Comment


            #6
            when it comes to the non compliance case, if found guilty (and its rather clear whether the deposit was protected or not), the LL will have to pay a minimum of 1x the value of the deposit. The judge will have some flexibility to decide between the 1x and 3x depending on how reasonable he deems the LL actions to be. Making significant deductions doesnt help if it comes to that. On top of that the LL will be liable for the tenants significant legal costs. While these might put the tenant off suing, they might not necessarily put off a tenant who is upset about unreasonable deductions. And given the tenant can sue for non compliance in the next 6 years, maybe its better off if the LL doesnt end the relationship in bad terms, whatever that might mean.

            The alternative argument could be that the non compliance issue is completely unrelated, so the LL might as well deduct whatever he thinks is reasonable and hope for the best.
            All views posted reflect my personal opinion only and do not constitute professional advice which I am not qualified or knowledgeable enough to provide.

            Comment


              #7
              Originally posted by MSaxp View Post
              The alternative argument could be that the non compliance issue is completely unrelated, so the LL might as well deduct whatever he thinks is reasonable and hope for the best.
              That would be taking a big risk. The damages incurred would have to be large to warrant a 3 times compensation payment. It doesn't take much prowess with google to find the relevant law.

              Does anyone have any practical experience of this (or case refs) since the Housing Act was amended in April 2012 to close the protect before court date loophole and the no claim once tenancy has ended loophole?

              In my view if the deposit is not protected then in cannot lawfully be used to offset damage. The LL is merely holding the money on trust for the T, with all the rules that involves. If he doesn't protect the deposit he has breached an implied trust and must return the money with interest. He was given the money in trust for the purpose of registering it with a DPS, not to hold for the tenancy.

              The best course of action (mentioned by someone above) is therefore to return the deposit but still make a demand for the damage and seek a CCJ if required.
              caveat emptor
              If it sounds like I know what I am talking about........I don't.

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