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Tenancy deposit confusion – what are the tenants rights?

HousesHere is a question to the blog clinic from David, who is a tenant

I moved into my flat in Feb 2009, paying my deposit to the letting agent and signing the assured shorthold tenancy with two others.

Throughout the four years which have gone by we have signed new tenancies each year and over time the other two flatmates have changed repeatedly.

Cut to Feb 2013 and I ask for the prescribed information and deposit certificate form my letting agent. I get a certificate dated from the contract before I originally signed in 2009, not with my name on it and no prescribed information.

The other two tenants I share with moved in midways through the current lease on a deed of assignment and paid their deposit to the outgoing tenants.

What are our rights? Is it a problem that the deposit was paid to the outgoing tenant and not the landlord/agent?

This looks to me like a right old muddle. Lets take a look at the various elements.

I am assuming in this answer that the tenancy is a joint and several one between you and various other tenants, rather than an agreement where you all have separate agreements for your own room and shared use of the common parts.

1. Your deposit.

As you paid your deposit direct to the agents, it was up to them to ensure that it was properly protected and that you were given the prescribed information.

At the time you paid your deposit the old rules were in force, but all landlords and agents were expected to regularise tenancy deposit situations prior to 6 May 2012.

I suspect that your deposit money was just used to pay off the outgoing tenant who presumably you replaced.

As the tenants had changed however this should be taken as a new tenancy and the tenancy deposit scheme informed accordingly.  The statute refers to ‘Any tenancy deposit’ so this would include a joint tenants contribution to the total deposit sum.

The agent should have dealt with your payment in accordance with the rules of the deposit scheme being used so I suggest that you take a look at the schemes website as they all have different terms and conditions.

2. The deposit certificate provided

I can’t see how this can comply with the rules though as it was not in respect of YOUR deposit money as this was paid later.

So it rather looks as if you may have a claim against the agents and the landlord for the penalty under the tenancy deposit rules.

3. The other two tenants

You say deed of assignment.  Presumably by this you mean a deed of assignment of their individual share of the tenancy to another person.

The trouble is I don’t think this is legally possible – or rather it is technically possible for a tenant to assign their beneficial interest in a tenancy but this will not work in the way that they think it will.

I wrote about this here.

I have to say that I really don’t like assignment even if it is in respect of all of the tenants, as it throws up this sort of problem.  Does the landlord / agent have a duty to notify the tenancy deposit schemes of this?  It is not a new tenancy but there has been a change of tenants.  Personally I think assignment is not appropriate for short tenancies and should be avoided like the plague.

So far as the deposit money is concerned, my view is that it is bad news for the incoming tenants.  As they did not pay the deposit money to the landlord or his agent, the landlord / agent are not bound by this and are not responsible for repaying the deposit money back to them.

They (ie the landlord / agent)  will also not be liable to them for any breaches of the regulations in respect of the deposit generally.

If there is a ‘lead tenant’ arrangement however they may be all right as it will be up to the lead tenant to repay the money to the right person.

What does anyone else think about this? Do you agree with my interpretation? The trouble is that we have not had many cases on the new regulations so we are all guessing a bit.

I am not aware of any case law at all regarding assignment in this situation so all we can do is speculate.

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About the post author:

Tessa Shepperson

Tessa is a lawyer and specialises in creating products and services which help landlords and letting agents learn and understand landlord & tenant law. For example, she runs the Landlord Law website (now in its 14th year) and is a director of Easy Law Training Ltd and Your Law Store. Tessa also sits on the Property Redress Scheme Council. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google

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Tessa is an English lawyer specialising in residential landlord and tenant law.

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