There are probably a lot of angry landlords out there.
Landlords who were sued by their tenants for the deposit of three times the deposit sum because they failed to protect, and were ordered to pay up.
Why are they angry?
Because if they were to be sued now, they could protect late and avoid the penalty. Or they may be able to get away with never having to protect at all!
Two Court of Appeal decisions have effectively changed the law and the upshot is that the penalty is now more or less a dead letter. The two decisions conerned are:
The Tiensia case
I discussed this when the decision was published last year. Here the Court of Appeal said that landlords could avoid the penalty if the landlord protected at any time up to the day before the court hearing. In this case the deposit was protected late but before the tenancy had ended.
Gladehurst Properties Ltd v Hashemi
This is the new case. The facts are reported here on Nearly Legal and the court report is here on BAILII. The effect of this decision is that tenants are not able to make any claim for the penalty payment once the tenancy is over.
As pointed out on Nearly Legal, this makes a complete nonsense of the whole thing, as most tenants will only find out about the failure to protect the deposit when the landlord fails to return it to them after they have moved out.
So before the tenancy the landlord can get out of it by protecting late. After the tenancy has ended the claim can’t be made at all. Fat lot of good really having the penalty!
Why should a landlord bother to protect at all?
Three reasons:
- He might want to serve a section 21 notice, and that notice will be invalid if the deposit has not been protected before it is served
- Its the law. Toothless, but still the law
- Things might be changed by the Localism Bill
The Localism Bill is to have its third reading shortly so we may learn more then.
I have given some guidance to tenants on making a claim here but I doubt whether anyone will want to bother now!
I was a tenant who paid a deposit to my landlord via their agent, they put the deposit into the Deposit Protection Scheme. When I left the property, there was a dispute as to the condition of the property (ie, dampness & mould causing my daughter to become seriously ill) and the Landlord wanted a further month’s rent from me despite them having taken the keys off me and having builders at the property to deal with the damp and mould work carried out. I therefore would not agree to the DPS releasing the monies to the landlord’s agent. Lo and behold….when on holiday and out of UK, someone purporting to be me, set up an email account in my name, rang the DPS giving them my date of birth, tenancy start date etc, got the DPS to email the deposit number to the false email address, and then logged onto the DPS website and authorised the DPS to release the monies to the agent. Result? The DPS say it is up to me to prove it was a false email address and my responsibility to pursue the agent for fraud!!! How can I afford to do that especially since I am now £400 worse off because the agent has given the deposit to the landlord for the alleged rent that was owed, which I was disputing!! Yes, a total farce.
I am sorry you have had that problem Dana, I have emailed my contact at the DPS and asked for their comments.
The law is not toothless. The tenant should make sure, during the tenancy, that the deposit is protected (all three schemes have a way of doing this). If the landlord has not protected it then you can start court action. the landlord will then either have to protect the deposit or pay the penalty of three times the deposit. If you incur costs in starting court action the Universal Estates judgements say you could still be award those back so you would not be worse off. The net effect is surely then that either the landlord does protect the deposit and the tenant’s money is protected and the tenant has access to ADR (the whole purpose of the legislation in the first place) or if not, the landlord will fall foul of the penalty.
I have to agree the judgement on Gladehurst is very poor. The legislation does not say anything about only applying during the tenancy and schedule 10 clearly includes references to the “tenant” when referring to the ex tenant so you cannot claim that the word tenant prohibits a claim after the tenancy. I fear this judgement will bring in a change in the localism bill and we can only hope they don’t move the goal posts too far.
David, that may be correct legally but pragmatically it is a different matter.
Apart from increasingly rarer instances of ignorance of the law, any landlord who is not protecting the deposit is probably doing so deliberately. If the tenant launches a claim against them they should do so in the sure and certain knowledge that the landlord will not be continuing the letting come the end of the fixed term.
A tenant in that position has to balance out having the money protected and losing their home
@Dana My contact at the DPS has offered to check this out for you, but you need to email me your ID number so they can locate your records on their system. Can you do this please – but don’t put it here, you can use the contact form on this page: http://www.landlordlawblog.co.uk/contact/
I have known cases where the DPS have held their hands up if they find they are in the wrong and have refunded the money. They are a pretty decent organisation. So its worth doing.
Dana, if this is what it looks like I would also report the agent to your local trading standards office and any governing bodies they might be signed up with, such as the Property Ombudsman or ARLA etc
We left our property in July last year. We have had a dispute with our landlord as he was trying to charge us for beds that were never replaced and a extautionate amount for cleaning. Our deposits were never protected while we lived in the property. We filed for small claims on 23/5/2011. We have claimed for 3 times the amount in compensation but Im guessing we will not receive this. Do you think we still have a good chance of getting our full amount back? Or is it just a straight up our word against his now?
The law seems massively flawed. Im guessing it was put in place to protect people like us- Students. This was the first property we ever rented and it has turned into a real nightmare getting our money back. Now we may not even win our case. Any advice?
I think you have a good chance of getting your deposit back, as Judges do not like landlords who treat tenants badly.
Its just the 3x they don’t like.