Here is a blog clinic question from Andy who is a landlord:
Hi, I own one (and my only) house in Wales. I am abroad working. When I left I rented it privately to a tenant as an Assured Shorthold Tenancy since 2009.
She quit in December, and left a lot of damage, uncleaned, damp, broken stained furniture etc.. I intended to keep £500 of her £650 deposit. However I did not ‘protect’ it under the Housing act 2004 (as I knew nothing of this), she is now demanding the full deposit in 14 days or will sue me.
I return to UK to live in my house on Feb 6th. Help!! If I give her the deposit back in full I will have to accept a big loss due to the damage etc.. however I may have inadvertently broken the law on registering her bond, so?!! help I need advice. I am not rich, just renting my house to pay the mortgage! Help and advice much appreciated asap. Thank you
At the moment, the most recent Court of Appeal authority is that the tenant cannot claim for the penalty payment of three times the deposit sum after the tenancy has ended. You can read about this here.
So I suppose on the basis of that it would be all right to refund the £150 and say that if she issues proceedings you will defend. People often say they are going to court when actually they have no real intention of doing this.
However if it sounds as if she is serious then refer her to my blog post (or one of the articles referred to there) and give her full details (receipts etc) to justify your deductions.
Note by the way that the rules on tenancy deposits are due to change in April and landlords who fail to protect will then be at risk of being ordered to pay a penalty payment to the tenant by the court. Ignorance of the law will be no defence.
This posting is a very useful place to raise the severity of the changes the Localism Act 2011 will introduce. Although I have raised the issue with Grant Shapps, via my MP, and he maintains the new rules were “what was always intended” I struggle to believe there was ever an intention to create such a monster.
So after Localism, how ill it work. In short you will have 30 days in which to protect the deposit and give the prescribed information. This may be considered an improvement on the current 14 days.
However, once the 30 days are missed, there is no way of avoiding the penalty. The changes also overturn the Gladehurst judgement referred to above, therefore allowing for a claim after the tenancy.
So lets take it as being 2018, ie 6 years after the legislation is introduced. Protecting the the deposit is fairly simple (you did or you did not!) but the prescribed information is more tricky. Try looking at how many private landlords include the post tenancy contact address. One of your tenants successfully wins a claim that in some way the information was defective and therefore the prescribed information was not given.
Now every tenant who had that prescribed information can also take you to court to claim their pound of flesh. And if you are not quite aware of this, this money does not go, like a court fine, to the Treasury, it goes to the tenant so they have a vested interest in making a claim.
Take an agent with 200 properties doing renewals every 6 months and an average deposit of £900 (you can adjust the maths for your own figures). 6 monthly renewals over 6 years (statue of limitations) is 12 tenancies and 12 wrong sets of prescribed information so 12 offences. Over 200 properties that is 2,400 wrong sets of prescribed information. With the MINIMUM penalty being one times the deposit this would amount to £2,160,000 or at three times the deposit it will amount to over £6,000,000.
Somehow I struggle to see how this is a reasonable potential outcome of this legislative change.
What ever else you do, make sure you either stop taking deposits or you get it absolutely right.
You are right David. It will be a big change. I don’t think most landlords are currently complying with the notice requirement properly, or are even aware that it exists.
There really ought to be a prescribed form. TDS provide their version of the form to their agents and DPS has a template on their site (we have one on Landlord Law too). But if there was a proper prescribed form then it would make it a lot easier for landlords to comply.
Look at the amount of problems there have been with the s21 notice (where there is no prescribed form) for instance, compared with the s8 notice (where there is). People should not be expected to create their documents when they need to comply with complex regulations.
Yes much of the potential problem lies in interpretation. The TDS version of the prescribed information does not include a “current address” for the tenant, only the post tenancy address and yet depending on your reading of the regs, it would appear to say the name and address, “including” such address as is to be used after the tenancy. I would read the including to mean “in addition to” the name and address. If the court help that was sufficiently fatal, there could be huge repercussions.
Keep up the good work.
Good point David I have added your warning to my own here http://www.property118.com/index.php/the-devil-is-in-the-detail/21710/
Monster? £6 million? I’ve not read such hyperbole on these pages in some time!
Those involved in renting out properties (landlords, agents) are professionals (they get paid for it) and should act as such. If an agent is indeed dealing with that many properties, one would hope that they would take some time or training in order to understand the legislation as it applies – or register with this site.
Reading the TDS briefing paper on the recent changes (see http://bit.ly/ssbW2a) and the relevant section of The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 (see http://bit.ly/ycIwAo), it really does not seem desperately onerous to comply with the regulations and 30 days seems like a perfectly adequate amount of time to complete the formalities.
Athlem I could not agree more, agents should be professional but there are two problems. Firstly not all agent know everything, probably a bold claim anyway and secondly until the courts decide quite what missing information will constitute a breach, we cannot be sure at what level of compliance the penalty will kick in. For example, if the tenant says they don’t have a post tenancy contact address, will it be enough to put “not available” or similar? We won’t know till someone takes this to a court of record to get a binding judgement. This could take years and by then agents (and landlords) could have accrued penalties running in to very large figures.
I could even tolerate the penalty being for all current tenants, but I fail to see why a tenant who left 5 years ago should be award a penalty of 3 times the value of his deposit, when his entire deposit is refunded. Outside of a law based situation such as this, a damages claim has to be based on a loss and the tenant might have suffered no loss at all and still get thousands.
The law is the law and landlords and agents shosuld follow it but I talk to literally thousands of landlords every year (I am a lettings trainer and talk on courses and at conferences and most of the landlords I talk too give nothing more than the deposit lodgement confirmation to the tenant. To all readers, if that is you, you need to change your system in the next couple of months.
Thanks Mary, My main interest is to raise awareness of this. I have approached Grant Shapps to suggest the simple amendment that the penalty should not be payable if the deposit has been returned or resolved. This would mean that a very large number of ex tenants who have got their deposit back, agreed deductions, would not be able to seek a claim. This would not restrict anyone whose deposit was “at risk” from seek to make sure it was protected and they had access to a fair adjudication on the refund, the very purpose of the legislation.
I hope that from here others will pick this up and put the pressure on Government to make legislation that is more balanced and proportionate. The more who comment, get their MP involved etc, the better.