Ben Reeve Lewis Considers problems with the tenancy deposit legislation
As a working TRO in an inner London authority you see a lot of people in a year. Running into the several hundreds.
All present with a variety of complaints of harassment, illegal eviction, breaches of tenants rights and issues with property conditions which we work on in tandem with Environmental Health.
There are a stock set of routine questions we have to go through. Name of landlord, address of landlord, etc. one of which being “Has the landlord protected your deposit?”
Now the majority of cases we see are either Assured Shorthold tenants or Statutory Periodic and 90% of them come brandishing some form of S21 notice, ranging from correctly drafted ones to versions written on the back of an envelope in crayon.
The eagle eyed among you will know that a S21 notice is invalid if the landlord hasn’t protected the deposit or has served notice before protecting.
An unknown quantity
The usual response to the question on deposit protection is a blank stare because at the bottom of the pile where I ply my trade the requirement for deposit protection is an unknown quantity among landlords and tenants.
There are another group of landlords who know about it but have no intention of complying, relying on tenant ignorance and a perceived lethargy to get them through.
So I read with interest Tessa’s piece on the recent case law of Charalambous v. Ng (2014) which now throws far more landlords into the quagmire of deposit protection legislation and it set me wondering how my tenant/clients fare when pursuing their landlord through the courts.
Deposit protection claims?
For some time now I have been giving out a deposit protection pack which walks tenants through a ‘Join the dots’ version of suing their landlord for the infamous penalty.
The pack contains clear, plain language guidance on how to get the necessary evidence from the scheme and how to fill in the N208 form needed, a blank copy of which is also inside the pack.
So in one of those winding down hours leading up to Xmas when even the worst landlords are too busy finding last minute perfume in Oxford Street to threaten their tenants I decided to dig out a list of ex clients who had been given the pack and having a bit of a ring around.
I got the best part of 20 and asked them how they had gotten on.
Claims in action
Only 1 of them had actually launched a case and that had taken 9 months and resulted in so many adjournments on technicalities they wished they hadn’t started.
The rest cited cost of proceedings and fear of standing up in court as the deciding factors in dissuading them from proceeding.
Hardly a MORI poll I know but an interesting snapshot which I’m sure isn’t in local isolation from other areas of the UK. I know housing professionals who appear in court regularly who dread the court experience even though they have done it hundreds of times.
So the problem seems to be that even when virtually holding a tenant’s hand they don’t advance their case once they leave the office with encouraging words ringing in their ears.
So with all talk of the Charalambous case creating waves in the landlord community at the moment I wonder how much at risk landlords really are.
Risk to landlords?
For my regular rogues this lack of action has a confidence boosting effect. Despite all the threats and serious looking letters nothing actually happens so why bother protecting the deposit at all?
If you have been following deposit legislation cases for the past 7 years you will know that it has become more complex than Japanese arithmetic which stretches lawyer and housing adviser alike, so what chance the poor tenant facing a confusing legal mountain with public speaking in front of a bad tempered judge as your final reward?
Deposit protection penalties are all very well but hardly designed to help ordinary people with no legal training to obtain justice.
I always find the phone advice staff of all the schemes tremendously helpful but that’s a long way from the thought of appearing in front of scowling Judge Nutmeg in a bad mood.
Why can’t it be easier?
Why can’t the process be done on paper, like accelerated possession proceedings? The paperwork needed is minimal and fairly prescriptive:
• Proof of payment
• Proof of tenancy date
• Proof of either failure to protect or late date of protection
• S21 notice.
If none of the facts or dates add up then what more needs to be discussed?
Tenant awareness
Tenant awareness of the requirements of deposit protection is also an absolute must.
Why can’t government information offices produce TV adverts on the topic? I grew up watching similar adverts on everything from how to park a car properly and calling the coastguard in an emergency, to not leaving country gates open, lest livestock should go walkies. Surely this is a serious enough community issue with the new army of renters out there.
Whilst tenants remain ignorant of the deposit protection rules and the legal machinery for claiming penalties continues to be complex and intimidating, belligerent and recalcitrant landlords have little incentive for compliance.
Hello Ben,
Your mini survey illustrates this legislation isn’t working for the very people it was designed to protect.
It has benefited the (minority) of tenants playing the system to avoid paying rent.
In answer to your question “Why can’t it be easier?”
Maybe its because a judge needs to decide whether to award 1x deposit, more, counter claims, costs or even anything at all depending on the actions and behaviour of the landlord and tenant.
Its a bag of nails, the whole thing needs scrapping and re-thinking properly.
Hi HB. Its my understanding (I could be wrong) that you cant counterclaim on an N208 claim and that the actions of the tenant are not subject to Part 8 proceedings. Its an administrative thing, apart from the possible severity of penalty, which may lead a judge to decide on the full 3 X or not.
I dont get your point about tenants playing the system to avoid paying rent. No breaches of S213 allows a tenant to withhold rent
I wasn’t sure about the counter claim, thanks for clearing that up.
What I’m getting at is it is often not just a case of;
Was the deposit protected?
If not 3x deposit award.
Kerching!
Next.
It is often a lot more complex than that.
I realise S213 doesn’t allow tenants to withhold rent but a dodgy tenant will use it as an excuse not to and to delay eviction living rent free.
It won’t effect competent landlords or criminals but it does catch out amateur accidental landlord.
(A good thing for me as it deters competition and puts upward pressure on rents).
Interesting findings, Ben. Better to know how many (out of all) claims were successful tho? To encourage tenants as much as possible. They must have redress of course (still much to the annoyance of some churlish landlords).
The cost is an obvious deterrent, certainly. Especially to tenants in England; it’s overly confusing. But if your claim is successful (and it’s easy to work that out, as you say) you pay nothing and get those fees back.
Success here in Scotland http://bit.ly/1xEMtj3 (where fees are clearer)
Scotland’s “consultation on a new private tenancy” just closed for comments. A new PRS tribunal is proposed here in Scotland, to take things out of the courtroom. That will be interesting.
Cd we have a post re fees pls Tessa / Ben ?
[I’ve changed my monica. Just Saying]
If the gov’t had tried to make it more difficult for tenants to bring claims under the tenancy deposit regs they could have hardly bettered the system we have.
Claims strictly speaking, need to be made under Part 8 of the CPR which comes under the ‘fast track’ system. This is much more complicated than the small claims process and can be very expensive.
I did actually do a DIY Guide for tenants some time ago but when I fully checked out the court fees I was horrified at how expensive they were so took the guide down.
It is not the issue fees but the setting down fees which can run up to £1,000 or more. Yes, the tenant will get an order for costs but that is a fat lot of good if the landlord fails to pay up. They will be considerably out of pocket.
I think some Judges may allow the claims under MCOL but even so it is not an easy process.
It is amazing what a total pigs ear the govt have managed to make of these regulations all round.
When the system was introduced the local courts were accepting claims as Small Claims that are obviously much cheaper. But when the Civil Procedure Rules Practice Direction came out the Judges were quite perplexed that it could be quite prohibitive for a tenant to bring a claim, but that had to abide by the N208 route although some did allow fee waiver.
Claims for possession however may be answered by a offset and counter claim for a Deposit protection award and that is therefore not heard as a N208 claim.
Regarding taking things out of the court room. This was done with Employment claims directing that they should be heard by informal Tribunal, at which an employee and employer could represent themselves. HR departments were already one step ahead of a shop floor worker. Do you know the size of the procedure rules, let alone the mass of case law that now extends several foot on the bookshelf?
The lack of advice services ‘the advice desert’, within social welfare law means that services are provided on the cheap and that is poor for both parties to a dispute. The Bright & Waterhouse Report into Rent Possession proceedings found that judges say that LIPs (litigants in person) tend to result in a lot of actual time at hearings is wasted with them trying to explain procedures and processes to either side but at the same time maintaining neutrality. Very difficult.
That being said the deposit legislation has been useful even if some landlords are either ignoring it or are unaware of it. If we consider the long standing requirement for a Gas Safety Certificate that landlords often still ignore or do not know after some 25 years, but no one says that the law should be withdrawn – it is just necessary to keep going in a variety of ways to ensure compliance. In some circumstances of mandatory HMO and other properties an actual certificate must be shown to an LA
Exactly. Who has £1,000 they can afford to hedge a bet on? and even if successful wait 6 months more to actually get it?
HB Saying tenants will use non protection as an excuse for not paying rent is the most astonishing 2 + 2 = 10 argument I’ve heard in a while. Like those daft pronouncements on Time Team “We found a shard of 6th century pottery here, so obviously this Birmingham car park was once a major sea port with approximately 30,000 inhabitants” haha
Isnt it more likely that landlords will use the information in this article to not bother protecting a deposit? At least thats probably only 2+2=5
I’ve done several presentations at landlord events and when I step down from the podium to the small line of people who want answers to particular questions there has never been a time when at least one of them hasnt said “This deposit protection Malarkey?…..Is there any way around it?”
Conversely I have never done a tenant event when a single tenant has come up to me and said “This rent Malarkey……Is there any law that allows me not to pay it?”
I hadn’t realised it cd cost that much. Shocking. Am hearing of more landlords not taking deposits now. And after much deliberation: I concluded, no harm in that.
Ben, ever had a tenant say “This section 21 ‘cos I’ve not been paying my rent Malarkey…..Is there any law that allows me to avoid it?”
& yep, I agree, mug landlords not protecting deposits correctly are fair game but lets not pretend it doesn’t go on.
Just Saying,
“Am hearing of more landlords not taking deposits now. And after much deliberation: I concluded, no harm in that.”
Overall, I agree, probably a good thing.
Not so good if you don’t have a home owning guarantor or don’t qualify for rent guarantee insurance.
Also, have you ever come across ‘deposit insurance’?
It is sold as an alternative to tenants putting up a large up front deposit. Instead the tenant pays a couple of hundred quid for an insurance premium. Covers against damage and non payment. Renewal annually.
For landlords that self-insure, it is the deposit that keeps on giving.
We won’t go into the less than legal methods.
Its not all completely harmless if you are at the bottom of the pile.
@Colin You say that deposit protection legislation has been useful and also tie it in with gas safe regulation. That just doesnt compute with my clients.
I’m going to buck the perceived hand wringing liberal impression of people in my line of work and state what I see working the arse end of landlord tenant disputes. Sorry if this offends many.
The tenants most at risk of exploitation from criminal landlords often have drink, drug or mental health problems. They usually dont know their rights or landlord obligations and lack the confidence,intelligence, general wherewithal to fight their corner.
This is where TROs and housing advisers come in. The legal system does not work for these people. Try getting the HSE to pro-actively take on a gas safe breach!!!!!! Get in the queue.
One of my tasks for January is to arrange a meeting with the HSE to see if we can work out a way of us partnering up and referring gas safe breaches to them on bulk, coz bulk is what we deal with when it comes to criminal landlords. I aint holding my breath. I know they will say they will be overloaded if we send them 50 tenants without gas safe certificates under the same landlord
Gas safe and deposit legislation doesnt work for the criminal landlords, of which there are more than most would care to admit.
@HBW Yeah of course there are tenants who try to avoid paying rent but my point is they dont automatically go “oooh Section 213…lets have a pint” They arent that legally savvy.
But I confess I’m ignorant of deposit insurance. Do tell!!!!!!!!
Of course NO court fees apply if the tenant is on a low income.
Despite that the whole system is a minefield. Even after winning an order for non-protected deposit compensation, this was set aside because my daughter’s landlord had moved without telling the court or her tenant and the whole debacle was rolled up with a s21 case which dragged on for 3 yrs of hearings and technical backtracking for various complex procedural issues; eventually a private settlement was reached, so all that court time (5 hearings in all) was wasted.
Not an experience she wishes to repeat!!
Have a search Ben and the main providers will come up.
They are a legitimate alternative to taking a deposit.
The tenant pays for referencing, if they pass, they take out deposit insurance.
The tenant pays the insurance premium, which is a lot less than a normal deposit.
It is clearly stated as a non-refundable payment and doesn’t come under deposit legislation (someone will correct me if I’m wrong!).
If they don’t pay the rent or damage the property, the landlord claims on the policy when they leave, up to the equivalent of a couple of months rent, similar to a ‘normal’ deposit.
The insurers then chase the ex tenant for their losses.
That is the way it normally works.
An angle on this is the landlord taking on the risk themselves.
They charge the tenant a non-refundable annual premium and pocket it themselves.
No pesky deposit regs to bother with.
E.g £600 pcm rent.
£200 annual premium (slightly higher than the pukka schemes).
After 3 years the landlord has a months non-refundable deposit.
Any premiums after that are pure gravy.
Tax deductible if they have to pay out.
Pop in a bit of annual index linking for more icing on the cake.
A loose variant on council bond schemes except the tenant gets turned over instead of the landlord.
I can hear voices (!) saying, what tenant would be daft enough to go along with that? To which I’d say have a look at letting agent renewal fees and pay day loans.
£600 or £200?
In fact, if I’d just been victim to one of the many failings of this legislation like this one;
http://www.theguardian.com/money/2014/jun/19/rogue-landlords-exploit-deposit-protection-loophole
I’d maybe prefer to get scammed by instalments myself.
Thanks for the heads up HB I’ll look into it in detail. When say if the tenant passes referencing do you mean credit checks? Most of my clients wouldnt
Fascinating thread as I expected when I first saw it posted by Ben.
HB Welcome I’d like to know how you are going to justify, under Consumer Law recently beefed up with fresh regulations and codes of practice, charging a premium for nothing.
All these type of policies in my view, along with ‘guarantees’ or paper bonds from local authorities are a complete waste of time (sorry Ben!) because the decision whether or not to pay out is subjective as it costs the payer (insurer or LA) money.
The word “reasonable” (which makes lawyers rich) and above all “agree” are usually liberally sprinkled though them especially the LA bonds.
Posters seem to be blaming the system for allowing tenants to do what is theirs by legal right in just the same way as staying on at a property after the fixed term has expired.
There is an easy way for Landlords to avoid s213 claims and that is deal with TDP obligations as they should do.
The number of s213 cases that should actually reach the Courts are minimal, because they are open and shut, black and white, and if guilty the only decision is the level of award and above all, costs. If you are dealing with a rogue Landlord or one who shouldn’t be letting and probably in jail instead then I agree it will be a waste of time and effort.
But if you are not then sending appropriate legal letters telling the landlord just what he is facing financially should bring an out of Court settlement, even if only the deposit returned + x 1.
I can cite two cases that support both arguments. I had an open and shut one where the Landlady simply kept saying the tenants had broken their agreement (they were leaving early after being stitched up on a 3 year agreement the LL didn’t even know about) and the agent, a London based ARLA one with 10 offices refused to advise her she should settle and in my view failed in their Duty of Care to her. In the end because it was girl sharers and one had gone abroad to work and didn’t want to pursue it they never went to Court and the landlord, totally wrongly, got away with it.
In the second a letting agent client of mine who was a tenant of an idiot Landlord got fed up with being messed around by him at tenancy end and having had an email from the Landlord confessing to not having protected the deposit and returning it (honest) decided to pursue a s213 claim. The fact the deposit was £1500 and that his brother was a barrister probably swayed him, he was awarded x2.5 the deposit (first case I had seen with an odd multiple) and the barrister was awarded £1800 costs.
Works both ways, sadly not well enough in both cases.
The counterclaim issue arises in a s8 hearing, not s213 claims or s21 actions
Yes Ben, credit checks.
Its not particularly common.
I was more highlighting possible reasons for properties being advertised as ‘no deposit’. It is not for altruistic reasons.
IO,
I’m not trying to justify it, I don’t do it.
I take up front deposits and comply with the legislation.
There seem to be plenty of ‘no win, no fee’ type solicitors specialising in tenancy deposit cases. Do you have any experience of people using these Ben?
They seem to try to settle out of court in the first instance. Given the number that come up on a simple google search I’m guessing they must have a fair amount of success?
I am not aware of any no win no fee solicitors, my understanding when I spoke to various solicitors firms about this is that it is not an attractive proposition for them.
You will probably find that the firms out there are claims firms not solicitors and that their object is to get the landlord to pay up without having to actually issue proceedings.
Agreed Tessa, I’ve been trying to find a genuine CFA deal for some time but response is luke warm.
Also many of the deposits for the people I see who are worst abused are well under £1,000, so even a full 3 X penalty doesnt come to a huge amount, although even £400 is an impossible sum to raise when you are on £75 a week JSA, so its all relative
This sounds really alarming and in particular the cartoon “case dismissed” at the top of the page seems to make a mockery of everything I have read about these claims. My understanding was that either non-protection or non serving of Prescribed info are “strictly liable” and that there is no defence even if the landlord complies late. If that is the case then why would a case be dismissed – although I understand that there is discretion in terms of granting 1,2 or 3 times the deposit? Or is the cartoon misleading and your real point that the procedure isnt streamlined enough and tenants have to front the costs? Because obviously there is a big difference.
Until reading this I was sure that non-compliance of deposit rules would never result in a case being dismissed but given that Ben seems very knowledgeable I am not so sure now.
Laura dont be thrown by the graphic. The point of the piece is certainly the unwieldiness and in many cases pointlessness of the legislation as it exists.
But deposit protection legislation as written even after several re-drafts is about as stable as candyfloss in a force 8 gale. Look back at Piggott v. Slavin, Tiensia, Fletcher and on & on.
One thing I have learnt from a whole working life in frontline housing problems is that what the law says and what goes on in the real world is not always the same thing.
Justice and ‘Access to justice’ dont always marry up, nether do the concepts of what could be termed ‘Natural justice’ and the legal system. Two different animals.
A tenant or landlord could win a case, get a money judgement against the other side, but all it is, is a court judgement. The court doesnt collect the money for you.
After judgement there is further work to be done. The courts charge a court fee for it so its up to whether or not the person claiming can afford to take things forward.
Even if they do then payment relies on the defendant’s ability to pay, so an applicant of any stripe can invest time, anger at injustice, moral outrage, and psychological effort in seeking said justice, only to find that at the end of the day they still get Nada and the perpetrator lives to scam another day.
Deposit protection legislation is very useful for housing advice types like me to block possession proceedings but beyond that, given the cost, sympathies of the court and the complications I wonder why they bothered sometimes.
Ben, your appraisal of reality versus theory is grim but no doubt realistic given your experience. It is unfortunate that bodies such as Shelter suggest that claiming is a)straightforward, b)probably does not require a solicitor and c)is cheap (their only mention of upfront expense for tenants is £155.00. See http://england.shelter.org.uk/get_advice/tenancy_deposits/getting_your_deposit_back/tenancy_deposit_compensation_claims
Can you point me in the direction of your “join the dots” non-compliance claim guide, if publicly available? Thanks
The procedure you are supposed to use for deposit claims using form N208 is not straightforward.
Also if the landlord fails to settle there can be very substantial court fees to pay before the case can be set down for a court hearing. These will be recoverable from the landlord but have to be actually paid to the court by the tenant first.
Then, as Ben says, if the landlord fails to pay the judgement, you will need to apply to the court to enforce the CCJ – which can be tricky and expensive. Getting a CCJ does not mean you will automatically get paid. Many CCJs go unsatisfied – I think it is about 30%.
Tenants should get legal advice before taking any action.
It is also worth noting a further complication I have encountered on several occasions. Court listings clerks advising applicants that the N208 is the wrong form, as its a money claim.
So as well as giving tenants the pack I also advise them not to be fobbed off. Listings clerks are not advice staff. There is always a note on the wall of listings office advising the public of this fact.
Listings staff are normal human beings and service varies from very helpful to downright rude and obstructive.
When getting injunctions for illegal evictions tenants on benefits are exempt from the court fees and can use a form EX160 which requires them to produce written evidence of benefits that is dated within the past month but in illegal evictions such documentation is usually locked up in the property, so as an alternative the tenant can sign a General Form of Undertaking to produce the evidence in 5 days once we get them back in but its a 50-50 chance that the listings clerk wont allow them to do an undertaking. A polite request for them to ask their manager usually entails disappearing through a door for 30 seconds and coming back with a second ‘No.
So as I’ve written elsewhere about paltry fines by the criminal judiciary, although the legal machinery is in place, in practice its really a bit of a minefield
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