Changes they are acoming.
Talking to Kevin Firth of the DPS at the recent Landlord & Letting Show, he mentioned that the amendments in the Localism Bill are now more or less set in stone and are just waiting for the Royal Assent.
So it is about time I told you what they were:
30 days for tenancy deposit protection and service of the prescribed information notice
There has been criticism of the current 14 day period, as it is not really long enough for some situations, for example where the deposit money is being passed from a letting agent to the landlord to protect.
However 30 days should be ample.
Initial requirements
The wording regarding initial requirements in the current legislation have caused all sorts of problems, witness the Tiensia case et al.
New wording will be put in place to hopefully prevent these arguments in future.
After the tenancy has ended
The new rules will make it clear that the landlord will not have the option of retrospectively protecting the deposit. If the tenant goes to court, the only option will be to order the return of the deposit to the tenant.
Although I understand that the DPS will still accept and protect the actual money – however this will not be sufficient to defeat a claim, as it does now.
The penalty for non protection of a tenancy deposit
At present the Judges have no discretion to do anything other than award a penalty of three times the deposit sum. This has incurred the hostility of the Judiciary as there are many occasions where the penalty is perceived as being too harsh and unjust.
Under the new rules Judges will have the discretion to award not less than the amount of the deposit and not more than three times that amount.
Section 21 notices
The rules will be amended to make it clear that a section 21 notice cannot be served if the deposit has not been protected or the prescribed information notice served.
However this rule may be mitigated if the deposit has been returned to the tenant (in full or with agreed deductions), and if an application to the court has been made under s214 which has been resolved.
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So there you are – thats whats likely to happen, possibly after April 12 2012. If you want to see the bills itself its >> here, s171.
Advice to landlords:
ALWAYS protect the deposit as soon as you can. AND serve the prescribed information.
- For Landlord Law members, my form for the prescribed information notice is >> here
- The DPS template is >> here
Probably the thing which annoyed the Judges most about the current legislation is that it gives them no discretion. However the new rules do.
So, as the tenancy deposit rules are there to protect tenants money they will probably come down hard on landlords who they think are blatantly failing to protect.
At last some good news for tenants.
I listened to Money Box on Radio 4 at the weekend when Shelter’s John Gallagher was talking about this with the head of the RLA who expressed the opinion that the main problem was with tenant ignorance of legal process, which I thought was a bit rich
Personally, I think the ‘Protect within 30 days’ or ‘refund the deposit’ in order to use section 21 is disproportionate.
I admit that ignorance of the law is no defence, but I contribute to a landlord forum where many accidental landlords find themselves only discovering deposit protection when they are on the verge of serving an s21. Often, if they are serving an s21 it is because of problems in the tenancy and to give back their ‘security’ seems harsh. Sure, a tenant is going to ‘agree’ to deductions in this situation.
My 2p worth is that an extended s21 notice period apply in the case of deposits not protected within 30 days.
Oh, and why don’t we limit the life of an s21 to remove the so called ‘sword of Damocles’ effect.
Isn’t it already clear that failure to protect a deposit means no s.21 notice can be served? How exactly is it different from the existing wording, because as far as I know this is generally undisputed (save for Saad -v- Hogan points).
@JS It would solve a problem I was once involved in where a landlord had not protected a deposit and was asked by the tenant to offset it against her arrears. However the Judge refused a possession order under s21 as the deposit had not been protected, even though both parties were happy for it to be offset against arrears.
Needless to say the tenant then put in a claim for the compensation! Which she lost as of course the deposit HAD been protected by the time she issued.
But it was annoying to have to issue proceedings for possession twice.
I assume that it is this sort of thing that the new rules will ameliorate.
I get accused of being soft and too diplomatic in dealings with landlords and tenants sometimes but I do find myself being quite hard core on this one.
Tessa I can see times when that would happen and the legislation gets in the way but in my experience it is the exception rather than the norm.
@David like you say, ignorance of the law and all that (great title for a law book Tessa). Information on the requirement for deposit protection is widely and freely available and has been for 4 years now. There is no excuse and I still see a huge amount of unprotected deposits, just today, I spoke to a high street agent who should know better who has failed to do it for 5 of their tenants.
I think the changes are timely and good. 30 days is sensible as is the sliding scale of penalties which adequately covers the clueless amateur landlord
And lets not forget why this legislation was brought in, because only around 14% of tenants were getting their deposits back at the end of their tenancy, because too many landlords were treating it as an extra income source.
I for one, shall be lighting a celebratory sparkler
I had already seen the Bill with these amendments in so it came as no surprise to me. Hopefully this will go some way to sorting this problem out but it always an unknown. There were a number of cases where District Judges were saying the tree times deposit mandatory order went against the grain which I believe referred to the fact that the judges were not given the discretion to which you refer.
I did a project in 2009/10 on the Tenancy Deposit Scheme which was prior to the Court of Appeal judgments. However I had proposed a number of amendments. I am not going to go into all these and there were quite a number.
One of these relates to who was a tenant and did it include a former tenant? The legislation did not address this at all. The importance of this is whether a tenant could apply for a s214 order after the tenancy has ended. (Of course the position was considered by the Court of Appeal subsequently). I considered that it was necessary to make the legislative intention clear. I am pleased that the legislature has made the position clear. The 30 days requirement will give more scope for a Landlord but a balance has to be struck and I have to say I am not persuaded by the argument of landlords that it should be longer. There is plenty of information in the community on the duties of landlords both from organisation like a local Council, the Citizens Advice Bureau etc. The internet has a wealth of information on landlords’ responsibilities and there are of course landlord organisations in existence that can help and in fact a site like this.
The former tenant scenario is of course covered in the amendments and of course the time in the Bill is now the 30 days rather than the 14 days.
However there still remains, as far as I am aware (not checked this) that any proceedings have to be issued under Part 8 whatever amount is involved. There should be amendment to the CPR for these proceedings to be automatically referred to the small claims track unless it is above the monetary level.
I am shortly going to revisit academically the Tenancy Deposit Scheme to look at things as they are now. One of the problems I found was reluctance by key players and both landlords and tenants to participate to any great extent in the surveys that formed part of the thesis behind the analysis but hopefully I will be able to get more responses on this occasion.
Thank you Ron for your thoughtful comments.
As regards the claim procedure, there was a note on the Court Service website saying that part 8 should be used but it seems to have disappeared.
Hopefully this will be addressed before the new rules go live, probably in April next year.
Just found an interesting article about DPS’s new contract – http://www.keywee.co.uk/archives/3522. Especially interesting as Scottish Government have opted for a custodial scheme.
“As regards the claim procedure, there was a note on the Court Service website saying that part 8 should be used but it seems to have disappeared.”
See CPR 56.1(f) and PD 56 paragraph 2.1
Thank you Westminster.