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View Full Version : Tenancy deposit not protected - advice please



HelenHol
28-01-2009, 09:58 AM
3 tenants rented one of our properties from 1st Sept 07 to 30 August 08. Despite my requests the tenants never signed a joint tenancy agreement so i was unable to lodge the £600 deposit with mydeposits insurance based scheme which i normally use. The tenants paid their rents fine.

When the tenants left the property £300 of work was required to make the property suitable for the next tenants. After much discussion with the tenants i agreed that i would refund all their deposits less £40 (£160). I have an email confirming that they would accept £164 each accepting some of the liability for the costs.

They have now contacted the CAB who are pushing for the full £200 to be returned each and are treatening to take us to court to claim the x 3 deposit as the deposit was not protected.

I have been fair on the deposit i have returned to them, but obviously i am in a tricky situation as the deposit was not lodged.

If the tenants do not have a signed tenancy agreement. Could they still go to court and claim the full deposit x 3 compensation? I think they are just looking to make money now. Can i protect the deposit now and would this stand up in court?

Any advice would be much appreciated.

Thanks

Poppy
28-01-2009, 10:05 AM
Stupid question, how were they able to move in without signing a contract?Just because you did not have a signed tenancy agreement did not stop you protecting the deposit.

Suggest that you return all of the deposit money right now.

I note your phrase "one of our properties". I sincerely hope that all other deposits taken on or after 6 April 2007 are protected in schemes. Are they?

HelenHol
28-01-2009, 10:59 AM
Not a very helpful response Poppy!

Mydeposits (the scheme I am a member of and where all our property deposits are protected) do not allow you to register a deposit if there is no AST in place. I have just spoken to Mydeposits and they have confirmed this is the case and pointed me to the document that states this. As far as they are concerned the tenants would have no case as they did not sign the tenancy agreement (despite me pestering them).

MrJohnnyB
28-01-2009, 11:07 AM
You can still register your deposits with the TDS and are legally bound to. Just because you do not have a written tenancy agreement, doesn't mean that such an agreement exists by simple operation of law there has to be an agreement to protect both parties. Its a simple fact, regardless of what you may have recieved in confirmation from the tenants the statute takes precidence.

johnboy
28-01-2009, 11:19 AM
A tenancy is in place it just happens to be verbal and is legal due to the Law of property act 1925 section 54.

Poppy
28-01-2009, 11:46 AM
Like MrJohnnyB and johnboy says just because you do not have a written tenancy agreement, this tenancy is still an assured shorthold tenancy and it does not stop you protecting the deposit. I hope you now understand that.

I see nothing wrong with what I have said.

All that mydeposits meant is that the law for protecting deposits only applies to assured shorthold tenancies that began on or after 6 April 2007.

HelenHol
28-01-2009, 13:04 PM
I have just contacted the TDS and as I am a private landlord, and they cover corporate and agency lettings, I am unable to register the deposit with them. They referred me to Mydeposits (see previous comments).

SALL
28-01-2009, 13:08 PM
I have just contacted the TDS and as I am a private landlord, and they cover corporate and agency lettings, I am unable to register the deposit with them. They referred me to Mydeposits (see previous comments).

http://www.depositprotection.com

This is another option to protect a tenancy deposit.

HelenHol
28-01-2009, 13:24 PM
Thanks SAL.

I have spoken to the DPS and they are happy for me to protect the deposits, even though the tenants have left the property. It sounds like this is the best course of action as I happy that the tenants are liable for a minimium of the £40 each and should resolve the problem of having no written tenancy agreement.

Poppy
28-01-2009, 13:24 PM
Do you think you will avoid legal action by protecting the deposit eighteen months after receiving it and the tenancy has now ended? I don't get that. Other members may disagree.

I must say I did not know that TDS do not deal with ordinary residential landlords.

Yes, of course DPS are glad to get the money because they were hoping to rely on interest earned and we all know where interest rates have gone lately - south!

MrJohnnyB
28-01-2009, 14:00 PM
I must say I did not know that TDS do not deal with ordinary residential landlords.

Thats because they do.. Or so this would have you believe...

The Dispute Service Ltd (TDS Ltd). This company has been established as a joint venture company between RICS, the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA). As a government backed scheme it must be open to all, providing applicants are prepared to sign up to the scheme rules. It is not, therefore, necessary to belong to one of the constituent professional bodies in order to join TDS Ltd. Membership fees are chargeable (see below).

The problem is, when you undertake to protect money in a scheme arent you required to obtain a signature from the parties entering into the scheme at the time the lease is formed?

mind the gap
28-01-2009, 14:06 PM
Stupid question, how were they able to move in without signing a contract?Just because you did not have a signed tenancy agreement did not stop you protecting the deposit.

Suggest that you return all of the deposit money right now.

I note your phrase "one of our properties". I sincerely hope that all other deposits taken on or after 6 April 2007 are protected in schemes. Are they?

I agree with Poppy, especially the highlighted advice. Oce you have returned the deposit in full I think it highly unlikely that a claim for 3x would succeed. The point of deposit protection is to ensure a deposit is not unfairly retained by LL and if your return it all now, that principle will have been adhered to.

HelenHol
28-01-2009, 14:21 PM
Point noted and returning the deposit in full is certainly an option.

When the tenants left the property there was (genuninely) £300 of work that had to be completed before the new tenants moved in (new tenants with a signed tenancy agreement and fully protected deposit:)). In have an email from the ex-tenants accepting part responsibilty for this work - £148 in total but now they have the CAB involved they are looking to get as much money as possible.

I agreed to refund £440 - making them pay £160 - so per their email they are only disputing £12.

Do I pay them back the full deposit when they have accepted liabilty for some of the costs (although i feel they are actually liable for more)????

mind the gap
28-01-2009, 14:27 PM
Point noted and returning the deposit in full is certainly an option.

When the tenants left the property there was (genuninely) £300 of work that had to be completed before the new tenants moved in (new tenants with a signed tenancy agreement and fully protected deposit:)). In have an email from the ex-tenants accepting part responsibilty for this work - £148 in total but now they have the CAB involved they are looking to get as much money as possible.

I agreed to refund £440 - making them pay £160 - so per their email they are only disputing £12.

Do I pay them back the full deposit when they have accepted liabilty for some of the costs (although i feel they are actually liable for more)????

If you want to minimise the risk of their 3x claim succeeding, yes! And do it now, is my advice.

SALL
28-01-2009, 14:38 PM
If you want to minimise the risk of their 3x claim succeeding, yes! And do it now, is my advice.


I agree, returning the full deposit would be the safest and best option.

HelenHol
28-01-2009, 16:03 PM
I'm getting mixed advice on the best course of action as the NLA have told me to lodge the deposit with the dps.

Poppy
28-01-2009, 16:06 PM
What reason did NLA provide?

The choice is yours. What do you want to do?

mind the gap
28-01-2009, 16:11 PM
I'm getting mixed advice on the best course of action as the NLA have told me to lodge the deposit with the dps.

It sounds as if the tenancy is over anyway. I doubt that you would be allowed to protect a deposit for a now-defunct tenancy.

Give it back!

HelenHol
28-01-2009, 16:13 PM
I'm repeating previous comments - but the dps have confirmed that we can lodge the deposit after the tenants have left the property.

Mrs Jones
28-01-2009, 17:06 PM
Do you really think it is worth all this aggro for a couple of hundred pounds??

Just return their deposit. If they have their deposit back, there is nothing to dispute.

HelenHol
28-01-2009, 17:11 PM
Yes is looks like returning the deposits is the best option (no i don't want the agro). My only concern is whether they could still go to court for the 3x fine.

mind the gap
28-01-2009, 17:13 PM
Yes is looks like returning the deposits is the best option (no i don't want the agro). My only concern is whether they could still go to court for the 3x fine.

I'm not sure, but you hanging on to any of it will only make it more likely, won't it?

Poppy
28-01-2009, 17:22 PM
So, what have you learned?


ASTs can be oral or written.
Deposits must be protected in a scheme, otherwise the tenant can sue for three times the deposit.

I'm going to stick my head out and say if you return all of the deposit money right now, the ex-tenants will not take you to court.

jeffrey
28-01-2009, 17:26 PM
So, what have you learned?


ASTs can be oral or written.
Deposits* must be protected in a scheme, otherwise the tenant can sue for three times the deposit.
*- but only AST deposits.
There is no requirement- indeed, no possibility- of deposit protection for a deposit on an SAT or a non-1988 Act letting.

Poppy
28-01-2009, 17:28 PM
OK, let my clarify. For ASTs, any deposit taken must be protected in a scheme.

lostprince
09-02-2009, 22:24 PM
Helenhol - a very late reply and I'm sure you've resolved this, but...

You do NOT have to worry about being made to pay 3x the deposit if you have protected the deposit with DPS. 3x the deposit is only payable if you haven't protected it at the time of court hearing. (Schedule 10 Regulatory Impact Assessment)

Paul Gibbs
10-02-2009, 10:34 AM
Late reply as well (sorry been busy) but you say that you and the tenants were £12 apart? If this is right why not settle and the wording of the settlement is that LL & T agree that the deposit in the sum of £x will be divided as follows. This agreement is in full and final settlement of all disputes between the parties in relation to the tenancy at (address).

you get your money, T gets their and they have compromised any claim for the deposit they have against you.