PDA

View Full Version : 2006 AST, renewed but deposit not protected, s.21 valid?



westminster
06-03-2010, 18:24 PM
I'm posting this on behalf of another landlord, bsx043, as we've been discussing it at the bottom of the high court case thread (http://www.landlordzone.co.uk/forums/showthread.php?p=196343#post196343), so the question might be missed.

Background: AST signed in 2006, renewed fixed terms in 2007 and 2008. Deposit not protected on renewal. Now periodic. T owes four months' rent. Agent has served s.21 notice, believing protection of deposit not required, (and advising LL that s.21 preferable to s.8 as T may defeat the latter by various means).

Now, we all know that it is advisable to protect the deposit in these circumstances as the statute is generally interpreted to mean that the deposit is re-received with a renewal. Nevertheless, the statute isn't crystal clear on this issue, and there is no high court decision on the matter, so it's still open to argument. See my post on the other thread. (http://www.landlordzone.co.uk/forums/showpost.php?p=196317&postcount=6)

Question is, what effect might this have on accelerated possession procedure/form N5b? Could the tenant, in theory, raise the issue and possibly defeat the application (depending on the judge's interpretation of the statute)?

Also, while the LL intends to protect the deposit now he realizes the mistake, he's reluctant to delay things further by re-serving another s.21 post protection. What's the best way forward;


cross fingers that no-one will question the validity of the first s.21
serve a s.8 notice and follow up with s.8 route for possession
protect the deposit, serve a s.8 and a new s.21, follow up with s.8 route, failing which use s.21 route?

tom999
06-03-2010, 19:21 PM
I've never had to fill in a form N5b, so can't help you there - but it's possible that the tenant could argue the S.21 notice was invalid at the possession hearing, and I would imagine it's also possible the judge might accept the argument.There is no court hearing under the accelerated procedure, unless the tenant requests one; and the Judge agrees.


Question is, what effect might this have on accelerated possession procedure/form N5b? Could the tenant, in theory, raise the issue and possibly defeat the application (depending on the judge's interpretation of the statute)?Any astute Judge would throw the claim out, as N5B has sections for tenancy renewals, and the claimant's (landlord's) submission to the Court should include any relevant documents to support the claim, e.g. AST, proof of deposit protection, s.21 and proof of s.21 service.




cross fingers that no-one will question the validity of the first s.21
serve a s.8 notice and follow up with s.8 route for possession
protect the deposit, serve a s.8 and a new s.21, follow up with s.8 route, failing which use s.21 route?
3. is the best option.
1. is a definite no.

westminster
06-03-2010, 19:52 PM
Thanks, Tom. I really wasn't sure what to advise.


Any astute Judge would throw the claim out, as N5B has sections for tenancy renewals, and the claimant's (landlord's) submission to the Court should include any relevant documents to support the claim, e.g. AST, proof of deposit protection, s.21 and proof of s.21 service.

In the other thread, the LL says:



In Form N5b, it states (7B(d)) that “if your claim for possession is in relation to an Assured Shorthold Tenancy where a deposit was taken after 6 April 2007, you must provide evidence that such deposit is safeguarded with a tenancy deposit scheme (TDS)....”. The agent says that this does not apply in my case, since the deposit was taken before this date and the new tenancy agreement has replaced the first tenancy agreement for the same premises and with the same landlord and tenant (clause 6 of the form applies). As far as I can see, there is nothing in form N5b that seems to indicate that my application would be invalid.

I'm just quoting as I am not familiar with the form or the procedure.

But that aside, I take it that your comment about an "astute" judge implies that you think (as I do) that deposit protection applies for renewals after 6th April 2007?

My interest in the issue is that, because the statute doesn't make it crystal clear, how are LLs supposed to know what they are meant to do? Obviously, a sensible LL would cover himself by protecting the deposit, but...

irishgem1
06-03-2010, 20:29 PM
Hi Guys! Have, as always, been reading your comments with interest. On the DPS website, under legislation, it states that deposits taken before 6th April 2007 do not have to be protected by a government scheme, however, as an existing tenancy is renewed and the Landlord agrees a new fixed-term tenancy,the initial deposit taken must then be lodged with a tenancy deposit protection scheme. Does that not imply that it is the law?
Many thanks

tom999
06-03-2010, 20:40 PM
I take it that your comment about an "astute" judge implies that you think (as I do) that deposit protection applies for renewals after 6th April 2007?If a renewal tenancy means that a new tenancy agreement is issued.


In Form N5b, it states (7B(d)) that “if your claim for possession is in relation to an Assured Shorthold Tenancy where a deposit was taken after 6 April 2007, you must provide evidence that such deposit is safeguarded with a tenancy deposit scheme (TDS)....”. The agent says that this does not apply in my case, since the deposit was taken before this date and the new tenancy agreement has replaced the first tenancy agreement for the same premises and with the same landlord and tenant (clause 6 of the form applies). As far as I can see, there is nothing in form N5b that seems to indicate that my application would be invalid.

Here's section 6 of Form N5B:
"6. Whenever a new tenancy agreement has replaced the first tenancy agreement or has replaced a replacement tenancy agreement,
a) it has been of the same, or substantially the same, premises, and
b) the landlord and tenant were the same people at the start of the replacement tenancy as the landlord and tenant at the end of the tenancy which it replaced."

The accompanying N5B notes say that section 6 should only be deleted if there has been the one tenancy.

I'd advise 'bsx043' to take legal advice, if he/she is unsure, and not rely on agent.

westminster
06-03-2010, 20:42 PM
Hi Guys! Have, as always, been reading your comments with interest. On the DPS website, under legislation, it states that deposits taken before 6th April 2007 do not have to be protected by a government scheme, however, as an existing tenancy is renewed and the Landlord agrees a new fixed-term tenancy,the initial deposit taken must then be lodged with a tenancy deposit protection scheme. Does that not imply that it is the law?
Many thanks
No, is the short answer. The DPS doesn't dictate the law. What they say on

https://www.depositprotection.com/public/legislation.aspx

is their interpretation. And it's good advice to landlords given the uncertainty - best to err on the side of caution.

Read the actual statute, i.e. the law, and you'll see it is open to interpretation.
http://www.opsi.gov.uk/ACTS/acts2004/ukpga_20040034_en_19#pt6-ch4

Also, here's a case where two different judges took two different views.
http://nearlylegal.co.uk/blog/2010/02/tenancy-deposit-renewal-of-tenancy-again/

irishgem1
06-03-2010, 21:08 PM
Westminster, thank you!

bsx043
06-03-2010, 22:49 PM
Thanks to Westminster for posting this thread. The situation I am facing at the moment is heads I lose, tails I lose. Maybe win later.

Here’s my predicament:

EITHER

Demand that agent protects T deposit which he holds and serve s21 again.
Meanwhile I serve the S8 notice, and proceed on that basis

OR

Let him Submit Form N5b and documents on Monday and expect it to fail, then sue him for litigation later. I am supposed to be the dump one though.


Do I have a better choice other than first above? I am not a lawyer but an academic who understands how to respect the law better than scrupulous businesspeople. Thanks for enlightening me on this issue anyway.

westminster
06-03-2010, 23:39 PM
Demand that agent protects T deposit which he holds and serve s21 again.
You don't necessarily need to rely on the agent for this. You could pay the deposit amount into the DPS yourself, send the T the prescribed information (https://www.depositprotection.com/public/documentlibrary/agentinfo.aspx) (NB keep copy and get proof of posting in the form of a free certificate of posting - essential), and get the money back from the agent afterwards.


Let him Submit Form N5b and documents on Monday and expect it to fail, then sue him for litigation later.
I would go with tom999's advice on this.

bsx043
07-03-2010, 09:45 AM
Thanks for all the information. Maybe I should seek legal advice, as Tom999 suggests, on the technicality of section 6 in Form5Nb. Are there any cases here or elsewhere where such actions on the s21 route have succeeded or failed?


On the other hand, Tom999 confirms your option 3 which, after reflecting overnight, I may decide to follow. I am not rushed for possession, although I thought the quicker the better to cut losses short. The next thing, at least for now, is to protect T deposit, issue s8 and new s21 with TDS confirmation, etc.

westminster
07-03-2010, 12:20 PM
On the other hand, Tom999 confirms your option 3 which, after reflecting overnight, I may decide to follow. I am not rushed for possession, although I thought the quicker the better to cut losses short. The next thing, at least for now, is to protect T deposit, issue s8 and new s21 with TDS confirmation, etc.

You must use the DPS to ensure you are protected against a claim for non-compliance.

http://www.depositprotection.com/

Do not use one of the two other schemes (i.e. TDS & mydeposits).

Also, are you clear on the requirements for a s.21 notice for a periodic tenancy? See this link (http://www.letlink.co.uk/letting-factsheets/factsheets/factsheet-21-section-21-notice-requiring-possession-of-an-assured-shorthold-tenancy.html).

havensRus
07-03-2010, 13:28 PM
Maybe I should seek legal advice, as Tom999 suggests, on the technicality of section 6 in Form5Nb.


You should delete S6 of N5b only if there has been no other ASTs signed since first one was issued. As long as there's another AST signed by same person(s), you must leave that section in.



The next thing, at least for now, is to protect T deposit, issue s8 and new s21 with TDS confirmation, etc.

That is the correct/best option.

Unfortunately, the law did not clarify the situation for tenancy renewal where deposits were taken prior to Apr07 and new ASTs signed after that.

Whilst the statute says deposits received after Apr07, the concensus is that it applies to renewals, as technically, a deposit has been taken for the contract, even though the no "new" money changed hands.

bsx043
07-03-2010, 13:42 PM
Thanks about the DPS.

About the s21(4)(a) Notice: According to the expired one-year fixed-term AST, rent payable in equal monthly payments on the 15th of each month. Therefore the date of expiry on the notice should be after 14th May 2010, and dated on (or before) 15th March 2010 ?

Next, landlord's address on the AST is c/o Agent's address. Should I have the same address or change it to my home address.

Also, is there a link on website where I can freely download s21 and s8 notices, perhaps in word/writable format rather than pdf ?

westminster
07-03-2010, 14:16 PM
About the s21(4)(a) Notice: According to the expired one-year fixed-term AST, rent payable in equal monthly payments on the 15th of each month. Therefore the date of expiry on the notice should be after 14th May 2010, and dated on (or before) 15th March 2010 ?
Periods start on the day after the fixed term expired (which may or may not coincide with the rent-due-day). So if the last day of the fixed term was the 14th of the month, then the periods would run 15th - 14th of the month and yes, the notice should seek possession after 14th May. Allow 2-3 days for postal delivery, i.e. post by the 12th to be sure notice is served by the 15th. Keep a copy and get a free certificate of posting. (Unless perhaps the contract specifies that notices must be served using a signed for service - does it? - but signed for services can be refused or returned undelivered).


Next, landlord's address on the AST is c/o Agent's address. Should I have the same address or change it to my home address.
Don't know.


Also, is there a link on website where I can freely download s21 and s8 notices, perhaps in word/writable format rather than pdf ?
Landlordzone has them.
http://www.landlordzone.co.uk/agreements.htm

Also, there are various landlord associations/websites you can join for a small annual fee and get such things and advice on them.

e.g.
http://www.landlordlaw.co.uk/pagedetail.ihtml?id=1396&page=non#1
http://www.landlords.org.uk/archive/factsheets/factsheets.htm

bsx043
07-03-2010, 17:17 PM
I have two more questions:

1. Before putting the deposit (equivalent to one month’s rent) on the TDS scheme, I need advice on how best to recover it, and what the procedure is. Tenant is owing over 4 month’s unpaid rent, which he is unlikely to pay. Furthermore, he has breached tenancy terms by displacing LL furniture, sub-letting rooms, redecorating them, keeping a pet in the house. Maybe, the house could be vandalized. All this would involve substantial cost to put right. In addition, there is cost of repossession, etc. AST terms are standard based on Oyez stationary.

2. On the S8 route to repossession, my case rests on grounds 8, 10, 11, and 12, although I could only state 8, 10, 11 to deter any counter-claim. However, confirmation can be obtained from neighbours about 12. Even on the mandatory ground 8 I have a strong case, as I don’t think T is likely to pay. Do I need to add 12 in case the tenant tries to be clever, putting in a counter-claim for repairs and all that? I am also thinking about the return of my deposit in full.

Even though s21 is a safer option, I think now that making a case through s8 might be strong. However, I am more thinking about what to state on s8 notice.

westminster
07-03-2010, 19:58 PM
I have two more questions:

1. Before putting the deposit (equivalent to one month’s rent) on the TDS scheme, I need advice on how best to recover it, and what the procedure is. Tenant is owing over 4 month’s unpaid rent, which he is unlikely to pay. Furthermore, he has breached tenancy terms by displacing LL furniture, sub-letting rooms, redecorating them, keeping a pet in the house.
You mean the DPS. When the tenancy ends, you will need to inform them that you wish to make deductions - the tenant can dispute it or not. The deposit schemes have an adjudication service; you can also choose to opt out and claim against the tenant in the county court (which you'll have to if you claim more than the deposit amount, because adjudication cannot award more than the deposit amount). See
http://www.hmcourts-service.gov.uk/infoabout/claims/index.htm
https://www.depositprotection.com/Public/DocumentLibrary/ProcessDocuments.aspx

You cannot make deductions for breaching provisions per se; you must have suffered an actual financial loss as a result.



2. On the S8 route to repossession, my case rests on grounds 8, 10, 11, and 12, although I could only state 8, 10, 11 to deter any counter-claim. However, confirmation can be obtained from neighbours about 12. Even on the mandatory ground 8 I have a strong case, as I don’t think T is likely to pay. Do I need to add 12 in case the tenant tries to be clever, putting in a counter-claim for repairs and all that? I am also thinking about the return of my deposit in full.
Judging by what I've read on the forum, it seems most LLs use just 8, 10, 11. Ground 8 is mandatory so if T doesn't pay the judge must grant your application. Ground 12 would involve a lot of extra work in terms of providing evidence and arguing your case, and is anyway unlikely to succeed as a ground as it's not mandatory. Whether you use G.12 or not, it won't in itself defeat a claim for disrepair; the T could be running a brothel and cannabis farm and you'd still be liable for repairing the boiler assuming T had reported it to you.


Even though s21 is a safer option, I think now that making a case through s8 might be strong.
As Tom999 previously advised, use s.8 route first (because the notice period is much shorter), then s.21 route in the event that doesn't succeed.

havensRus
08-03-2010, 12:17 PM
1. Before putting the deposit (equivalent to one month’s rent) on the TDS scheme, I need advice on how best to recover it, and what the procedure is. Tenant is owing over 4 month’s unpaid rent, which he is unlikely to pay. Furthermore, he has breached tenancy terms by displacing LL furniture, sub-letting rooms, redecorating them, keeping a pet in the house. Maybe, the house could be vandalized. All this would involve substantial cost to put right. In addition, there is cost of repossession, etc. AST terms are standard based on Oyez stationary.


If you want to make deductions from deposit, and want to use the scheme arbitration service, you would need to make sure you have a checkin inventory including photographs, and one on checkout, to show that the damage you are claiming for was done by T. Without any proof, it is unlikely you will be awarded damages.

It is generally recommended that LL not use the scheme arbitration, but use the court instead....

bsx043
08-03-2010, 20:10 PM
A check-in inventory was taken by the agent but not the photographs.

I have posted another thread on s8 and s21 issues for comments.
http://www.landlordzone.co.uk/forums/showthread.php?t=26732

While researching on this I now understand the s8-s21 strategy of evicting a problem tenant and wish I had been more alert and knowledgeable about these issues, rather than rely on the agent's view at the time.

pandoralcy
09-03-2010, 01:57 AM
You must use the DPS to ensure you are protected against a claim for non-compliance.

http://www.depositprotection.com/

Do not use one of the two other schemes (i.e. TDS & mydeposits).

Also, are you clear on the requirements for a s.21 notice for a periodic tenancy? See this link (http://www.letlink.co.uk/letting-factsheets/factsheets/factsheet-21-section-21-notice-requiring-possession-of-an-assured-shorthold-tenancy.html).

Hi westminster,

do i need to keep a copy of the signed prescribed information or
do i just need to give the tenant a copy?

Also, why do u recommend using the dps in this instance, and not TDS & mydeposits?

westminster
09-03-2010, 11:53 AM
Hi westminster,

do i need to keep a copy of the signed prescribed information or
do i just need to give the tenant a copy?
It is not essential for T to sign the prescribed information. It is enough to give to T, but you need proof you did, so keep a copy and get proof of posting in the form of a free certificate of posting.


Also, why do u recommend using the dps in this instance, and not TDS & mydeposits?

Because there was a recent High Court case (see link below), therefore binding on lower courts, which ruled that if the deposit is protected late with the DPS then the 3x penalty does not apply. It's specific to the DPS because the case concerned the DPS's "initial requirements" - the other schemes have different "initial requirements" and there hasn't been a High Court ruling on them as yet.
http://blog.painsmith.co.uk/2010/02/12/high-court-decision-on-tdp/