Rental Deposit Question-Help required

[kermallysultan]

My son rented a flat through Raymonds Estate Agent in Sutton and paid a deposit of £650. When he left a flat he did not get his deposit back because he was told the person handing letting has run away with the money and the matter is with the police. The person, they wrote me, was T/A as Raymond Estate Agents/Sutton Lettings who was based at their office.
My point is , eventhough there was a separate company, Raymond Estate Agents cannot let any one trade in their name and occupy their premises without checking to see if they have indemnity insurance. Failure to do so would lead to facilitating individuals to commit fraud.
I think I have a case against Raymonds Estate Agents in recovering money, if not in full at least in part.
Your advice/ comments/view will be greatly appreciated.

[Jennifer_M]

Who is the landlord of the property ? Is it Raymond Estate Agents/Sutton Lettings ?

If it is another person I think that is the person you need to chase up. Then it's up to the landlord to get their money back from the agent.
Remember your contract is with the landlord not the agent.

An expert will correct me if I'm wrong.

In anyway writing a letter telling them you will take them (landlord or agent, make sure you sue the right people!) to small claims court if you don't have the deposit back within 7 days usually gets people moving. If they still don't pay, then sue.

[MrWoof]

Do you have a receipt for the deposit, if so, who is it from? If it is from Sutton Lettings it looks like a police job but as Raymond Estate Agents allowed him to use their name, I would think they are liable. At the least, they are guilty of misrepresentation. Having said that, an agent acts on behalf of the LL and anything the agent does is on behalf of the LL. Perhaps Lawstudent should come in on this one.

[Paul_f]

If the agent was holding the deposit and an employee has absconded with it then that's the agent's problem and action should be taken against the agent. The landlord has not seen the money nor been a party to handling it therefore you can't go after the landlord.

If the agent is a member of ARLA/NAEA/RICS then you will be covered by insurance under the client money protection scheme that all such agents are party to and should write to the relevant organisation with the facts of the case.

You haven't quite fully explained it in enough detail to know who you exactly paid the money to. Is the agent you paid the money to still trading and is it a limited company or partnership/sole trader as all this is relevant?

[Jennifer_M]

Paul, are you saying that if a tenant wants to rent a property and the agent/LL decides the deposit is held by the agent (and the tenant has no choice in that really), then the agent disappears with the money, the tenant can't do anything to get his money back ??

And that even though his contract is with the LL and that you could see it as:
- the tenant wants to rent the property from the LL
- he gets into a contract with the LL
- he pays a deposit to the LL
- the LL appoints the Agent to hold the deposit as part of the contract between LL and agent

??

Seems a bit unfair to me (I know life's not always fair but here there seems to be a blatant lack of minimum protection)

[Paul_f]

The lawful position is:-


The agent holds the deposit in trust on the tenant's behalf not landlord.
The landlord only has access to the money if there are dilapidations or rent arrears.
If the agent absconds with the money you can't blame the landlord and it has nothing to do with the AST unfortunately.
That is precisely why you should only consider using ARLA/NAEA/RICS regulated agents as the tenant's deposit is protected by insurance.

[Jennifer_M]

Right I see, the problem is a tenant who wants to rent a certain property doesn't have the choice of the agent so basically he's got the choice between:
- rent the right property hoping the agent won't disappear
- rent another property that might not be suitable (but where the agent is "regulated")
- ask for the LL to hold the deposit and have the risk of a dispute at the end of the tenancy where the LL doesn't want to give it back

I know that bad situations are probably rarer than stories that end well but tenants are required to give deposits to cover the LL and have very little control over what happens to it yet the LL doesn't have any responsibility in what happens to the money.

I'm not going to change what is fact unfortunately, just having a rant at what seems pretty unfair to me. :rolleyes:

Would that new scheme about deposits (if it's still going to happen ?) give some more protection ?

[Dan]

What new scheme about deposits Jennifer?

[P.Pilcher]

2 Jags' new scheme is supposed to overcome such problems as you mention by requiring a government authorised third party to hold all deposits which landlords/agents are supposed to lodge within a certain period of the AST being signed. If this is not done, landlords loose the right to repossess their property under section 21. So as you can see, if the agent takes the deposit and runs off with it instead of lodging it with the third party as the new legislation will require, both landlord and tenant loose out.

P.P.

[Dan]

Oh okay, and who??? gets to keep the interest from all this accumulated deposit money. Is a third Jag on the way?

[P.Pilcher]

Ha Ha - I don't think anybody knows yet, but I assume that it will "help" to reduce the administration fees for the scheme which will be charged to landlords - another example of Gordon's stealth taxation.

P.P.

[Paul_f]

Pilcher has only given you half the story which only confuses the issue.

I won't go into a huge amount of detail here [there's enough though!] but agents will be able to retain deposits provided they are licensed to do so and they will have to prove they have all the necessary insurance etc. in place.

Anyone not licensed will of course have to lodge the deposit with a government designated body, which covers most private landlords. I don't agree that it will necessarily help matters in the event of a dispute, and of course if the agent/landlord or any tradesman who need to be paid out of the deposit can't claim on the proceeds if the tenant doesn't agree won't be able to. So the landlord will have to "front" such finance.

You will also need to extract all monies you are likely to be owed for administration charges before the tenancy commences, as you are unlikely to be able to get an outgoing tenant to meekly give up any outstanding money owed to an agent for instance when they leave!

Don't like it one little bit in this format. It's gone from being landlord dominated to tenant dominated, but voluntary schemes failed so what was the goverenment to do? Unscruplous landlords are unfortunately to blame. Now who could we be thinking of?

[P.Pilcher]

Thanks for your input Paul: It raises the question that if a tenant can unconditionally prevent the release of a deposit to a landlord who can justifiably claim all or part of it, what is the point of a deposit in the first place? I suppose we could charge tenants "administration" fees approaching a month's rent and unofficially offer to return most of it if they terminate in accordance with the conditions of their AST, but no doubt "2 Jags" will have that one covered!

P.P.

[Yardleystar]

I am not a lawyer but.....

1) Has the agent got a bonded account...if so it will be insured
2) Have you actually spoken to the police.....just to verify the story and to check the matter is with them, if you get my drift (I am considering the law of libel here!)
3) Liability is not negated by theft.....think about it.....if you are robbed it doesn't excuse you paying your bills. The theft is the agent's problem not yours and there is no reason why he should not stump up the cash and carry the loss

[Victor]

I have also been unable to recover a deposit held by the Letting Agent who was based in Raymonds Estate Agents office in Sutton.
Has any body out there any further information about this Letting Agent and are the police actually taking any action in this matter?

Thank you

Victor

[Tax Accountant]

I am not convinced that the security for the deposit rests with the agent. After all, how is the tenant to know what has happened to the deposit? For all he knows, it has been passed on to the landlord, just in the same way that the rent is passed on to the landlord.

I am inclined to say that it is the tenancy agreement which determines who is responsible for accounting for the deposit. I would also say that unless the tenancy agreement specifically states that the deposit is to be retained and accounted for by the agent, it is the landlord who is accountable for it as the agreement is always between the tenant and the landlord. An agent is always acting as an agent of the landlord.

Ramnik

[Jennifer_M]

I have the feeling this is not quite right. This issue has been discussed on the forum before and if I'm not mistaken the deposit is:

- the landlord's problem if it's held by him, and in case of a problem the LL is the one to be taken to court
- the LL's problem if held by the agent but the agent is asked by the LL not to return the deposit, then the LL is taken to court
- the tenant's problem if it's held by the agent and the agent has ran away with the money

I'm sure someone can confirm this.

[MrWoof]

The last time I used an agent, the agent held the deposit but not on my behalf. When I sacked the agent, I had to get written permission from each tenant to have the deposit transferred into my client account.

[Ericthelobster]

Anyone not licensed will of course have to lodge the deposit with a government designated body, which covers most private landlords.Is there any info as to when this scheme is coming into effect? (I'm assuming it is a "definite" now, right?)