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attilathelandlord
09-03-2007, 10:46 AM
Have been looking high and low and nowhere can I find the legislation that states that the costs of the TDS cannot be passed onto the tenant directly.

By that I mean literally asking the tenant to cough up the costs before the start of the tenancy, not just including it in raised rent.

Can anyone enlighten me?

Also can't find actual legislation where it states that landlord must pay up to 3 times rent in compensation if not in a scheme. Housing Act 2004 merely states that S21 cannot be served until scheme joined.

Any help there too? I'd like the specific Act/Statutory instrument. Thx.

jeffrey
09-03-2007, 11:39 AM
Have been looking high and low and nowhere can I find the legislation that states that the costs of the TDS cannot be passed onto the tenant directly.

By that I mean literally asking the tenant to cough up the costs before the start of the tenancy, not just including it in raised rent.

Can anyone enlighten me?

Also can't find actual legislation where it states that landlord must pay up to 3 times rent in compensation if not in a scheme. Housing Act 2004 merely states that S21 cannot be served until scheme joined.

Any help there too? I'd like the specific Act/Statutory instrument. Thx.

I think that all of your points will be covered by Statutory Instuments, not in the 2004 Act itself. Details to follow once I locate them.

attilathelandlord
09-03-2007, 11:44 AM
You may be right, I believe there are some that are due to be published that will cover this.

I've had several interesting chats with several policy bods of various organisations and get a 50% split yes/no.

I will keep looking also.

Poppy
09-03-2007, 11:46 AM
Little odd. Been trying to locate the legislation using search engines. Can't find it at present. Used to be able to. Could it be my imagination? :confused:

jeffrey
09-03-2007, 11:49 AM
Even the official UK Statute Law Database is silent on this!
I have sent an enquiry e-mail and will report back asap.

red40
09-03-2007, 11:56 AM
I think that all of your points will be covered by Statutory Instuments, not in the 2004 Act itself. Details to follow once I locate them.

You won't find them Jeffrey, they haven't been released yet and knowing this government it maybe May before anybody sees them:eek:

Rumour has it they will be released the week before the deadline, but how accurate that is, I dont know.

The disclaimer on the ARLA website says :-

Disclaimer
The answers in this note are provided in good faith and are based upon the information currently available (February 2006) but are subject to change as Statutory Instruments still have to be laid before parliament and contracts negotiated by successful scheme administrator bidders. Return to the top of the page

Poppy
09-03-2007, 12:01 PM
Think I've found it http://www.opsi.gov.uk/acts/acts2004/40034--q.htm#214
paragraph (4) specifies compensation equalling three times deposit to be repaid to applicant (ie tenant).

Poppy
09-03-2007, 12:10 PM
Found it in the end by starting out from the www.opsi.gov.uk website and then drilling down through

Legislation
UK
Acts
Public acts 2004
Housing Act 2004 web version (HTML)
did a search on the text for "deposit"
Sanctions for non-compliance
and found the correct section above

Not easy.

attilathelandlord
09-03-2007, 12:13 PM
Ha must have missed that am getting old!

jeffrey
09-03-2007, 12:20 PM
But the rules about costs will be in the (awaited) SI, it seems.

Poppy
09-03-2007, 12:21 PM
Have been looking high and low and nowhere can I find the legislation that states that the costs of the TDS cannot be passed onto the tenant directly.

By that I mean literally asking the tenant to cough up the costs before the start of the tenancy, not just including it in raised rent.

Can anyone enlighten me?


I don't see anything that says a landlord must bear the cost. I can only assume that the legislators expect that to be a matter for negotiation between the contracting parties.

In the same way that tenancy agreements state that rates, utilities and council tax are payable by the tenant - Make it a clause in the tenancy agreement. "Cost of holding tenant deposit to be borne wholly by tenant and is payable on the commencement of this tenancy." Or whatever similar. This of course needs to be backed up with an attached invoice from the scheme the landlord has chosen.

Or, simply charge a higher total rent and you deduct the cost from your tax bill, probably end up with the same net profit.

Or, simply charge the same total rent and you deduct the cost from your tax bill, thereby taking a smaller overall profit.

Alternatively, simply don't take deposits on or after 6 April 2007.

For clarity it is probably in the landlord's interest to specify who keeps any interest earned on the deposit in the tenancy agreement.

attilathelandlord
09-03-2007, 12:45 PM
Yes i agree with what you say.

I just like to see the root law in black and white as I've been asked this very question many times and couldn't locate the legislation.

Thx.

attilathelandlord
09-03-2007, 12:49 PM
Just phoned Shelter under the guise of being a tenant in order to get clarification.

Basically they are saying the same thing, it is not allowable for a landlord to recharge the TDS costs outright and I quote "if your landlord knows what they are doing they should increase the rent".

Also "if you get charged, come straight to us and we'll help you fight it".

However, I still didn't get the specific legislation. Suspect it will be in a Statutory Instrument yet to be released.

nick..
09-03-2007, 13:11 PM
Are you living so close to the edge financially that you would resort to spreading £30 over 12 annual payments just to get out of your obligations to pay this?

lorenzo
09-03-2007, 13:15 PM
LL: The rent is 702.50 pounds per month.

T: That's a strange figure. Why is that?

LL: I have to to cover TDS costs.

T: HANG ON! If I stay longer than a year, you're ripping me off 2.50 per month; I want a discount after 12 months! I want you to take off the 2.50 after you've paid off the TDS.

LL: You're being a bit petty aren't you?

Babboom :cool:

jeffrey
09-03-2007, 13:21 PM
OK- so have a round figure for rent. Charge £700 or £710. Don't start explaining what you factor into the rent.

red40
09-03-2007, 13:23 PM
If you want to see the DRAFT order its below under Housing, England and Wales, the explanatory notes are a riveting good read :rolleyes:

http://www.opsi.gov.uk/si/dsis2007.htm

lorenzo
09-03-2007, 13:30 PM
OK- so have a round figure for rent. Charge £700 or £710. Don't start explaining what you factor into the rent.

T: What? 710??!!!!! Ripoff! Harry is down the road is only charging 702.50 AND slashing it to 700 after 12 months!

LL: Oh #### it! 700 pounds then.

T: But, but, but.... How are you gonna cope not covering your TDS expenses?

LL: I'll manage. Just buy me a beer and we'll call it squits :o

attilathelandlord
09-03-2007, 13:32 PM
"Are you living so close to the edge financially that you would resort to spreading £30 over 12 annual payments just to get out of your obligations to pay this?" Nick

I was wondering when that kind of comment would be forthcoming! I am not interested in circumventing the legislation, I merely wish to see it clarified.

As it happens, extra costs can be set against tax and if I charge extra to cover the cost, that will increase my tax burden anyway so I'm not interested in the cost aspect in the least.

I'm just the kind of person who when told I have to do/not do something I want to know why and how. I don't just accept anything I'm told.

Lorenzo, don't forget that the premium must be renewed every year, as far as I can see it is not a one-off, much in the same way as car insurance. (got figures from mydeposit.com)

jeffrey
09-03-2007, 13:36 PM
If you want to see the DRAFT order its below under Housing, England and Wales, the explanatory notes are a riveting good read :rolleyes:

http://www.opsi.gov.uk/si/dsis2007.htm

I note that the draft SI:
i. makes no provision about L's costs; and
ii. contemplates L or T having to go to the hassle of a Statutory Declaration if they can't agree re L's retention of some or all of a deposit. How many people are likely to volunteer for that and the consequent delays?

lorenzo
09-03-2007, 13:40 PM
Thats another interesting point. The fee, which is tax deductable for LL, must be paid for with after tax income if passed on to T.

So T must earn 60 for what would only cost LL 15

attilathelandlord
09-03-2007, 13:51 PM
That's true Lorenzo, but there are few tenants these days who won't negotiate on rent and to be quite honest if I have a decent prospective tenant who can move in to save me a void then I'm not stupid enough to quibble over a few quid.

Interesting parallel to G Brown's recent taxes on the airline industry. It didn't take long for that cost to be passed on and I don't remember seeing any legislation that it couldn't be passed on (except that without ratification it wasn't legal to impose the tax!).

It's all swings and roundabouts really. At the end of the day most tenants don't bother paying the last month's rent if they are worried about the deposit and a lot of mine are overseas people. I generally give their deposits back in cash on the day they move out as they are taking it back home with them. If overseas tenants' landlords go for the custody scheme then I can't see the tenant hanging about for the time it will take the deposit to be repaid, they'll simply forgo the rent. Or harangue the landlord as they don't understand that the landlord no longer holds the deposit.

attilathelandlord
09-03-2007, 14:11 PM
Exactly Wickerman which is why I'm not too excited about the costs and recharging. I want to see the legislation that says I can't pass on the costs, not because I necessarily want to pass on the costs, but because I want to see the legislation!!!

Poppy
09-03-2007, 17:42 PM
All landlords know that the rent is a combination of any or all of the following:

use of the property
mortgage payments
repairs
maintenance
furnishings
insurance
professional fees
gas safety check
soon-to-be deposit protection
teeny tiny profit if you're lucky

All a tenant needs to know is the rent is the rent. Nothing further needs to be explained. I don't have to explain myself to my (usually nice) tenants.

jai
09-03-2007, 17:45 PM
I think this is a free deposit scheme..

http://www.depositprotection.com/Unrestricted/Schemes.aspx

If not I will indeed be charging my tenants an intial £100 setup fee. This is still less than what most agents charge.

Ericthelobster
09-03-2007, 19:23 PM
OK- so have a round figure for rent. Charge £700 or £710.I predict the TDS will actually hurt tenants more than they or the Powers That Be seem to realise... so it costs a LL £2.50 a month before tax to use the scheme: if he gets the hump about it, he'll put up rent not by £2.50, but by a minimum of £5 - maybe £10, which the tenant then has to find from taxed income. And if all landlords follow suit, then the market will certainly bear such an increase.

attilathelandlord
09-03-2007, 19:53 PM
Think you're right ETL. Bad landlords won't bother with the scheme anyway.
In the longterm, rents will rise, same with HMOs. Those who stick with it will see rents rise. It will always be the tenant who pays in the end and the poorer of them will get stung the worse.

I'm beginning to wonder if the injunction not to pass on the cost as such is merely a policy one, not statutory (until I see statute to the opposite) in that the wonderful government has implemented this wonderful new scheme but then realised that in a commercial world, the consumer pays and doesn't want to be seen as the bad guy.

lorenzo
09-03-2007, 19:54 PM
I predict the TDS will actually hurt tenants more than they or the Powers That Be seem to realise... so it costs a LL £2.50 a month before tax to use the scheme: if he gets the hump about it, he'll put up rent not by £2.50, but by a minimum of £5 - maybe £10, which the tenant then has to find from taxed income. And if all landlords follow suit, then the market will certainly bear such an increase.
That depends where the competition is.

If LLs are competing for Ts... fuggedit. They'll move on to the next (more sensible) LL... and probably beat the poor blighter down another 50 quid.

If rentals are scarce however, you will of course get away with screwing Ts for all they're worth. Chuck on 100 pounds for the "privilege" of the T having protection from you if you can.

Sheesh!

attilathelandlord
09-03-2007, 19:59 PM
Get real Lorenzo, no Landlord will charge more than the market as that would be financial suicide. I'm not a charity and my costs have to be paid. Every other business passes on the costs to the consumer, why shouldn't I.

The tenant has always had protection, namely the small claims court. It's just that most of them can't be bothered to use it, so now landlords are being asked to subsidize their fecklessness.

lorenzo
09-03-2007, 20:35 PM
Attilla,

Not every business can pass on every cost. Most businesses are faced with the prospect of absorbing costs from time to time. It is a matter of market forces working this out as time goes by, that is my point.

You'll get your 2.50 or 5 or 10 quid a month as conditions allow. Interest rates have gone up 1.5% percent in the last year or so (and if the MPC had any balls they'd have put them up the other day too): Have any of you passed that on to your clients-tenants?

I'll bet most have not been able to, I certainly haven't.

I'm just pointing out it's a lousy 30 pounds FFS. It costs very much more than that to send the lazy worthless plumber over to fix a dripping tap.

As to feckless tenants: In fairness, most are not savvy business people like y'all and the prospect of going to court (SCC or otherwise) is quite daunting, what with taking days off work and knowing what to do.

This type of system has been operating in Oz for years and it works well. Believe me you will end up appreciating it. (Unless Phoney Tony and Crash Gordon manage to really mess it up)

You ask me to "get real"; I say "get over it".

It's not a big deal.

attilathelandlord
09-03-2007, 21:01 PM
Well, yes courts are daunting but that's no reason to make the landlord cough up for the costs, especially since there will be arbitration meetings if there is a dispute about the deposit which the tenant will have to attend anyway and that won't be any different.

Also, the deposit schemes only cover the amount of the deposits. What if damage caused is much more than that? The tenant will find him/herself in court defending and that won't be much fun either. All it will do is double the amount of arbitration/court time.

Plus, for some landlords it's not just a measly £30, it could be around £3000 a year.

It is just another unnecessary layer of bureaucracy and quite frankly will rebound on the tenant with higher rents.

Also in Oz it's much easier to remove nonpaying/property damaging tenants. If we had an easier time of removing said tenants then maybe we could tolerate such legislation. I can't see us appreciating it any time soon.

lorenzo
09-03-2007, 21:21 PM
Also in Oz it's much easier to remove nonpaying/property damaging tenants. If we had an easier time of removing said tenants then maybe we could tolerate such legislation. I can't see us appreciating it any time soon.
Let's hope that changes... someday. :(

Miffy
10-03-2007, 19:40 PM
I was under the impression that the custodial scheme was paid for by its own interest?

Attilla, I can't see how bad (or good!) LLs will be able to avoid the TDS, since they will get a massive fine and no S21 route available if they don't do it. I was under the impression that you couldn't use S21 EVER :eek: if non-compliant within first 14 days?

Lorenzo, I would be interested in how this scheme has worked out well for LLs in your country? I must admit I am viewing it as a giant pain in the rear. I can see damaging tenants arguing the toss just for the hell of it now they don't have to go to court, though I suppose that would mean their deposit would take longer to come back to them. And some foreign tenants will suffer on returning home- I had a nice Polish couple in one of my houses recently who got their deposit back in cash on move out day because they needed it that way to go home with. Don't suppose I will be able to do that under TDS? (Not that I would normally take that risk, but still...)

lorenzo
10-03-2007, 20:37 PM
Lorenzo, I would be interested in how this scheme has worked out well for LLs in your country? I must admit I am viewing it as a giant pain in the rear. I can see damaging tenants arguing the toss just for the hell of it now they don't have to go to court, though I suppose that would mean their deposit would take longer to come back to them. And some foreign tenants will suffer on returning home- I had a nice Polish couple in one of my houses recently who got their deposit back in cash on move out day because they needed it that way to go home with. Don't suppose I will be able to do that under TDS? (Not that I would normally take that risk, but still...)

The tribunal here likes to see who has acted in fairness and in good faith. If the LL has done the above, and the tenant is being a Neanderthal, the Tribunal will rule in favour of LL.

Over here it is more often the LL who initiates tribunal proceedings.

If LL's in UK have "their paperwork in order" (presumably adequate inventories) it will be cut & dried with regards to proper deductions. Based on the experience here, I'll be embracing the system when I finally get home.

(discaimer: let's hope the fascist bastids don't muck it up. :mad: )

nick..
11-03-2007, 10:21 AM
Get real Lorenzo, no Landlord will charge more than the market as that would be financial suicide. I'm not a charity and my costs have to be paid. Every other business passes on the costs to the consumer, why shouldn't I.

The tenant has always had protection, namely the small claims court. It's just that most of them can't be bothered to use it, so now landlords are being asked to subsidize their fecklessness.

Wow, that paragraph is quite something, "Atila"

In my experience, Landlords have been far too casual in seeing the tenants deposit as a pot to dip into for a lick of paint and some new door handles between occupancies. Most tenants would be too intimidated or lacking in time to take a thieving landlord to court over a few hundred quid, especially during the stress of yet another relocation

This swings some much needed security back in the favour of the tenant so there can be no more casual theft of their deposit money, which could occur every 12 months with the frankly disgraceful AST terms we have to abide by

The deposit money is not a redecoration budget, its there purely to cover damage to the property, and general wear and tear is a mile away from actual damage

Perhaps now it will force the casual BTL landlord to start thinking a bit more professionally, understanding they now need to plan for some general making good between occupancies, and allowing for a measly 30 quid per property to secure their tenants money


Plus, for some landlords it's not just a measly £30, it could be around £3000 a year.

Yes, and on 1000 properties it will be 30,000, but being a "property investor" your profit should be rising in line with the number of "properties" you own


It is just another unnecessary layer of bureaucracy and quite frankly will rebound on the tenant with higher rents.

If thats true, why are you getting so excited about it? I'm seeing plenty of landlords getting their knickers in a twist over this, but maintaining its the tenants that will suffer by not getting their deposits back quickly (no change there) and having to pay (we'll see)

nick..
11-03-2007, 10:25 AM
ignore

ignore

Sportingdad
11-03-2007, 19:02 PM
I forsee lots of problem's the main thing is the admin, with the Australian computerserve custody scheme, can anyone see in the summer 4 month rental changover period.... tenants/landlords getting the deposit back (even if agreed) within 4 weeks, the the next tenancy the tenant will just withold the lasts months rent, in Victoria-Australia where compterserve operate (population 4.5 million) if you do not pay the last months rent you are fined $1,000 and entered onto a tenant database http://www.ntd.net.au/ (which any self respecting agent will not rent to you again) the tenant database is the last thing the tenant wants to be on..

Joannepowell
11-03-2007, 21:21 PM
Sportingdad - we could use such a tenant database here in the UK! There has been plenty of chat on this forum about creating something like a 'name and shame' website... would appear data protection wins everytime! :(

Kind Regards

J

DianeB
11-03-2007, 21:38 PM
I forsee lots of problem's the main thing is the admin, with the Australian computerserve custody scheme, can anyone see in the summer 4 month rental changover period.... tenants/landlords getting the deposit back (even if agreed) within 4 weeks, the the next tenancy the tenant will just withold the lasts months rent, in Victoria-Australia where compterserve operate (population 4.5 million) if you do not pay the last months rent you are fined $1,000 and entered onto a tenant database http://www.ntd.net.au/ (which any self respecting agent will not rent to you again) the tenant database is the last thing the tenant wants to be on..

Like Joanne I think it sounds a good idea (and that's coming from someone who has been victim to a non-payer). Just to play devils advocate though, is it possible that a tenant may feel they have good reason to withhold this rent but feel bullied into paying it for fear of finding themselves on this database, or does it go through tribunal first?

settloe_99
11-03-2007, 22:33 PM
Sportingdad - we could use such a tenant database here in the UK! There has been plenty of chat on this forum about creating something like a 'name and shame' website... would appear data protection wins everytime! :(

Kind Regards

J

In Manchester the council run a free service called MLIS (Manchester Landlords Information Service). The applicant completes an MLIS application form and the landlord then sends this to MLIS. MLIS then check council records along with private landlord records they hold and report back to you within 2 days. They can tell you if they have found tenancy records which the applicant hasn't declared and can also tell you if they have found a problem with an applicant. However due to Data Protection they can't tell you what they have found out about the applicant, just that there's a problem with them.

jeffrey
12-03-2007, 14:34 PM
From http://www.depositprotection.com/Unrestricted/Legislation.aspx?bhjs=1&fla=1

Interesting that there is a rent limit on this - if it is over £25k then the deposit is not required.

...because such a tenancy cannot be an AST by definition.