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  • Deposit Protection

    Landlord refused to protect deposit unless tenant paid

    Thanks again for your input Paul.

    The point is that in this case, the tenant's problem can be easily solved by borrowing a small amount to tide her over the overlap.

    But she only wants to do this if it's (almost) certain that she would indeed receive the compensation from the LL (who has been a horrible example, allowing her and her children to live in a cold, damp, mouldy house as well as failing to correctly protect her deposit twice).

    I've told her that in my understanding this is pretty open and shut and there are no extenuating circumstances which would stop a judge awarding in her favour. And also that the compensation amounts (between 1 and 3 times the deposit, for each failure to protect) are mandatory.

    I told her that I would double check this so she can make an informed decision.

    The reality is that she doesn't really need a favour from the LL now, as long as she knows she can get what she's entitled to in a couple of months.

    In her position, I would borrow a few hundred to see me through the overlap, knowing that I was going to get that back and more shortly.
    Would you agree?
    I looked back a page to remind myself of the discussion, and I noticed that you say that the rent is paid 2 months in advance. If the rent is paid monthly then the 2nd month is defined as a deposit, and the sum that should have been protected is £1600, leading to a claim for return of £1600, & a £4800 penalty.
    Thanks a lot Nick.

    The first rental payment was for two months up front, but a subsequent payment was then not made until the 3rd month, so I think the deposit amount is still the same (if that makes sense..)

    I guess I'm trying to ascertain the likelihood of a judge deciding that no compensation should be paid by the landlord for failure to protect the two deposits (at the start and renewal of the tenancy) in the event that he fully returns the deposit when she moves out.

    My understanding is that these are two separate issues.

    Would she have to show that she has suffered a material loss as a result of the deposit not being protected? Or is the mere fact that it was not done enough?
    If no rent was paid in the 2nd month, then yes it's no longer a deposit, or maybe pedantically a deposit that was returned.

    The person to give authoritative advice is David Smith. If it affected me personally I would use my membership of the Guild of Landlords to get expert advice.

    As your LL has been told that the deposit should be protected, and still didn't protect it, I can't see them being treated leniently, however I think if they return the deposit without deductions they wipe the slate clean.

    I'd still advise agreeing an amicable parting of the ways. If this doesn't happen & your friend doesn't pay the extra month, and the LL withholds the deposit to pay the rent arrears, and it goes to court my best guess would be that the judge will award the LL the 1 month rent, but insist that the deposit is returned with a penalty of in excess of 1 month - i.e. your friend will be quids in. But that's just my guess.

    I did search the internet for clues, you might like to read the following:

    A template letter to send to the LL

    A success story

    A discussion about how the Judges are assessing the penalty

    A complaint from a Housing Professional about how difficult it is to get an award of the penalty
    SO helpful and useful.

    Thank you again Nick.
    Hi all

    OK..so the story continues.
    My friend moved out of the rented house and into her new home in mid December.
    The LL arranged to meet her for a check out and inspection, but did not turn up.
    He said to post the keys through the letter box and that he would go and look at the place himself at a later date.

    He did so and informed her that he would be paying her deposit the following week.

    I was certain that he would return her deposit in full as he must know that by failing to protect both her deposits he's potentially in a vulnerable position. So I assumed he would not want to draw attention to this by withholding any funds.

    To my surprise, although nothing was mentioned about any problems with the house, the deposit arrived a hundred pounds short.

    My friend suggested that this might be because she had not been able to de-weed and mow the garden before she left. (However this would not amount to £100 of damage).

    I have drafted the letter below to send to the LL on behalf of my friend and I would be really grateful if the resident DPS experts here could cast an eye over and advise if it's ok or if there's anything I should change (or add).

    It will feel very good to see this terrible LL pay for his disregard of deposit protection legislation and his mis-treatment of his tenant.


    Dear XXXX

    Letter before action: Failure to return the balance of deposit and failure to protect tenancy deposit in accordance with the law

    I am writing to you on behalf of Ms XXXX the former assured shorthold tenant of XXXXXXXXX. Her tenancy started on XX of XXXXX 2013 and ended on XX XXXXX 2015.

    I am writing concerning the deposit of £850 paid to you on XX XXXXX 2013, and renewed on XX XXXXXX 2013 as a security against her obligations under the terms of her tenancy agreement.

    I understand that you were not able to attend the check out of the property on XXXXX XX 2015 as arranged, but that you visited subsequently and then informed Ms XXXXX that you would be making a payment to return her deposit. No mention was made of any problems with the property.

    To date, only £750 of her deposit has been refunded to her. No explanation has been provided for deducting £100 from the money.

    We do not accept that this deduction is reasonable.

    I therefore request that, within 14 days of receiving this letter, you pay Ms XXXXXX the sum of £100, being the balance of the deposit paid to you.

    Section 213 of the Housing Act 2004 required that you protected Ms XXXXXX’s deposit with a government-backed scheme within 30 days of the payment of her deposit. You were also required to provide her with details of the scheme you used along with certain other information.

    Having checked with all the deposit protection schemes it appears that you failed to protect Ms XXXXXX’s deposit with a government-backed scheme (and provide her with the prescribed details as required by law).

    I have seen from correspondence between you and Ms XXXXXX (attached) that you told her that her deposit would not be protected unless she paid a fee of £30 at the start of the tenancy and then £50 at the start of the second AST (assured shorthold tenancy).
    It is not legal to make protection of deposits conditional on the payment of fees. Furthermore, if these fees were non-optional, they should have been advertised at the point of advertising the rent (under the Consumer Protection From Unfair Trading Regulations).

    Ms XXXXXX was under severe financial pressure at the start of the tenancy and was unable to afford the extra fees. This has nothing at all to do with your legal obligations to correctly protect her deposits (both in XXXXX 2013 and XXXXX 2013).

    By choosing not to protect the deposits, you were in breach of Section 213 of the Housing Act 2004.

    Section 214 of the Housing Act 2004 provides that where the court is satisfied that you failed to comply with your obligations under the law relating to tenancy deposit protection:

    The court must also order the landlord to pay to the applicant a sum of money equal to between one and three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.

    This would apply to the deposit taken at the start of the tenancy in XXXXXX 2013 and also to the deposit relating to the renewed tenancy in XXXXXX 2013. This would amount to a compensation amount of up to £5100.

    However, Ms XXXXXX is open to reasonable offers to settle this matter.

    If Ms XXXXXX does not receive payment of the balance of the deposit (£100), plus an agreed amount being the penalty for failing to comply with your legal obligations, or a substantial response from you by 14th February 2016, we will issue court proceedings without further notice. We reserve the right to include a claim for interest on the unreturned deposit. We will also be asking for an order to cover all legal costs.

    We will be relying on the Court Civil Procedure Rules Practice Direction: Pre-action Conduct. I must therefore draw your attention to paragraph 13 concerning the court's powers to impose sanctions for failure to comply with the Practice Direction, and inform you that ignoring this letter before action may increase your liability for costs.

    I further understand from Ms XXXXXX that other aspects of the tenancy fell short of required standards (such as failure to renew the gas safety certificate on time and address problems in the house in a timely manner).

    If we cannot achieve a satisfactory resolution, we will also be notifying the local authority and Trading Standards about all of the above.

    Yours sincerely

    You don't need to take action through the courts yourself

    Just raise a dispute with DPS
    Once that process is exhausted and you have no satisfactory solution then go for County Court Action to enforce the deposit regulation
    You are of course within your rights to go for this dopey LL big time!!
    That being said it would all be a stressful experience
    So you could just request the £100 on the proviso that the LL provides in writing a good reference
    You could formulate one for him to sign
    This LL has failed to understand the deposit regulations
    He seems to have persisted with such ignorance
    I would proceed on the basis of his ATTITUDE
    If he is contrite etc I would let the matter go once the £100 has been refunded
    If he refuses and is arrogant then go for everything you can from him!!!
    If there is LL licensing inform the council
    They may revoke his licence rendering him unable to operate as a LL
    I would also inform the HSE re the gas certificate issue
    He really isn't doing himself any favours
    Direct him to fora like this to raise his knowledge about these and other matters
    He could have easily charged an admin fee for the deposit at the beginning of the tenancy providing he had quoted this at the beginning of the tenant advert
    It is a timely reminder that LL need to understand the tenancy regulations
    Ignorance of such could cost the LL dear!!!?
    LL need to understand that the law is heavily in favour of the tenant
    But if a LL complies with it then generally there shouldn't be too much of a problem
    But a very good letter you have formulated if you choose that route which you are entitled to do based on the LL behaviour
    It's a bit long winded, so long I didn't read it, and doubt that the LL will either. How about a summary paragraph at the front, "If the full deposit isn't paid within 5 days I will be taking legal action for recovery of the deposit and a penalty for the failure to protect it".

    I'd do 5 days or this will drag on.

    I agree that it's good to record the facts - date of the inspection, and that he didn't turn up.

    The DPS won't be interested, neither will the other deposit schemes - it's not a deposit that they are holding/insuring.
    That is a noteworthy point re deposits
    So if the LL refunds the deposit or some of it the deposit scheme is no longer liable for the deposit dispute adjudication service!?
    The LL could have cancelled the deposit registration and repaid just £1 thereby leaving the tenant to have to proceed with County Court action
    Very few tenants would bother doing that!
    So if I'm a stroppy LL I'll just refund a £1 of a deposit having cancelled deposit registration depriving the tenant of the FREE adjudication service
    Somewhat defeats the deposit protection scheme adjudication process for the tenant!!?
    If this how the service works it doesn't protect the tenant as it should
    Thanks both

    I agree the letter is a little long but I wanted to spell out all the facts (mainly to support likely action later). I know what you mean about not bothering to read it but if it was a letter threatening me with legal action, then I would read it very carefully indeed!

    This is not really about the £100 shortfall on the deposit (and as Nick said, the deposit was never protected so DPS would not be interested.)

    My understanding is that the fact that he never protected either of the two deposits (i.e. at the start of the tenancy as well as the 6 month renewal) pretty much guarantees that a judge would have to impose the mandatory penalty.
    My friend has been so badly treated, and the extra money (even if only in a few months time) would really help her out. So it seems to me that taking action is the right thing to do.

    I also think that there's a good chance he'll settle before action if he knows he might face a £6k bill (after costs).