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  • Deposit Protection

    Protecting a deposit in advance of receipt?

    Hi Tribesters.

    Sorry for the long post, please bear with me.

    I posted this in the deposit protection tribe where I got some advice but I remain in a catch 22 with my agent and I still need links to the relevant articles and/or case law to present to them.

    If anyone can point me in the right direction I would remain eternally grateful.

    It goes as follows.

    I have a potential catch 22 which comes at the end of a nightmare experience with a letting agent and I hope I can get some speedy advice please.

    I know that I have 30 days in which to register a deposit, the clock started ticking a few days ago.

    I want to hold the deposit myself rather than trusting a potentially absconding ltd company letting agent.

    I have used the letting agent on a tenant find only basis, I am a member of the RLA and I tick all the other eligibility boxes enabling me to use the RLA/TDS Deposit Guard Scheme.

    Today the letting agent sent me their statement detailing the money collected minus their charges and confirmed the net payment to my bank account, I checked this and all is fine.

    I emailed them back asking why the deposit money was not included as I need to get it protected and the whole project put to bed.

    They replied that they cant release it to me until i demonstrate that I have protected it, so I called them.

    I explained that I had read about a case (I saw it here in PT but I cant seem to find it) where a council was providing the deposit for the tenant for a normal PRS AST, presumably a tenant that needs some kind of community support.

    The council had refused to release the deposit to the landlord until he demonstrated that he had protected it so he went and protected it then they released it.

    Some time down the road they were in dispute then court over whatever.

    The judge ruled that the deposit had not been protected because the landlord was not in possession of it at the time he paid the protection insurance policy, therefore he had paid a policy on nothing and then gone on to hold an unprotected deposit all this time and was made to pay some price, presumably three times the amount.

    I called the RLA and was starting to explain my situation and the advisor stopped me and explained to me the folly of protecting it first presuming I was unaware, so I was right.

    I called the agent who disagreed and subsequently called the TDS who have confirmed she is right and that Ï must protect the deposit first.

    So I called the TDS and was told much the same thing.

    Remember this is a joint scheme and they dont even agree.

    It was futile going further with that advisor as they were singing off a sheet and I asked to be put through to someone more senior.

    I spoke to someone in complaints with a mind of their own, she listened carefully, showed lots of interest, gave me an email address and then asked me to show her this court case or this ruling or whatever its termed.

    Of course I cant find it, can anyone point me at it and/or give me some guidance here.

    Its urgent because although there is 30 days and the tenancy has only just started I now also understand its 30 days from receiving the deposit, or the first part of it, not the start date of the tenancy.

    One further point, I got the agent to use the correct AST provided for use with this scheme, not their own AST which also has other own goals in it like statutory not contractual periodic terms after the initial fixed term.

    All advice welcome, please help before I go round there and shoot this agent.

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    Why don't you take out an Insurance policy to protect it with  My Deposits, or  DPS  ?

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    Thats exactly what I am trying to do, the choice of which scheme makes no difference to the situation, the issue is the law.

    The last word I have from a more senior employee of the RLA  is that the legislation is unclear and various judges have interpreted it different ways, some of which say that you cant protect a deposit that you dont actually hold at the point of taking out the policy.

    As I explained

    The judge ruled that the deposit had not been protected because the landlord was not in possession of it at the time he paid the protection insurance policy, therefore he had paid a policy on nothing and then gone on to hold an unprotected deposit all this time and was made to pay some price, presumably three times the amount.

    All I am looking for here is a way of finding evidence that this is the case, its a conversation I read here on property tribes some time ago.

    I bet Paul Barratt knows exactly where to find it.

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    I cannot recall seeing the case you are referring to but from your description the circumstances are different.  In that case the deposit had not been paid, in your case it has been paid to the agent and they are holding it on your behalf and therefore in my view protection would be valid.

    That said, has the agent protected the deposit?  If they haven’t then I think they could pass it to you for you to protect after you receive it.  If they have protected it, then they are probably following their scheme rules on wanting you to protect the deposit before passing it across.

    As I said in the other post the simplest course of action would be to tell them to protect it in the custodial scheme and transfer it within that scheme.

    https://www.tenancydepositscheme.com/new...to-myself/

    I am not an expert on tenancy deposit and the above is just an opinion.

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    Thanks for your reply.

    If the agent had protected the deposit in a custodial scheme then yes transferring it across would be straightforwards but I dont want them to do that.

    From the outset with these new tenants my objective has been to wise up to this industry if i want to survive in it. With the lettings fee ban on the horizon I anticipate that I wont be using agents going forwards and further anticipate that a number of agents may well do a runner at some point so I'm making sure they wont be doing that with my tenants money, or mine for that matter.

    If I have to be ultimately responsible then I'm having control and holding the deposit myself using an insurance backed scheme, in this case deposit guard.

    Being jointly liable at this point the agent doesnt want to release the deposit to me in case i fail to protect it but last year they expected me to be fine with the converse, right?

    Ive spoken to a senior legal advisor now at the RLA who also owns numerous properties and runs a letting agency, what they do is get the landlord to sign a document assuming total responsibility for the safekeeping of the deposit and that allows them to release it.

    I have written to them to that effect and we shall see how they respond.

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    I know my situation is somewhat different to this example but my objective is being able to sleep at night without having to second guess how some judge in the future might act.

    Check that out

    https://nearlylegal.co.uk/2018/06/too-soon-2/


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    As I indicated above the deposit has been paid to your agent who accepted it on your behalf unlike the case quoted where the deposit had not been paid.

    Equally as indicated in the article reissuing the prescribed information after receipt of the deposit would be an option.

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    Yes I do understand.

    Its just that the RLA are advising me otherwise on the basis I have described.

    The letting agent has responded and will not cooperate either.

    I have asked to speak to a director and am waiting.

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