Security Deposit - Agent to keep interest earned?

Steve_P_6

I am a long term reader of these forums but this is my first post!

I'm currently reading through the tenancy agreement for a property that I will be moving into shortly and I have noticed that the letting agent has put in a clause which states, that any interest earned on my security deposit will belong to them.

Are they entitled to do this?

All the information I can find with regards to tenancy deposit schemes state that "The interest accrued by deposits in the scheme will be used to pay for the running of the scheme and any surplus will be used to offer interest to the tenant, or landlord if the tenant isn’t entitled to it."

I haven't signed the agreement yet but I suspect if I question it it will only delay my move. I am also loathed to let the agent have any money they are not entitled to (no matter how small) as a matter of principal and the admin fees i've already been charged are pretty steep.

Thanks for reading :-)

N79

Are they entitled to do this?

In a word - yes.

jb9

Don't forget to check with the scheme after you move in that your deposit has been properly registered. They have 14 days to do this. I too have a tenancy agreement where the agent is keeping the interest, and they haven't registered the deposit even though the agreement details the scheme in some detail

tbs624

jb9 wrote: »

Don't forget to check with the scheme after you move in that your deposit has been properly registered. They have 14 days to do this. I too have a tenancy agreement where the agent is keeping the interest, and they haven't registered the deposit even though the agreement details the scheme in some detail

Get written confirmation from the scheme administrators that this is the case - if you were served with a S21 notice of intention to seek repossession of the property at expiry of your fixed term it will be invalidated, if served prior to the deposit registration, or the issuing of "prescribed information" to the tenant . See the Housing Act 2004, S215:

1) If a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at a time when—

(a) the deposit is not being held in accordance with an authorised scheme, or
(b) the initial requirements of such a scheme (see section 213(4)) have not been complied with in relation to the deposit.

Many LLs/LAs serve a S21 routinely, just after you have signed your tenancy agreement, but this bit of the legislation seems to have passed some of them by.

Unfortunately, although the legislation states quite clearly that the deposit *should* be registered and the scheme's "prescribed information" given to the T, both within 14 days of the deposit being received by the LL/LA, judgements so far indicate that a LL who complies later than that, but prior to any court hearing, is likely to get away without being ordered to pay a 3x deposit penalty.

It was surely never the intention of the law that T's should *have* to chase the LL to make sure that their deposit money had been scheme-registered. However, the reality is that it is clearly in the T's interest to do so in order that they will have the security of using the adjudication process to resolve any dispute over the return of their deposit at the end of their tenancy. Unfortunately, some Ts will not want to chase a LL for fear of being seen as a difficult T and therefore unlikely to be given the option a renewing their tenancy agreement.

The time limit for scheme registration could have been extended to one month after deposit receipt, to allow for the lazy or less than bright LLs who struggle with time management, and the most straightforward penalty could have been "miss that deadline and you may not serve a S21 for this tenancy *at all*", thereby removing the LLs ability to evict after the FT expiry date in retaliation for a T daring to chase up deposit registration. Swift compliance by the vast majority then, I reckon………….;)

Planner

tbs624 wrote: »

Get written confirmation from the scheme administrators that this is the case - if you were served with a S21 notice of intention to seek repossession of the property at expiry of your fixed term it will be invalidated, if served prior to the deposit registration, or the issuing of "prescribed information" to the tenant . See the Housing Act 2004, S215:

1) If a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at a time when—

(a) the deposit is not being held in accordance with an authorised scheme, or

(b) the initial requirements of such a scheme (see section 213(4)) have not been complied with in relation to the deposit.

Many LLs/LAs serve a S21 routinely, just after you have signed your tenancy agreement, but this bit of the legislation seems to have passed some of them by.

Unfortunately, although the legislation states quite clearly that the deposit *should* be registered and the scheme's "prescribed information" given to the T, both within 14 days of the deposit being received by the LL/LA, judgements so far indicate that a LL who complies later than that, but prior to any court hearing, is likely to get away without being ordered to pay a 3x deposit penalty.

It was surely never the intention of the law that T's should *have* to chase the LL to make sure that their deposit money had been scheme-registered. However, the reality is that it is clearly in the T's interest to do so in order that they will have the security of using the adjudication process to resolve any dispute over the return of their deposit at the end of their tenancy. Unfortunately, some Ts will not want to chase a LL for fear of being seen as a difficult T and therefore unlikely to be given the option a renewing their tenancy agreement.

The time limit for scheme registration could have been extended to one month after deposit receipt, to allow for the lazy or less than bright LLs who struggle with time management, and the most straightforward penalty could have been "miss that deadline and you may not serve a S21 for this tenancy *at all*", thereby removing the LLs ability to evict after the FT expiry date in retaliation for a T daring to chase up deposit registration. Swift compliance by the vast majority then, I reckon………….;)

Interestingly I found this case last night, where the deposit was retrospectivley protected, but the judge considered that retrospective protection went against the grain of the act and awarded the 'compensation';

http://nearlylegal.co.uk/blog/2009/01/deposits-the-mandatory-award-again/

Obviously its only a County Court decision, and goes against the other case (s) we are aware of, but shows that the act and its interpretation is still a mindfield.