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Tenant Deposit Scheme 2004 Housing Act")
clutton_2
Posts: 11,149 Forumite
Sorry if this is a bit long winded, but, it is very difficult to precis.
Tenant Deposit Schemes
A landlord is prohibited from serving a notice requiring possession of the rented property, at the end of the term fixed by the tenancy if he has received a deposit but has not complied with the requirements to:
a) safeguard it under one of the 2 authorised tenancy deposit schemes; and
b) provide the tenant with the prescribed information;
1) The Custodial Scheme
61. Under a custodial deposit scheme, the deposit is held by a third party rather than by the landlord. The scheme will be run and managed by a private organisation, known as the ‘scheme administrator’, which will contract with the Government to run the scheme.
62. The custodial scheme will be available to all landlords to use and there will be no fee payable for its use.
63. Under the custodial scheme, all deposits will be held in a single designated bank account, which is managed by the scheme administrator. The interest generated on the deposits will be used to fund the running costs of the scheme.
64. At the start of the tenancy, the tenant will still pay his deposit to his landlord as happens now. However, instead of the landlord retaining the money, he will be required to pay it into the designated bank account. The deposit money will then remain in that account until it is dealt with in accordance with the scheme at the end of the tenancy.
65. At the end of the tenancy, if both the tenant and landlord notify the scheme administrator that they have agreed on how the deposit is to be split between them and the scheme administrator is satisfied that such an agreement has been reached, the scheme will pay out in line with this. This agreement may have been reached through discussions held between landlord and tenant as a result of the parties having used the
Alternative Dispute Resolution (ADR) service which the scheme offers.
66. The Act provides that the interest generated by the deposits in the designated account may be retained by the scheme administrator but that the arrangements for the scheme may provide for interest to be paid to the tenant on the amount being repaid to him, at a rate specified by the Government.
67. The scheme administrator is required to ensure that the deposit and any interest due is paid back within 10 days of receiving notification that the parties have agreed who is entitled to the money. It is expected that in practice in the majority of cases deposits will be returned within a shorter period.
68. If the landlord and tenant cannot reach agreement over the deposit, and cannot or will not use ADR, either party will need to obtain a court order to get the deposit paid to them. In this instance, the scheme administrator will retain the deposit until either the tenant or landlord obtains a final court order specifying the proportion of the deposit to which each is entitled. The scheme administrator will then pay out in accordance with the court order within 10 days of receiving notification of the decision. Again, this is a
maximum period and in practice deposits should be repaid out to parties within a shorter time scale.
2) Insurance-based Schemes
69. Whereas with the custodial scheme the money is held by a third party, under an insurance-based scheme the landlord continues to hold the deposit himself. If at the end of the tenancy there is no dispute, the landlord returns the agreed amount of deposit to the tenant. The landlord is only required to transfer to the insurance-based scheme administrator such part of the deposit amount that he and the tenant dispute is payable at the end of the tenancy.
70. That may be the whole deposit amount or could just be part of the deposit. For example, a tenant has paid £1000 as a deposit, at the end of the tenancy the landlord states that he wishes to retain £200 to pay for replacing damaged furniture, but the tenant disagrees claiming it was already like that when he moved in. If the landlord only wishes to retain £200, the remainder of the deposit (£800) has therefore been agreed to belong to the tenant and should be returned to him. The disputed £200 should be
transferred to the scheme administrator until the dispute is settled.
71. The landlord must transfer the disputed amount within 10 days of being directed to do so by the scheme administrator.
72. Once the disputed amount has been transferred to the scheme, it will then operate in much the same manner as the custodial scheme, with the administrator holding onto the disputed amount until the dispute is settled. The landlord and tenant also have the same options available to resolve the dispute as when the deposit is protected by a custodial scheme. Either they can try to reach agreement between themselves or through the
Alternative Dispute Resolution service the scheme offers, or one party can seek a court order to resolve the dispute.
73. Once the scheme administrator has been notified that either an agreement or a court decision has been reached, he will distribute the deposit amount between the relevant parties. The scheme administrator is required to ensure that this amount is paid back with 10 days of receiving notification that the parties have agreed/a court has decided who is entitled to the money. However, this is a maximum and it is expected that in
practice in the majority of cases deposits will be returned within a shorter period. Again, some of the interest that accrues in respect of a deposit paid into the designated account under an insurance-based scheme may be payable to the tenant, at a rate specified by Government.
74. The scheme administrator will pay the tenant any amount due regardless of whether the landlord has transferred the deposit to the scheme’s designated account as required. This will ensure that tenants get their deposits returned to them as swiftly as possible and are not unnecessarily held-up by landlords refusing to pay the disputed amount into the scheme.
75. Where a scheme administrator has paid out to the tenant but has not received the money from the landlord, the scheme administrator will pursue the landlord for the amount it has paid out. Any landlord who wishes to use an insurance-based scheme will be required under the terms of the scheme to undertake to reimburse the scheme administrator for monies it pays to the tenant. Failure to do so could result in the termination of the landlord’s membership of the insurance-based scheme and he would instead only be allowed to use the custodial scheme.
76. Scheme administrators must establish and maintain adequate insurance cover to allow for the scheme to make such payments where a landlord fails to reimburse the scheme. A scheme administrator may require participating landlords to pay contributions towards this insurance cover or may charge fees towards the administration of the scheme.
PENALTIES
Where a landlord has not complied with the requirements of the Act by the time of the tenant’s application, he will be free to rectify the position before the court hearing.
56. If by the time of the court hearing, the landlord has still not arranged for the deposit to be protected or has not provided the tenant with the necessary information, the court must, as it thinks fit, either make an order requiring the landlord to pay the deposit amount into the custodial scheme to be held there until the end of the tenancy or order the landlord to repay it to the applicant. The court is likely to order repayment in situations where the tenancy has already come to an end, for instance where the tenant
was not aware that his deposit was not safeguarded until after he vacated the property.
57. The court must also order the landlord or agent to pay the tenant a sum of money equivalent to three times the amount of the deposit that was paid the tenant.
58. Section 215 of the Act sets out the civil sanctions that are available against a landlord should he fail to comply with the requirements in section 213 of the Act.
59. A landlord is prohibited from serving a notice requiring possession of the rented property16, at the end of the term fixed by the tenancy if he has received a deposit but has not complied with the requirements to:
a) safeguard it under one of the authorised tenancy deposit schemes; and
b) provide the tenant with the prescribed information; until after he has rectified the situation.
60. A landlord is similarly prohibited from serving such a notice where he has taken a deposit in form not permitted under s213(7) (e.g. where he has accepted an article of value belonging to the tenant, instead of a money deposit) until after he has returned that deposit to the person who gave it to him.
Tenant Deposit Schemes
A landlord is prohibited from serving a notice requiring possession of the rented property, at the end of the term fixed by the tenancy if he has received a deposit but has not complied with the requirements to:
a) safeguard it under one of the 2 authorised tenancy deposit schemes; and
b) provide the tenant with the prescribed information;
1) The Custodial Scheme
61. Under a custodial deposit scheme, the deposit is held by a third party rather than by the landlord. The scheme will be run and managed by a private organisation, known as the ‘scheme administrator’, which will contract with the Government to run the scheme.
62. The custodial scheme will be available to all landlords to use and there will be no fee payable for its use.
63. Under the custodial scheme, all deposits will be held in a single designated bank account, which is managed by the scheme administrator. The interest generated on the deposits will be used to fund the running costs of the scheme.
64. At the start of the tenancy, the tenant will still pay his deposit to his landlord as happens now. However, instead of the landlord retaining the money, he will be required to pay it into the designated bank account. The deposit money will then remain in that account until it is dealt with in accordance with the scheme at the end of the tenancy.
65. At the end of the tenancy, if both the tenant and landlord notify the scheme administrator that they have agreed on how the deposit is to be split between them and the scheme administrator is satisfied that such an agreement has been reached, the scheme will pay out in line with this. This agreement may have been reached through discussions held between landlord and tenant as a result of the parties having used the
Alternative Dispute Resolution (ADR) service which the scheme offers.
66. The Act provides that the interest generated by the deposits in the designated account may be retained by the scheme administrator but that the arrangements for the scheme may provide for interest to be paid to the tenant on the amount being repaid to him, at a rate specified by the Government.
67. The scheme administrator is required to ensure that the deposit and any interest due is paid back within 10 days of receiving notification that the parties have agreed who is entitled to the money. It is expected that in practice in the majority of cases deposits will be returned within a shorter period.
68. If the landlord and tenant cannot reach agreement over the deposit, and cannot or will not use ADR, either party will need to obtain a court order to get the deposit paid to them. In this instance, the scheme administrator will retain the deposit until either the tenant or landlord obtains a final court order specifying the proportion of the deposit to which each is entitled. The scheme administrator will then pay out in accordance with the court order within 10 days of receiving notification of the decision. Again, this is a
maximum period and in practice deposits should be repaid out to parties within a shorter time scale.
2) Insurance-based Schemes
69. Whereas with the custodial scheme the money is held by a third party, under an insurance-based scheme the landlord continues to hold the deposit himself. If at the end of the tenancy there is no dispute, the landlord returns the agreed amount of deposit to the tenant. The landlord is only required to transfer to the insurance-based scheme administrator such part of the deposit amount that he and the tenant dispute is payable at the end of the tenancy.
70. That may be the whole deposit amount or could just be part of the deposit. For example, a tenant has paid £1000 as a deposit, at the end of the tenancy the landlord states that he wishes to retain £200 to pay for replacing damaged furniture, but the tenant disagrees claiming it was already like that when he moved in. If the landlord only wishes to retain £200, the remainder of the deposit (£800) has therefore been agreed to belong to the tenant and should be returned to him. The disputed £200 should be
transferred to the scheme administrator until the dispute is settled.
71. The landlord must transfer the disputed amount within 10 days of being directed to do so by the scheme administrator.
72. Once the disputed amount has been transferred to the scheme, it will then operate in much the same manner as the custodial scheme, with the administrator holding onto the disputed amount until the dispute is settled. The landlord and tenant also have the same options available to resolve the dispute as when the deposit is protected by a custodial scheme. Either they can try to reach agreement between themselves or through the
Alternative Dispute Resolution service the scheme offers, or one party can seek a court order to resolve the dispute.
73. Once the scheme administrator has been notified that either an agreement or a court decision has been reached, he will distribute the deposit amount between the relevant parties. The scheme administrator is required to ensure that this amount is paid back with 10 days of receiving notification that the parties have agreed/a court has decided who is entitled to the money. However, this is a maximum and it is expected that in
practice in the majority of cases deposits will be returned within a shorter period. Again, some of the interest that accrues in respect of a deposit paid into the designated account under an insurance-based scheme may be payable to the tenant, at a rate specified by Government.
74. The scheme administrator will pay the tenant any amount due regardless of whether the landlord has transferred the deposit to the scheme’s designated account as required. This will ensure that tenants get their deposits returned to them as swiftly as possible and are not unnecessarily held-up by landlords refusing to pay the disputed amount into the scheme.
75. Where a scheme administrator has paid out to the tenant but has not received the money from the landlord, the scheme administrator will pursue the landlord for the amount it has paid out. Any landlord who wishes to use an insurance-based scheme will be required under the terms of the scheme to undertake to reimburse the scheme administrator for monies it pays to the tenant. Failure to do so could result in the termination of the landlord’s membership of the insurance-based scheme and he would instead only be allowed to use the custodial scheme.
76. Scheme administrators must establish and maintain adequate insurance cover to allow for the scheme to make such payments where a landlord fails to reimburse the scheme. A scheme administrator may require participating landlords to pay contributions towards this insurance cover or may charge fees towards the administration of the scheme.
PENALTIES
Where a landlord has not complied with the requirements of the Act by the time of the tenant’s application, he will be free to rectify the position before the court hearing.
56. If by the time of the court hearing, the landlord has still not arranged for the deposit to be protected or has not provided the tenant with the necessary information, the court must, as it thinks fit, either make an order requiring the landlord to pay the deposit amount into the custodial scheme to be held there until the end of the tenancy or order the landlord to repay it to the applicant. The court is likely to order repayment in situations where the tenancy has already come to an end, for instance where the tenant
was not aware that his deposit was not safeguarded until after he vacated the property.
57. The court must also order the landlord or agent to pay the tenant a sum of money equivalent to three times the amount of the deposit that was paid the tenant.
58. Section 215 of the Act sets out the civil sanctions that are available against a landlord should he fail to comply with the requirements in section 213 of the Act.
59. A landlord is prohibited from serving a notice requiring possession of the rented property16, at the end of the term fixed by the tenancy if he has received a deposit but has not complied with the requirements to:
a) safeguard it under one of the authorised tenancy deposit schemes; and
b) provide the tenant with the prescribed information; until after he has rectified the situation.
60. A landlord is similarly prohibited from serving such a notice where he has taken a deposit in form not permitted under s213(7) (e.g. where he has accepted an article of value belonging to the tenant, instead of a money deposit) until after he has returned that deposit to the person who gave it to him.
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Comments
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So more OTT legislation; because a minority have abused their position the majority have to cope with more legislation.
I can foresee a number of things arising out of this:
Landlords not bothering to take deposits as they will never see any of the money without a court case or arbitration and / or waiting months for a decision.
Landlords asking for huge deposits as the above will stop tenants from getting their deposits back for months without mutual agreement, so it becomes a situation as to who is the more desperate for the money in the time period it takes to sort it out.
Some dodgy landlords coming up with deposits by another name to try and avoid the legislation.
Deposit by credit card. Landlord "reserves" funds on tenants credit card but doesn't take it. Therefore no money received therefore no deposit, but, if damage done by tenant or rent not paid, landlord takes money off credit card. Open to all sorts of abuse by both sides.
Tenants stalling eviction by claiming deposit illegal.
Tenants being wary of deposit schemes run by landlords association.
I've just looked over what I've written and can anyone see anything good about this legislation?A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
to be honest, I think its a great idea. I shudder to think how much money Ivelost ovr the years in arbitary deposit loss, without knowing my rights on getting it back. When i was at uni i lost loads, in fact pretty muc hevery tenancy I lost some, always for "wear & tear" the LL hasnt been abloe to accept.
If I, nad all my housemates had gone to SC court for these, it would have clogged up the system. Lets be honest, something has to give.:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
Interesting cross posting there LynzA house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
what do you mean?:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
"I've just looked over what I've written and can anyone see anything good about this legislation?"
"to be honest, I think its a great idea."A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
I think its an awful idea.
At work we wil have to abide by it; however my brother and my dad (both private landlords, and good ones at that) will not want to do it this way.... much more hassle for them.
Are the govenment trying to stop landlords being landlords?! I think my dad would rather sell all of his rentals than have the hassle of sticking to the ever increasing new rules.2012 wins approx £11,000 including 5k to spend on a holiday :j0 -
There is no way someone like me/my son could implement this scheme; he has lodgers and only charges 2 weeks rent as deposit (less than £150); is he supposed to jump through all these hoops before he can tell his lodgers to go?
TBH, there is going to be wear and tear, they are lodgers, we never withold deposit money for that, it's really just in case they leave owing rent.(AKA HRH_MUngo)
Member #10 of £2 savers club
Imagine someone holding forth on biology whose only knowledge of the subject is the Book of British Birds, and you have a rough idea of what it feels like to read Richard Dawkins on theology: Terry Eagleton0 -
lodgers have a different legal status, and i don't known if this new legislation applies to them or not.
One thing which occurs to me, is that in the past 2 years i have neither seen nor heard ONE single advert for the new 2005 Housing Act with regard to HMO licensing that Office of Deputy Prime Minister says was advertised nationally. I am a very well informed landlady. i suspect there will be tens of thousands of landlords who will still not have heard of this new Act and who will not be implementing it. Subsequently how many tenants will know about this new legislation ?
Prescott would not put a ceiling on the HMO license fees - and there is no mention of a ceiling for fees in this deposit scheme. Yet another tax on landlords.
I am definitely in rant mode now !! and who else would wait for 6 months for their wages ? Some landlords in Liverpool who were taking on HB tenants a couple of years back, had tenants come and go 6 months later and STill no darned rent, and, of course, no interest on the unpaid money !!! Grrrrrr .....0
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