Landlord/Tenant Deposit Scheme

stphnstevey

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.

ascollen

I'm saddened by the need for this kind of legislation. I'm a landlord and have only ever needed to retain deposits 3 times, all because the tenant withheld their last month's rent.
Although in itself that says more about the situation - if tenants are so suspicious of a landlord or have been burnt in the past...

clutton_2

this legislation is a sledge hammer to crack a nut - with a blinking vengeance - it will be really interesting to see who gets the contract to run it.

i know some of the landlord bodies have been considering it, but, the whole problem was where was the money going to come from to pay for the administrators costs ???

Myself, i can only see that if deposit-taking become untenable, the ONLY recourse for landlords will be a significant hike in rents - ie. 1/6th increase. i always take one months rent as a deposit (occasionally 6 weeks), and if i cannot now take a deposit, charging 1/6th more rent will at least give me the same money in the long run, AND i get to keep it !!!! BUT, if the tenant does not pay the last months rent, AND does damage, i've lost out - no change there then ................................

if there was no capital appreciation in the long term, i doubt that many landlords would continue in this business.

i have withheld only 2 deposits in 6 years - one for damage which cost 5 times the deposit, and the other to cover the last months ubpaid rent.

whambamboo

stphnstevey wrote:

I'm concerned about the penalties for NOT using a deposit scheme as the goverment are making it compulsory. Apparently you can have problems gaining possession back of your house if you haven't used a scheme and also pay a fine upto three times the deposit directly to the tenant.

I can see unscruopulous tenants finding out about this, not paying rent to those landlords that don't use a scheme, not being evicted in the normal three months or so AND getting a payment of upto three times their deposit in compensation.

Won't that simply help ensure that landlords use the scheme?

I'm not sure how this is a bad thing?

If landlords are supposed to use it and they don't, then there has to be swingeing penalties, otherwise the law will be toothless.

Have I missed something: you seem to be saying that if the landlord doesn't follow the rules it's unfair that he gets penalised. Seems like normal practice to me.

whambamboo

stphnstevey wrote:

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.

So even he doesn't comply with the law, he's free to do so any time before the court hearing.

If even by then he hasn't bothered he will be subject to a penalty.

I really cannot see what you are complaining about. Why should cowboy landlords not follow the rules????

If you drive at 120 mph down the motorway you will get penalised too. Follow the rules and there are no penalties.

clutton_2

there is no legal compulsion to have a deposit of any sort.

Where is the other side of the fence - where is the legislation to protect landlords from thieving tenants ??

whambamboo

Here's the typical thinking of an 'honest' landlord from the singingpig link....

BUT I see a flaw in favour of the landlords - i.e. if you haven't placed the deposit in one of the approved schemes, then you still have the chance to do so before a court hearing. I reckon that few tenants will actually know about or understand fully how the deposits must be held, or indeed of their 'rights'.

Therefore if you need to get a tenant out then you serve him notice, and only if he refuses to go do you need to put the deposit in a scheme before you take him to court.

So he plans to exploit the tenants' ignorance, ignore the rules, ignore the scheme, and only put deposits in the scheme when things go to court, and all the rest of the time continue to do exactly what he likes.

Ah yes, sounds like a really dreadful law, so unfair to those poor landlords.

ascollen

Seems to be some speculation that more DIY landlords will have their properties managed by professional agents, in which case the agent will be responsible.
Standard agent fees of 12% means landlord is 12% worse off. Rent increase will be inevitable, that will end up bad news for tenants...

The nanny state strikes again...
Is this legislation really to protect tenants?
Or is it a way to identify landlords dodging tax?

lynzpower

Although while I truly believe many of the LLs who post here are honest and trustworthy, come along we all know that this is the biggest scandal going.

through abolutely no fault of my own over the years Ive lost a good couple of grand in the wear & tear stakes through ignorance. Now Id take them to court, before I didnt really undersand.

Everyone I know has lost some proprtion of the deposit.

I like the scheme I think its a good idea, although like any tendered service its all about the execution. I expect capita too, and fr a company that run a pi55 up in a brewery ( husing benefit processing?) I am concerned that tihs will be the difference between it being a great idea and a poor idea.

whambamboo

clutton wrote:

Where is the other side of the fence - where is the legislation to protect landlords from thieving tenants ??

Not sure what you mean? The law is designed to provide for deposit arbitration i.e. equitable resolution.

As regards thieving tenants, the remedy is just the same as for thieving landlords - you take them to court for breach of contract/theft/whatever. I am not sure what legislation you expect?

This law is two-sided, not one-sided, to resolve deposit disputes in the interests of *both* parties.

Also landlords can get insurance (e.g.. http://www.letsure.co.uk/),. They are running a business, so if they feel there is a risk they wish to insure against, they can do so. The tenant cannot insure against unscrupulous landlords.