Transitional AST - Should our Deposit be protected?

atr88

Hi,

I share with 2 friends in a house in Central London. Our tenancy is over £25,000 due to location and size of house and it started on the 2nd September 2010.

Due to confusion with the landlord, we signed two tenancy agreements, one before we moved in which was a "General Tenancy Agreement" which had a clause stating that our tenancy deposit did not have to be protected. The landlord asked us to sign a new agreement on the 5th September which states that it is an "Assured Shorthold Tenancy".

There is a clause in the second agreement stating that our deposit should be protected by the Tenancy Deposit Scheme. I am slightly unsure of our legal position since we fall into the transitional period where our tenancy converted to an AST on the 1st October 2010.

We would like our deposit to be protected as we are now in dispute with our landlord. There are some repairs to be made to the house which we are liable for (no disagreement here) but we think that he is charging over the odds for repair and want to be protected.

He says that he is not required by law to place our deposit in the scheme. We disagree because of the clause in our contract but we are not sure where we stand on the AST issue if it went to court. Any help?

Many thanks,
atr88

may_fair

There is no clear answer to the question of whether deposits paid in respect of common-law tenancies which subsequently became ASTs on 1st Oct 2010 need to be protected. Whilst the general view is that LLs should protect them, (if only to avoid potential disputes), the issue is open to interpretation and there hasn't been a higher court ruling which establishes the actual position (the fact that your contract says the deposit will be protected is somewhat irrelevant).

Assuming the tenancy hasn't ended, you could - theoretically, anyway - claim against the LL for non-compliance under s.214 Housing Act 2004. However, it would be highly inadvisable to do so, because if you lost you could end up having to pay the court fees (in excess of £1,000) plus your LL's legal costs, as non-compliance claims are not dealt with in the small claims track whatever the value of the claim. You'd also need to pay a specialist lawyer to conduct the claim, as such claims are too complex for the average layperson, and if you pleaded the claim incorrectly, that in itself could cause you to lose the claim.

In addition, there is no sanction for late compliance, so if the LL complied before the hearing, you'd also lose (albeit you might be able to recover your costs in these circumstances).

Overall, it is simply not worth the potential risk of losing thousands just to get the deposit protected, particularly when there is no certainty that the LL is obliged to protect the deposit in this situation.

If the tenancy has ended, then you have no claim under s.214 (following a recent Court of Appeal judgment). You would be confined to claiming for return of deposit only (and if the deposit is £5,000 or less, this would be allocated to the small claims track).

Note that deposit scheme adjudication (ADR) is not compulsory, so even if the deposit were protected you could well end up settling the deposit dispute in court anyway.

atr88

Thanks for your reply. I suspected as much but good to have it confirmed.

I guess we'll be going to the small claims court at the end of this!

atr88