New Tenancy Deposit Schemes....

scrummy_mummy_2

I received an update E mail this morning from the NLA re their HFIS backed tenancy deposit scheme.
The costs have been published guys....they're not too bad but it's more admin for a conscientious LL and more agro for honest ones!!
visit; https://www.mydeposits.co.uk

It advises LL's that, other than using a Tenancy Deposit Solution Scheme, that they might want to 'find a way round the legislation'
Whilst the NLA does not endorse this activity, it got me thinking.
Firstly to even mention it, there must some loopholes.
Secondly, and after considering it at much length...what happens if a Tenant doesn't want their deposit protected.....??

I am led to believe that, if you do not partake in one of these schemes as a LL that, if you ever need to go to court for eviction proceedings, disputes over rent etc, that the court will not hear your claim.

Here's the thing I'm putting forward for your thoughts...if, after explaining the costs (if as the LL you intend to pass them on as I do!) and the purpose of the deposit scheme, (using the literature we are able to download from the mydeposits site to give to tenants) the tenant STILL doesn't want their deposit protected, (cost based possibly?) where do you think a LL will stand if the tenant were to sign a waiver???

Surely, a court would take this into consideration????

What d'yall think?

RHemmings

What do you do if your tenant asks you to use one of the free schemes, such as The DPS? Then you wouldn't be able to coerce them into not protecting their deposit by asking them to pay additional money to have it protected.

As a tenant, I would quite like the idea of a landlord not protecting my deposit if I could then get paid 3x the deposit if they tried anything funny.

While I'm not a lawyer, the documentation I've read on the scheme says that all deposits must be protected. If was a landlord I would be suspicious of any tenant who didn't want the deposit protected, as I would be concerned that they may want to take advantage of any loopholes (such as the difficulty)

As for the waiver, what happens if the tenant says that they were coerced into signing it because they were desperate to find accommodation, and you wouldn't let them rent the property (or thought that you wouldn't) unless they signed? Particularly if you'd made demands for money (which they might not have) if they wanted the deposit protected when it can be done for free?

scrummy_mummy_2

Does a completely free scheme exist?
If so where?

liz545

On the FAQ section of the website you quote, it states:

If a deposit is not protected, the landlord will be breaking the law. S/he will be unable to regain possession of the property using notice-only grounds for possession under Section 21 of the Housing Act 1988. The tenant can apply for a court order requiring the deposit to be protected, or for the prescribed information to be given to them. If the court is satisfied that the landlord has failed to comply with these requirements, or is not satisfied that the deposit is being held in accordance with an authorised scheme, the court must either:

Order the landlord to repay the deposit within 14 days of the issuing of the court order, or

Order the landlord to pay the deposit into the designated account held by the custodial scheme administrator.

The court must also order the landlord to pay to the tenant (or person who paid the deposit on his/her behalf) an amount equivalent to three times the deposit amount within 14 days of the making of the order.

I'm sure it'll mean more paperwork for landlords, but surely if you're an honest, reasonable landlord this is just part and parcel of your job? I'm confused as to why you'd be looking for ways around the legislation otherwise...

scrummy_mummy_2

It's a purely hypothetical question....which I posted for discussion/thoughts as this is a completely new area LL and tenants are facing.

At no point in my post do I suggest I am personally seeking to circumvent the legislation and I am fully aware of what it says on the site. Just for the record, I will probably join the NLA scheme the next time my tenants change over...(unless RHemmings can tell me of the kind soul who is a Government authorised provider who has been approved to run a scheme and who is offering to do it completely free!)

What prompted my post was that it struck me as odd that the NLA itself mentions 'finding a way around the legislation'...this suggests there ARE loopholes? If there are, what might they be?
What happens if a tenant on HB cannot afford to get their deposit protected...is HB going to pay the LL extra to do it for them? It's going to cost a private LL £30 per deposit 'lodged' (and £20 per transaction lodged by an agent plus a little bit for themselves obviously) ...how many LL/agents are going to pass this cost on? What happens if a tenant can't pay and the LL won't???
It's all very well and good stipulating that all deposits must be held in a scheme but the world isn't black and white. If it was there would be no need for a deposit scheme because all landlords would return the deposits fairly, in good time and with fair deductions!
Landlords are LEGALLY not supposed to spend tenants deposits on boob jobs and fast cars, but they do....along with a whole list of other illegal things they do regardless of what legislation says.

By the way...to all prospective tenants out there...how will you actually know a LL is truly a member of a scheme? At the moment there is no certification process in place so you'll only have their word for it.
As with all legislative processes, getting a court order is the easy part....enforcing it and getting 3X your deposit back is going to be the hard part. If a LL is prepared to take your money, use it for his own personal gain and not repay it....how likely is he to actually be bothered by you taking him to court and suing him for 3x the original amount? These people don't care....my tenants have been pursuing their previous LL for 18 months now as he kept their whole deposit. They sued, won and then had to go back to court to get a payment order....still waiting!!!!!..

I forsee there will be a lot of posts about this area after the scheme is introduced.
More holes than Swiss cheese methinks.

RHemmings

My source for the scheme being free was from this web page: http://www.arla.co.uk/info/tdsra.htm Click on the link for the PDF document. The PDF document itself has a Welsh Dragon at the top, but I saw nothing suggesting that the scheme is not countrywide.

Edit: I've just noticed that the bottom two schemes are to allow Landlords and agents respectively to hold onto the deposit. I presume that these are the ones that charge fees. So, if they allow the landlord to hold onto the deposit and then earn interest on it, but the landlord passes on the cost to the tenant, then the landlord is perhaps being a bit cheeky. Getting their cake and eating it too perhaps.

RHemmings

scrummy_mummy wrote:

By the way...to all prospective tenants out there...how will you actually know a LL is truly a member of a scheme? At the moment there is no certification process in place so you'll only have their word for it.

...

As with all legislative processes, getting a court order is the easy part....enforcing it and getting 3X your deposit back is going to be the hard part.

In some ways I would prefer that the landlord not protect it, if I'm going to get 3x the deposit back in fees. But there is the additional hassle, as you mention.

Furthermore, getting a court order enforced is hard, but fortunately landlords have at least one known asset. The house, which will probably be rented out in the future (so that there are earnings to attach).

scrummy_mummy_2

Super...was totally unaware of this (guess that's a downside of being a member of the NLA!...they are only going to actively promote their own scheme!)
Took a little bit of finding/reading blarb but the really useful address is https://www.depositprotection.com
Hurrah!
All of my 'outstanding questions/concerns' appear to largely be covered on this site...I wait with eager anticipation to see what the 'secondary legislation' is all about.
Well done RHemmings!
I think I may decide to offer my tenants a choice between the two schemes actually.....I'll think on anyway.
Shame the NLA hasn't made more of an effort to advise it's members accordingly really...unless I've missed something!
Glad I posted now. I had begun to think I had just unintentionally placed myself in the firing line.!
happy bunny now....

real1314

Hmmm

Just for arguments sake:

"Rent was going to be £425 pcm, however I'm going to set it at £500 pcm, with the proviso that on renewal after 6 months it will reduce to £425 pcm.

Also I'm going to offer a refund of £450 at the end of the tenancy subject to the property being returned in a satisfactory condition."


Wonder how that would go down?

RHemmings

real1314 wrote:

Hmmm

Just for arguments sake:

"Rent was going to be £425 pcm, however I'm going to set it at £500 pcm, with the proviso that on renewal after 6 months it will reduce to £425 pcm.

Also I'm going to offer a refund of £450 at the end of the tenancy subject to the property being returned in a satisfactory condition."


Wonder how that would go down?

Would a court have the power to decide that this is actually an unprotected deposit, and then apply the penalties anyhow? I'm not a lawyer and don't know these things, but I thought that courts and judges had some leeway in interpreting things. For example, if a business started giving its employees interest free loans instead of salary, so they didn't have to pay tax, I don't think the tax authorities would be forced to swallow it.

clutton_2

so who knows anything about the "Insurance backed Deposit Scheme" - which is in the 2004 Act - under this section, landlords keep the deposit, until there is a dispute, then it is lodged with ??? who ?? anyone else heard any details about this ? or is NLA (and all the other landlord bodies) only publicising the scheme which makes them money ?