Deposit not put in a TDP

BookmobileBadGirl

I will start by saying that this information is coming via my brother who is not one for sharing a lot of detail

He recently has moved out of a flat he shared in London, they have been waiting to get their deposit back and have just discovered that their deposit was not put in a TDP. His (now ex) flat mate has spoken to a NWNF solicitor who has told them to fight it and they could get three times their deposit back, that as they stayed on longer than the original contract they could get six times their original deposit back, and that as their landlord changed halfway through their tenancy and they were not informed they could get nine times their deposit back.

This solicitor will take 29% of any money they get back as a fee.

my questions are:
 does what the solicitor said sound realistic?
do they need a solicitor?
should they just get their deposit back and move on?

any other thoughts welcome

Comms69

Get a new solicitor. 

The info is close. But they arent getting 9 times their deposit. They'll be lucky to get 2 times.

They do not need a solicitor. 

Step one is to offer a settlement to the landlord. Ask for 3 times the deposit (plus the original deposit ) and accept 2 times.

greatcrested

Rubbish.

They had a single tenancy and paid (I assume) a single deposit just once. It should have been protected and they can claim 3 x the deposit as penalty, from the current landlord. They may get the full 3 times or the judge might award less eg 1 x ot 2 x.

No need to pay a solicitor - waste of money.

See more below

greatcrested

Deposits: payment, protection and return

CONTENTS
A) The leglislation
What is a deposit?
C) Do all deposits have to be registered?
D) What if not registered?
E) Claiming back a deposit;
F) What deductions are valid?
G) References

(Applies in England/Wales)

A) Deposit Protection Legislation

Deposit registration was introduced by the Housing Act 2004, and then amended first by the Localism Act 2011, & then the Deregulation Act 2015, to correct various problems with the original Act. Only registered schemes can be used for protection.

* Any security deposit paid by a tenant must be protected by the landlord in an approved scheme within 30 days of receipt.
* Also within 30 days the landlord must give to the tenant:

i) a copy of the deposit scheme certificate
ii) the 'Prescribed Information' (see reference links below)
iii) a scheme leaflet

Note that since 1/10/15, landlords must also give tenants 'The Prescribed Information' defined in Statutory Instrument 2015 No. 1646. Note this is (confusingly) not the same as the deposit 'Prescribed Information'.

This legislation applies only to tenancies - it does not apply to 'Excluded Occupiers' (lodgers).

What is a 'deposit'

1) Holding Deposit

A 'holding deposit' is before the contract is signed stop the landlord advertising the property, and hold it for the applicant. This does not have to be protected in a scheme. The Tenant Fees Act 2019 means that usually it is refundable when the contract is signed, or it may be put towards the initial rent. It may be kept by the landlord if the tenant changes their mind, as compensation for having taken the property off the market. See the link below for full details. Since June 1st 2019, the maximum amount for a holding deposit is 1 weeks rent.

A holding deposit is not the same as (but may be confused with) an admin or application fee ie to cover credit checks, referencing etc. but these can no longer be charged since June 1st 2019.

2) Security Deposit

A security deposit belongs to the tenant. It is money set aside, which can be used (subject to what the contract says) towards the cost of any tenant's debts relating to the tenancy, typically rent arrears, missing items or damage. It must be protected by the landlord in an approved scheme. The schemes can be found via the reference links below. Under the Tenant Fees Act 2019, since June 1st 2019 the maximum deposit amount is limited to 5 weeks rent.

3) Advance Rent

It is usual for rent to be paid monthly in advance. Occasionally a tenancy requires rent to be paid two months in advance. In either case, since the money paid is rent, not a deposit, it does not need to be protected, nor returned.

The advance rent paid is not returned to the tenant at the end of the tenancy (if that were the intention, it would be a deposit), but the tenant does not need to pay rent covering any period leading up to the end of the tenancy for which advance rent has already been paid.

In some rare cases, a tenancy requires advance payment at the start of the tenancy for the final months rent. There is some debate as to whether this constitutes a deposit, but providing it is rent as opposed to money which is returnable it does not need to be protected.

C) Do all deposits have to be registered?

Where a tenancy was created before 6th April 2007 the deposit does not need to be registered in a scheme. However, if it is not registered, a valid S21 Notice cannot be served by the landlord unless it is first either returned or protected in a scheme.

Any tenancy created (whether fixed term or periodic) since 6th April 2007 requires the deposit to be registered & the PI served. This includes tenancies that existed before 2007 but where the fixed term was renewed, or became periodic, after 6th April 2007.

Previous advice to landlords to re-issue the Prescribed Information each time a fixed term is renewed, or a periodic tenancy is created, is no longer applicable (Deregulation Act 2015).


D) What if a landlord fails to register the deposit &/or provide the PI?

Tenants should not rely on a clause in the tenancy agreement, or a verbal assurance by the LL/agent, stating the deposit will be or is protected. The tenant should have received the 'Prescribed Information' (see links below) confirming registration in a scheme.

Sometimes tenants cannot remember receiving the PI, or mislay the PI. In that case, it is worth checking each scheme to see if the deposit is registered. See links below.

There are two key consequences for a landlord where he fails to register as required:

1) A S21 Notice will be invalid (S21 is required where a LL wishes to evict)

a) A S21 Notice will be invalid if it is served before the deposit has been registered, even within the first 30 days.

b) A S21 Notice will be invalid if the deposit was registered late (after 30 days).

Where the deposit was not registered or was registered late, a landlord can not serve a valid S21 Notice to evict the tenant unless the deposit is first returned (or, by agreement with the tenants, offset against agreed deductions).

Where the tenancy started after 2007, it is not enough for the landlord to register the deposit late and then serve a S21. The deposit must be returned to the tenant (in full, unless the tenant agrees to a lesser amount) before a valid S21 Notice can be served.

However where the tenancy started before 2007 (ie before compulsory registration was introduced) the LL can either return the deposit, or register it and then serve a S21 (Deregulation Act 2015). Note that if the fixed term was renewed, or became periodic, after 2007, this does not apply and the deposit must be returned.

c) A S21 Notice will also be invalid if the PI has not first been served

Where the deposit was registered in time (within 30 days), but the Prescribed Information was not served, the landlord does not need to return the deposit to the tenant, but must serve the PI before a valid S21 Notice can be served.

Note that in relation to tenancies starting since 1/10/15, a S21 will also be invalid if 'The Prescribed Information' defined in Statutory Instrument 2015 No. 1646.has not been provided, though there is no time limit for this.

Eviction via a S8 Notice, for example for rent arrears, is unaffected by deposit registration & is always possible - see How can a LL or tenant end a tenancy?

2) Penalty of between 1 & 3 times the deposit

A tenant can make a claim against the landlord for this penalty via the courts. This claim can be made at any time during the tenancy (once the 30 day time limit has passed of course), or for up to 7 years after the tenancy has ended. This does not apply however, to tenancies that started before 2007 (Deregulation Act 2015).

Late registration of the deposit does not protect the landlord from a claim, but may mitigate it (ie the court may award a penalty of closer to 1 times the deposit).

In many cases, a tenant only realises the deposit is unregistered, or that a penalty can be claimed, when he comes to reclaim his deposit at the end of the tenancy. So the tenant is often primarily seeking the deposit's return. In that case, the threat of a claim for the penalty may be enough to have the deposit returned, and this may be the easiest solution.

However the tenant would be within their rights to claim both the deposit AND the penalty.

The first step is to write (a letter) to the landlord, at the address provided (usually on the tenancy agreement) "for the serving of notices". The letter should be headed "Letter Before Action", and then clearly request the return of the deposit within 5 working days. There is further advice on this, and sample letters, in the Shelter link below. (note: Shelter suggests 14 days, not 5).

When making a claim for the penalty (and/or the deposit) via the courts, you will need Form N208 (see guidance Form 208A )

Again, the Shelter link below has further details.

E) How does a tenant claim back the deposit?

1) Dual Claim
In the ideal process, the tenant and landlord (or agent) agree whether all of the deposit should be returned, or whether any deductions should be made (and how much). This agreement can be reached through discussion, or in writing. Once agreement is reached, each side contacts the relevant deposit scheme requesting the deposit be returned as per the agreement. Provided the scheme receives the same request from each party, the deposit will be released.

As there are minor variations in how each scheme does this, read the relevant scheme's advice for the precise process.

2) Failure to agree

If landlord and tenant cannot agree on deductions the landlord wishes to make from the deposit, they can resolve the disagreement in one of two ways

a) through the deposit scheme arbitration process. Either side can raise a dispute. See the relevant scheme process for details.

b) through the courts. Either side can make a claim, and where the claim is for less than £10,000 it will be allocated to the 'Small Claims Track'. This means the case will be heard by a judge in an informal setting, and legal costs cannot be claimed by either side.

3) Single Claim

If either the landlord or tenant fails to respond to initial discussions regarding the return of the deposit, a single claim can be initiated. The scheme will then attempt to contact the other party, and if unsuccessful will return the deposit to the claimant. Check the relevant scheme process for full details.

F) When can a landlord make deductions from the deposit?

The tenant must return the property to the landlord at the end of the tenancy in the same condition as it was at the start, less fair wear and tear. Consequently if the tenant makes changes eg re-decorating etc., it is advisable to get the LL's written permission, otherwise the LL could insist on returning the property to its original condition, at the tenant's expense.

The tenant must also pay all rent (and any other fees due) up to the tenancy end date. This includes situations where the tenant gave insuficient notice: the tenancy (and rent due) does not necessarily end when the tenant moves out. Proper notice must be given to end the tenancy.

1) Determining the condition of the property

In determining the relative condition at start/end of the tenancy, it is most common to compare the check-in inventory with the check-out report. LLs are advised to get the tenant's signature agreeing to the check-in inventory, and tenants are advised to ensure the inventory is accurate before signing.

However in the event of disagreement, other evidence can be used. For example a landlord who had just refurbished a property, or installed brand new equipment, could produce dated receipts for the work or purchases.

Tenants could produce (ideally dated) photos of the property on thir departure, or a witness statement from a 3rd party.

2) Professional cleaning

Many tenancy agreements require tenants to have the property 'professionally cleaned' at the end of the tenancy. However

* if the property was not cleaned to that standard at the start of the tenancy, the LL cannot enforce such a clause, and

* in any event, what matters is the condition of the property, not how it is achieved. If the tenant (or their 'unprofessional' friends/family) can clean to the required standard, the LL cannot enforce 'professional cleaning'.

3) Betterment

Landlords cannot claim for costs that would result in 'betterment'. For example, if an old carpet is damaged, the landlord can make a fair deduction from the deposit, but cannot claim for the full replacement cost as this would result in the tenant providing a brand new carpet to replace an old one (betterment).

So if the carpet were 5 years old at the end of the tenancy, and the expected life-span of a carpet of that quality was 10 years, the LL could claim only 50% of the replacement cost.

4) Costs exceeding the deposit value

It is worth noting that if a tenant owes the LL an amount greater than the deposit, the LL can claim this from the tenant, and if necessary use the courts to sue. The deposit is just one method the LL can claim what is owed.


G) REFERENCES
Deposit Schemes:

• Deposit Protection Service

• MyDeposits - including deposits that were held by Capita

• Tenancy Deposit Scheme

Deposits (Government site on deposit protection)

Shelter (Information on deposits)

Is it registered? (Shelter: how to check each scheme & see if your deposit is protected)

Housing Act 2004 (Section 212: tenancy deposit schemes)

Localism Act 2011 (Section 184: tenancy deposit schemes)

Deregulation Act 2015 Ss 30-32 (amendments to Housing Act & Localism Act re S21 service, & penalties)

Tenant Fees Act 2019 Abolition of most tenant fees from June 1st 2019 Gov Guidance Notes

Shelter information on 2019 tenant fees.

National Landlords Association (Explanation of Deregulation Act 2015)

Prescribed Information (RLA explanation of each scheme's PI and what must be provided)

Claiming Compensation (Shelter: how to claim if your deposit was not protected)

Money Claim Online (apply online to start legal action against a landlord or tenant who owes money)

Form N208 (and guidance notes)

greatcrested

BookmobileBadGirl said:

 and that as their landlord changed halfway through their tenancy and they were not informed

When the LL changed, they should have been told - but that does not impact the deposit at all. The Landlord & Tenant Act 1985 (S 3) says:

3 Duty to inform tenant of assignment of landlord’s interest.
(1)If the interest of the landlord under a tenancy of premises which consist of or include a dwelling is assigned, the new landlord shall give notice in writing of the assignment, and of his name and address, to the tenant not later than the next day on which rent is payable under the tenancy or, if that is within two months of the assignment, the end of that period of two months.

(2)........

(3)A person who is the new landlord under a tenancy falling within subsection (1) and who fails, without reasonable excuse to give the notice required by that subsection, commits a summary offence and is liable on conviction to a fine not exceeding level 4 on the standard scale.

[F1(3A)The person who was the landlord under the tenancy immediately before the assignment (“the old landlord”) shall be liable to the tenant in respect of any breach of any covenant, condition or agreement under the tenancy occurring before the end of the relevant period in like manner as if the interest assigned were still vested in him; and where the new landlord is also liable to the tenant in respect of any such breach occurring within that period, he and the old landlord shall be jointly and severally liable in respect of it.

(3B)In subsection (3A) “the relevant period” means the period beginning with the date of the assignment and ending with the date when—

(a)notice in writing of the assignment, and of the new landlord’s name and address, is given to the tenant by the new landlord (whether in accordance with subsection (1) or not), or

(b)notice in writing of the assignment, and of the new landlord’s name and last-known address, is given to the tenant by the old landlord,

whichever happens first.]

(4)In this section—

(a)“tenancy” includes a statutory tenancy, and

(b)references to the assignment of the landlord’s interest include any conveyance other than a mortgage or charge.

jonnygee2

should they just get their deposit back and move on?

To answer this question - I don't see why you wouldn't act on it (following the advice in links/posts above) given it's simple to do without a solicitor (as above) and deposits are normally quite a lot of money. 

AdrianC

Tell the solicitor to get stuffed.
Ask the ex-landlord for the full deposit back.
If he refuses, remind him that it's trivially easy to launch a small claim (https://www.moneyclaim.gov.uk/web/mcol/welcome), and that since he broke the law over deposit protection, the maximum the court can order him to pay is 3x the deposit.
Thank him kindly for paying the full deposit back.
Move on with life.

steampowered

I'm actually going to disagree with everyone else. Claiming a refund of the deposit is easy - just file a claim through the moneyclaimonline service. But claiming the penalty for not protecting the deposit is much more difficult than you might expect.

Most people do need to use a solicitor to claim the penalty. A 29% fee is very reasonable. If the solicitor is offering a NWNF fee deal and they seem reputable, I'd be tempted to take them up on the offer.

Claiming the penalty for not protecting a deposit is much more difficult than one might expect, because it doesn't go through the small claims track process. There is a quick of the Civil Procedure Rules which says that these claims are treated as "Part 8" claims, rather than standard "Part 7" claims.

That has a number of tricky consequences:
- You cannot use the small claims procedure. 
- You cannot file your claim online using the "moneyclaimonline" service. You have to serve a paper Part 8 form with the appropriate county court. 
- The court fees payable on issuing the claim are substantially higher than when issuing a small claim - it could have changed but the issue fee was £308 last time I checked.
- The procedure is much more difficult. For example, a Part 8 claim requires a formal witness statement including a statement of truth to be attached to it. That's straightforward for any half competent solicitor, but most lay people would get it wrong.
- If you lose a Part 8 claim, you can be ordered to pay the defendant's legal costs - remember that these cases are not treated as small claims.

BookmobileBadGirl

So a bit of an update.

Brother and the flatmate decided to go with the solicitor who sent a request for £16,000. The landlords/company have come back offering £5,000. Brother was happy with this as it was £500 quid extra (after NWNF) for no effort really. Flatmate has pushed back so they are going back to the company for more.

Comms69

BookmobileBadGirl said:

So a bit of an update.

Brother and the flatmate decided to go with the solicitor who sent a request for £16,000. The landlords/company have come back offering £5,000. Brother was happy with this as it was £500 quid extra (after NWNF) for no effort really. Flatmate has pushed back so they are going back to the company for more.

Im confused, deposit was presumably £1750(ish), so they offered the full 3x the value (or 2x the value + the initial deposit) ?

Im pretty sure - ok im certain - that they cant split the claim now. It's either both accept or both proceed.

steampowered

Thank you for the update!

It definitely sounds like using the NWNF solicitor got a great result on this one. I can't imagine you would have got a £5k offer back so quickly DIYing it.