Tenants recalling rent (DDICA 4)

gemgem513

I've been letting my house out through a letting agency and the previous tenants have been very difficult during their time in my house. When they moved out in january 2021 they owed 2 months rent and left the house in a really bad way and caused a lot of costly damage. In december 2020 when they were still living in the house the direct debit for their rent was taken out of their bank account. The tenant rang up my letting agency and said that the money was taken out without permission and she wanted the letting agency to refund it. As she owed the rent the letting agency refused to refund. In the last week (May 2021) the letting agency have got back in touch with me to say the lady has recalled the £550 rent that was taken out of her bank in december. So the letting agency are saying that the money was recalled and taken out of their bank account 5 months after the money was originally paid by the tenants. The letting agency are asking me to pay the money I owe to them. Surely if someone has paid money for something they owe they shouldn't be able to then take that money back? The letting agency have said because it was done under a DDICA 4 then they cannot dispute the reason that the money was recalled. I'm reluctant to give the money back to the letting agency without getting advice first. Any help would be hugely appreciated x 

user1977

gemgem513 said:

Surely if someone has paid money for something they owe they shouldn't be able to then take that money back? 

No, that's how the Direct Debit Guarantee works. The bank reverses the transaction, so you're back where you were before the payment was taken i.e. if the tenant owed you rent then they still do. How that ought to be treated as between you and your agents, I don't know (in part because we haven't seen your contract), but I would expect the risk falls with you.

moneysavinghero

Banks need consumers to have trust in the Direct Debit system. If dodgy companies were able to just take money at random from consumers accounts and then the consumer had to go through a lengthy process to try and prove it to get their money back, then the trust in the DD system would be non-existent and it would fail.

Therefore the DD guarantee says that anyone can get their money back that was taken by DD. No questions asked. Of course if they still do legally owe the money then that has not changed - you just need to find another way of getting that money.

SpiderLegs

Seems fair enough to me, the DD was taken in error and should not have been kept.

Repay the money to the LA and pursue the tenants for arrears through small claims.

eddddy

Collecting rent by Direct Debit can be very risky.

I remember hearing a LL complain that 'rogue' tenants paid their rent for 2 years by DD, then the tenants did a Direct Debit Indemnity Claim for the full 2 years of rent. So 2 years of rent  money was returned to the tenant's account - so they emptied the account and did a runner.

In that case it was fraud (which is a criminal offence), but that might not help the LL much - especially if the refunded rent has been used to pay-off loans etc, so the rogue tenants no longer have it.

(Had the tenants paid their 2 years of rent by standing order, that scam would not have been possible.)

eddddy

But, FWIW - in the OP's case it sounds like the tenant may have mis-used the DD guarantee (perhaps by fibbing to the bank).

Specifically:

It protects you in the rare event that there is an error in the payment of your Direct Debit, for instance if a payment is taken on the incorrect date, or the wrong amount is collected. It cannot be used to address contractual disputes between you and the billing organisation.​

Link: https://www.directdebit.co.uk/DirectDebitExplained/pages/directdebitguarantee.aspx

The OP's situation sounds like a contractual dispute, not an error.

Examples of errors would be something like:

• The letting agent says to the tenant "Your final payment will be in November 2020" - but then collects another payment in Dec 2020
• The letting agent says to the tenant "Your payment for December 2020 will be £250" - but then collects £550

But if...

• The letting agent says "Your payment for December 2020 will be £550" - and then collects £550 - there is no error in the DD. (But there may be a contractual dispute about whether £550 is actually owed)

So the letting agent could try challenging it a bit harder with the bank, and show evidence that no DD error was made, and it was a contractual dispute. But the bank might not take any notice.





Edit to add...
The OP seems to mention reason code 4 (DDICA 4) . That looks like 
​

Advance notice disputed
Payer disputes time, amount or frequency of advance notice and has requested single payment to be countermanded

Link: https://www.bacs.co.uk/resources/pages/emailcommunicationreasoncodes.aspx

i.e. The advance notice of the direct debit was wrong - i.e. the letting agent didn't correctly inform the tenant about the direct debit details in advance.

gemgem513

Thanks everyone for your replies. I've replied back to the letting agency and asked why they use direct debit rather than standing order as direct debits can be recalled. They've said its always been their policy as it gives them great control over the money. I dont understand this really. I've put your point to them @eddddy about the reason code and asked if they could challenge the bank over this. They have said 'the code used in this case is not one that can be challenged - we have had this confirmed by our Direct Debit Provider Allpay' The letting agency have also said that I need to pay the money to them then chase the tenants through the small claims court   I already know I will get nowhere with this as so many other companies are chasing them for money also it seems as if they're wanted by the police. 

[Deleted User]

you have now been overpaid by the letting agent.  So you need to give them back the money and then deal with the rental arrears as a seperate issue.  ITs not fair you are out of pocket but equally its not the letting agents fault either.