NLA warns landlords of “no win no fee” deposit protection lawyers

Speaking recently on BBC Radio 4 Carolyn Uphill, Chairman of the National Landlords Association (NLA) warned landlords to ensure their tenants’ deposits are properly protected and that they’ve fully complied with Tenancy Deposit Protection (TDP) law.

The warning comes after a growing number of information requests to TDP schemes from ‘no win no fee’ claims companies who, on behalf of tenants, are targeting landlords who may not have fully protected deposits.

All landlords in England and Wales must by law protect their tenants’ deposits within a Government authorised TDP scheme and must also ensure that they pass on important information about where and how it was protected – known as the Prescribed Information – to the tenant within 30 days from the start of the tenancy.

Failure to do so could lead to heavy penalties and claims companies seem to be inviting tenants who haven’t received their prescribed information to make a claim against their landlord – even if the deposit is protected.

Carolyn Uphill, Chairman of the NLA said:

“You have to ask where the financial loss for the tenant is. The majority of tenant’s deposits are being protected and ninety nine per cent of tenancies end without any issues over the return of the deposit. Where problems do arise, the tenant has access to a free and impartial decision using the scheme’s dispute resolution service.

“Of course, where there is blatant disregard for the law landlords can have no argument and must be brought to rights. However, these claims firms are looking to exploit those landlords who have protected their tenant’s deposits but may not have properly issued the prescribed information.

“In practice this could simply mean not providing their tenant with a leaflet about where the deposit is protected.

“This sort of action is morally questionable, unnecessarily punitive and will only work to undermine the good relationship that exists between the majority of landlords and their tenants”.

Eddie Hooker, CEO of Tenancy Deposit Scheme my|deposits, also commented:

“It has always been the landlord’s responsibility to protect the deposit and a vital part of the process is to pass the Prescribed Information on to the tenant.

“Landlords must be aware that they are ultimately responsible even if they use a letting agent. Our advice is to check with your agent or directly with your deposit protection scheme to ensure all of your deposits have been properly protected.

“Those who fail to comply with either step of the legislation leave themselves open to potential fines of up to three times the deposit value and could fall prey to these kinds of claims companies.

Mark Alexander, founder of Property118 recently highlighted the marketing activity of these companies – see this thread.

Mark Alexander also commented:-

Following the case of Superstrike Limited vs Rodrigues at the Court of Appeal it is now unclear whether landlords should have re-issued Prescribed Information when when a tenancy became Statutory Periodic at the end of a fixed term. The ruling was that deposits taken pre April 2007 should have been protected when a new statutory periodic tenancy came into being after Tenancy deposit Protection laws came into force. This is because it is now clear from legislation that a Statutory Periodic Tenancy is a new tenancy and that all deposits taken in respect of new tenancies should be protected. What is not clear is whether a deposit which was protected and remained protected needs to be re-protected and new deposit protection certificates and prescribed information to be served. The guidance issued by the Deposit Protection Schemes is  unclear on this point and concludes that only new legislation or a ruling in the High Courts will clarify this matter. To date, no lawyers have publicly announced a solution which could protect landlords and letting agents from claims if such a ruling goes the wrong way.

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