Deposit Protection – look out landlords, the vultures are circling

I have mixed views on this, nobody likes someone actively searching for a fault in their business practices and in that respect I am against it, in the same way I imagine every UK bank is against PPI refund claim centres.

However, I personally think it may be what the industry needs. It will root out all the agents and landlords who don't comply with current legislation. I recently discussed the need for agent regulation, and in another thread the need for legislation to be enforced as opposed to creating more legislation. This is more or less the outcome albeit in a quite intrusive and potentially offensive manor. It means landlords and agents will have to adhere to the rules and regulations set out in the industry and someone is in effect enforcing these Laws.

I'm sure there will be many who disagree with this opinion but if you are carrying out your business practices correctly whether an agent or landlord you have nothing to worry about from these vultures.

As I see it, sooner or later this was going to happen, whilst they are the first I've come across they certainly will not be the last and they will make a fortune from landlords and letting agents who haven't protected deposits correctly.

I'm sure many people will be commenting on the Superstrike V Rodrigues case after my comment and let us hope that the NLA's press release is correct to limit the number of people who suffer from these no win no fee businesses. But I think that this maybe a discussion for when we have a clearer understanding of the implications.

As a synopsis I have an instant hate for them because they are trying to extract money from landlords and agents who may well have made a mistake. This is no different from any other no win no fee business simply put some people will get stung by this as the banks did with PPI, but on another note banks don’t miss-sell PPI anymore, and I believe that this will have a similar effect on the letting industry.

What will happen to Professional Indemnity Insurance premiums for Letting Agents in the wake of this?

Presumably the primary line of attack will be whether prescribed information has been served correctly. How many tenants will have kept the paperwork? I suspect very few of the types that will try on a claim.
This will leave the ambulance chasers in a position whereby they need to write to landlords and letting agents to request copies. I have no doubt that they will be incredibly aggressive demands but I suggest you ignore them, even if you are 100% sure that you have done everything right. That will leave them only one option which is to take you to Court. This will cost them money and aggravation. Another way to irritate them if they do issue Court papers is to request the case to be heard in your local Courts. That will defer the case at the very least and cause them even more aggro and expense as they will have additional travelling costs. Do not send your defence to the Court or any supporting evidence until a few days before the case is heard. If you are unwell or the Court date is inconvenient you can also apply for a change of date. Clearly they are hoping to take 50% of the winnings. Their business model will be heavily reliant on high volume, low costs, minimal defence. Make it difficult for them and they will soon give up.

Please feel free to share this advice with all landlords and letting agents you come across. I suspect many of them will otherwise be unaware the problem until they receive their first nasty letter. Be kind, prepare them.

Good luck (wink wink)

@Anon - Professional Indemnity is a very good point, i can only see one of two options, either premiums go up, or deposit protection claims become excluded from the policy.

Another Shelter initiative perhaps?
Tw*ts.

Crazy world isn't it? This will confuse my tenants even more! Not one of my tenants so far has even remembered their deposit protection number at the end to release their deposit, yet alone whether or not I served them all the correct forms. Thank goodness I keep my records straight here and ensure most of my correspondence is by email, which I keep for ever, so can produce a reminder of what was sent when needed.

Maybe someone should ask why they have not put their MOJ licence number on the video.I believe it is a legal requirement.

All Firms actually listed can be found here > https://www.claimsregulation.gov.uk/search.aspx

Spotted the flaw in their plan !!!
Actually it's 2 flaws

1. They state one and a half times the deposit back.
But it's 3 times if they make the claim themselves.

So when we get a tenant trying to make a claim via this questionable service we just point out how much the service is making out of them. Only have to offer £10 more.
Out of court settlement

2. Once a tenant makes such a claim just point out how long he has on the AST
And that landlords do talk to each other and WE do have a data base of bad tenants. It's a list of difficult tenants which, once evicted may find it difficult to find another landlord prepared to trust them.

If you saw any other flaw please let us know.

This actually happened to me recently. A new tenant moved to a flat I own in February this year. For my part I secured the deposit through My Deposits on the date of check in. As is my usual practice I printed off 2 copies of the certificate, copy of the Information for Tenants form and The Prescribed Information form. These were then posted off to my tenant together with a standard "welcome" letter to my new tenant. Whether or not the tenant actually received the paperwork is questionable but 5 weeks later I received a claim form from my local County Court citing my failure to provide the prescribed information and a claim for 3 times the deposit, a total of over £3000.

Immediately, I responded to the tenant enclosing copies of everything that had been sent to him the day after he moved in. I also advised him that I would be appointing solicitors to defend the action and that in the event of a successful defence that we would be seeking costs against him.

For some years I have used a litigation lawyer famed locally for his vociferous handling of his instructions. In this case my witness statement was submitted within 6 hours of me receiving the original court papers.

A few days later my tenant wrote to me notifying me that he had instructed the court not to proceed with the matter. After this things got very interesting indeed. Having passed the tenants letter to my solicitor he advised me that in order for the tenant to stop the claim he has to file a 'Certificate of Discontinuance' with the court. This is a prescribed court form without which the tenant could simply tell me he was discontinuing but in reality could still attend court on the day and seek an undefended judgement. As a result my wily old brief simply sat back until the court date, then attended on my behalf. In this case the court had actually cancelled the case based on the tenants letter, however heres the real sting in the tail;

Because the case was stopped by the tenants letter, it never went through any case management process hence it was never listed for The Small Claims system. This allowed me, via the solicitor to put in an application for costs. My tenant is currently facing around £1200 in costs and charges as a direct result of his own greed and stupidity. Any hope of a reasonable landlord / tenant relationship was lost early on. The tenant, having offered to pay the costs at £1 a week has unwittingly admitted liability for the costs. Having signed a 12 month tenancy at his request I am very much looking forward to the run up to Christmas when, instead of an altruistic message of peace and goodwill, this particular tenant is going to be receiving a Section 21 notice instead!

This brings me on to an interesting question. As my tenant has cost me £1200 in legal fees I feel compelled to deduct it from his deposit when he leaves. After all, I have the receipts to support my claim. Would anyone care to comment on my perceived chances of success? Also, despite the tenants actions he continues to pay his rent in full as it becomes due. Should I receive a tenancy reference request in the future, I will of course be entirely truthful. Of course, when asked if I would ever consider renting to this tenant again, the answer will be a big fat "NO"! Am I obliged to to make further comment if this answer raises further query. Any advice would be most welcome.

I have checked with The Ministry of Justice and Tenants deposit Claimline Limited - Company Registration Number 0833119 is not listed with them.

I suggest this if any landlords or letting agents receive correspondence from this company they DO NOT RESPOND but immediately make a complaint to the Ministry of Justice.

I have also read through this companies Terms of Engagement and I find them to be incredibly amateurishly drafted.

For example
"3.1 On the successful settlement of your claim, the Company will charge you a Service Charge of the Compensation awarded to you. This is subject to a minimum charge of 35% + VAT of the award or £600 plus VAT, whichever is the greater."

How can they guarantee 1.5 X the deposit as a minimum payout then? Let's assume the deposit was for £350, a very typical deposit for a room in an HMO. The maximum award would be £1,050, i.e 3 X the deposit. Deduct their minimum fee of £600 + VAT at 20% = £720 and that leaves £330 maximum payout. However, their guarantee states minimum payout of 1.5 X the deposit so that would be £475. The math just doesn't add up does it? Also, What if the Court ordered a fine of 1 X the deposit?

Is this the following fair contract term?

"6.4 If you terminate this Contract prior to an offer of Compensation, the Company may charge you a reasonable fee subject to a maximum of £375 plus VAT."

and this

"9. Misleading Information
We reserve the right to charge you for any costs incurred by us if any information
provided by you is misleading or contains material omissions which result in us providing a service to you, which we would have declined to provide, had we been in possession of the full information."

In this particular instance I don't think landlords and letting agents have too much to worry about. HOWEVER, one Vulture hovering will attract others!