Guidance from tenancy deposit protection schemes following the Superstrike Ltd. vs Rodrigues Court of Appeal case

A separate joint briefing note that considers the wider implications on the Superstrike judgement has been produced by leading landlord and letting agent representative organisations including the National Landlords Association.

This contains more information about the case and again we recommend that you read it.

See >>> https://www.property118.com/wp-content/uploads/2013/07/Superstike-Implications.pdf
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Bloody marvelous hey?

So here we are, 6 years after Tenancy Deposit Protection legislation was introduced and the government approved Deposit Protection schemes still can't decide between them what the rules are without a Supreme Court Judge making yet another ruling or a change in legislation!

They've issued wooly guidance which flies in the face of what all landlords and letting agents were told BY THEM prior to the Superstrike Ltd vs Rodrigues Court of appeal case and they've openly admitted, at least in my opinion, that their members may be well and truly stuffed.

No doubt they've taken legal advice to protect their own backsides?

Well if the sh** hits the fan be prepared to see some very fast phoenix insolvency arrangements put into place by the Deposit Protection schemes. It wouldn't surprise me if they are already looking at Newco structures and asset stripping their existing business models to leave nothing but shell companies for landlords and letting against to litigate against. I will be watching this like a hawk, as I suspect will others 'in the know' about these types of restructures.

In crude terms folks, I reckon the deposit protection schemes are going to leave the PRS "up sh** creek without a paddle"

I read the guidance earlier today when I received an email from my deposit scheme and I agree with Anon that it basically says nothing other than 'Your stuffed whatever you do even though you are in that position by following our earlier advice!'

The schemes are not fit for purpose and the government really needs to get to grips with this - like yesterday!

There has also been some industry guidance issued today which offers a little more but still basically lets us know we are all in the ****. See here:
http://mydepositsnews.co.uk/1C72-1QLDI-6QK0M7-PJECE-1/c.aspx

What a mess! If this is the best that they can come up with after discussion with DCLG and weeks of deliberation, I despair. Why on earth can Government not issue clear guidance on the intention of their legislation as a holding measure and take urgent steps to amend it as necessary? Bungling ineptitude is the most charitable description I can think of.

Does this all mean that every LL who has protected a deposit could have a claim made against them.
I'd love to see that happen
It would bankrupt most LL.
I can't see lenders being very happy about the situation when their property values go through the floor with lots of bankrupted LL stock coming on the market!!
What about all the homeless tenants!?
The govt will have full blown national emergency on their hands with hundreds of thousands of homeless tenants.
Receivers generally have no mercy and will wish to boot out existing
tenants as soon as they can to sell with vacant possession!!
Mind you I'd love some ex tenants to try that on me; I would be telling them where to go.
You have got to be pretty cute to be able to serve a Statutory demand to commence bankruptcy proceedings
It is very easy to avoid a process server; I do it all the time!!.
Might be an opportune time to start applying voluntary 2nd charges or interests on property titles in favour of trusted 3rd parties!!?

This scenario is without doubt a complete farce. The Deposit Protection Schemes are all stating that their guidance for the various permutations of tenancy is effectively speculation, most if not all of the bodies representing Landlords – and the input on this site itself - are similarly speculating on the “why’s and wherefore’s” and yet, I believe I am correct in stating that there has not been any statement or guidance from the relative Minister and/or the relative Governmental Department.

This situation is born of legislation that is unclear and inadequate and, as such, because of our legal system, has to be presented to a court for clarification, albeit for this particular case, on appeal which itself leads one to question whether, should this decision be contested again, might that particular court overturn the court of appeals decision!.

Unfortunately, those persons responsible for such matters in Government have been rather mute on this particular matter. It is they who should be either clarifying the legalistic position or be adding to/amending the present legislation urgently in order to negate any ambiguities for all of us involved in the letting of properties.

Until this is done we are all effectively floundering in the dark.

This is the straw that broke the camels back for me.

I have made an appointment to meet with Bryn Cole and his team at FCC Paragon at 3pm today and I will be leaving from Norwich soon to drive down to Portsmouth.

They already have a warranty product which stands as an alternative to taking deposits and I will be digging into the details of that and looking to negotiate a group buying deal for Property118 Members and supporters of The GOOD Landlords Campaign.

My brother, who is a letting agent, is equally alarmed so we will be sharing the driving and going together. Therefore, I will only be communicating by iphone today whilst Adam is driving so please bear with me if I don't respond to comments as quickly as normal. As it's such a long drive we will be staying over night (perhaps to drown our sorrows!) and driving back tomorrow so please bear with me.

One begs the question, if landlords can be held liable, can their agents be counter sued? If so, I pity those agents without PI insurance. Furthermore, isn't it about time the insurance industry, particularly the PI providers which may well be affected by the fallout of this too, get behind the lobbying?
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A sleeping conspiracy theory - was this the intention behind the deposit regulations all along - to persuade landlords not to take deposits!?

If the tenant has to pay the cost of the warranty product and the cost depends on the risk of the tenant then the warranty option could be very nice, especially if it provides for RGI and legal cover.

Ideally the landlord will not even have to collect the charge from the tenant, with the tenant paying directly for the warranty. A landlord could then decide on the warranty providers he/she would accept given the past payout history.

However I foresee lots of paperwork every time a landlord wishes to claim from the warranty, so a £100 charge for stain on a carpet may not longer be collectable.

Mark, We also provide a deposit warranty as an alternative to taking a traditional deposit. We would be delighted to talk to you about providing a bespoke product for your Property118 community.