Is the no-deposit scheme correct?

I'm assuming you meant 5 weeks as a deposit and not 5 months, the deposit scheme are wrong, you submitted a section 8 based on the tenant owing two months rent so they owe you 2 months. The problem is these schemes are unregulated so you are at their mercy. What does it say in their T & Cs

Reply to the comment left by SimonR at 03/03/2020 - 17:09
Yes, 5 weeks! T&C's can't possibly cover each potential claim scenario, so not sure what you are expecting here?

My take on this is that the "agreed arrears" of £1100 would only be valid if the tenancy had continued to 6th February. It was actually terminated by mutual agreement on 25th January when the tenant signed a deed of surrender so I do not see how you can claim that rent is due for any period beyond that date. The S8 is headed "Notice seeking possession " and a reasonable interpretation is that the landlord wishes to end the tenancy and intends to seek a court order if possession has not been given by the specified date. Liability to pay rent for the remainder of the fixed period would only arise if it was the tenant who was seeking to end the tenancy so I think the insurers are correct.

Had proceedings been issued on 25th January you would not have obtained an order for many weeks and if the tenant had then stayed put until the bailiffs turned up, the arrears and other costs would have been way in excess of £1100 by the time that you gained possession, so the surrender was the pragmatic solution, benefiting both parties.

Mmm, I remain unconvinced about these so called "zero deposit schemes". And maybe this case only strengthens my reservations.
When we assess tenants, we do reference checks, credit checks and check tenants’ bank statements. We want to know that the tenants can afford our rents comfortably. If a tenant could not afford to pay a five week deposit because they were waiting for the deposit to come back from their last tenancy, that would indicate to me that they must be only a month or so away from not being able to pay the rent.
Not the sort of tenant I want! And that is the main reason why I won’t be offering “zero deposit tenancies” any time soon, but I can see they have a place at the low rent / low income end of the PRS.
I'm not sure they are all that great for tenants too.
Worth saying the government is looking at bringing in some tenancy deposit passporting thing, but I cannot see how this could work with any great fluidity.
I wrote a longer piece about these zero deposit schemes here..
https://www.lettingfocus.com/blogs/2019/09/zero-or-nil-tenancy-deposit-schemes/
Hope the situation is soon resolved in your favour.
David Lawrenson
http://www.LettingFocus.com
Private Landlord Advice

On the matter in question, because the tenancy was surrendered before fixed term ended, I think you are on a sticky wicket here because as part of the surrender it might be implied that you had accepted the arrears and actually wrote them off.

Maybe a legal opinion is required here.

As I say, it's why I don't like these No Deposit Schemes.

David Lawrenson
http://www.LettingFocus.com

Another way of looking at this is that the amount offered by the insurers is actually more than would have been available if a 5-week deposit had been taken instead.

The insurers will have to justify their expenditure to the tenant when they try to recover their outlay from him so it is not surprising that they are not prepared to pay more than what they consider to be the tenant's legal liability. They seem to have approached the claim in exactly the same way as would have been expected from an adjudicator under one of the deposit protection schemes.

The tenant has already paid the premium for the insurance cover and will end up in debt to the insurers, whereas the landlord will recover his full legal entitlement without the hassle of chasing the tenant for anything in excess of the maximum 5 weeks deposit so it is not difficult to work out who is emerging as the loser.