New Deposit Service launched

New Deposit Service launched

10:36 AM, 9th September 2014, About 10 years ago 48

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As many as 38% of landlords calling the Landlord Action legal helpline for advice on evicting a tenant have failed to place their tenants’ deposits in a government recognised scheme within the prescribed 30 days of receiving it, or have not even heard of the scheme which came into force back in 2007.

Landlord Action has now launched a deposit service to deal with these cases. Paul Shamplina Landlord Action

Reviewing enquiries from the start of this year, there is still a major problem with amateur landlords (and some agents) having very little knowledge of this important piece of legislation, which is seeing an increasing number of landlords facing penalties of up to three times the value of the deposit, which is then awarded to the tenant. The landlords also face penalties if their agent failed to comply with the legislation, which adds tension to the relationship between landlords and their agents.

There are too many landlords that still do not know enough about being a landlord and their responsibilities. Many are failing to comply with deposit protection rules and this is having a knock-on effect when landlords wish to evict through Section 21. The simple fact is, ignorance will not solve the problem.

The only way a landlord can legally evict a tenant who will not move out voluntarily (and who is not in arrears or in breach of their tenancy agreement) is via a court order for possession, but in order to obtain this, a landlord must first return the deposit. Furthermore, we are receiving more and more phone calls from desperate landlords who are being sued by their tenants for compensation for not protecting the deposit.

It seems to me, that tenants are becoming savvier than landlords when it comes to buy to let legislation. Landlords, this is your business, you must be fully versed in your responsibilities.

Solicitors are reluctant to take on these cases as there is no defence against it and it is purely down to the judge’s discretion. In response to the rising number of enquiries with deposit issues, Landlord Action has launched a fixed fee deposit claims mitigation service for landlords, to act on the landlord’s behalf in dealing with the court paperwork and also attempting to reduce the level of penalty the landlord faces.

Eddie Hooker, CEO of MyDeposits, said “the findings of Landlord Action are somewhat worrying, especially as all three schemes have seen a healthy year on year increase in the number of deposits being protected. Having said that, we should not become complacent and there is clearly more work to be done in ensuring that deposit protection is embraced by the entire private rented sector. Landlords and agents should be aware that protecting the deposit with an authorised scheme is only one part of their legal responsibility. The other requirement is to correctly serve the Prescribed Information to the tenant and this is definitely an area where better understanding of the legislation is needed. The majority of legal cases we see surround the incorrect issuing of the Prescribed Information, or failing to issue it all. All schemes have extensive information on how to comply with the legislation, including timescales on their websites and we urge letting operators to ensure they understand their obligations”.

Please CLICK HERE if you wish to see the new Deposit Service

Contact Landlord Action

Specialists in tenant eviction and debt collection. Regulated by The Law Society.


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Comments

Alan Loughlin

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12:55 PM, 9th September 2014, About 10 years ago

as far as I understand she cannot waive it, and you were wrong to do it, all the more reason to avoid deposits altogether.

Andy Bell

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13:18 PM, 9th September 2014, About 10 years ago

Just yesterday I issued my first refund from the DPS. A very frustrating process even though it was a full refund to a model tenant who had been in property since 2007. I gave up trying to figure the process on line. I rang the DPS helpline and they were very good, issuing a new repayment ID and explained what the tenant had to do. All a faff that could be explained better on the website but it did work out OK.

Next thing the new tenant moved in the day after the old tenant moved out so I've put his deposit in. It was only when I wanted to printout a page of the details for my record that I found a button that lead to all this "Prescribed Information". 12 pages of mostly small print that I've never seen before and had no idea that I should have issued to all my tenants. Again the website is hopeless at explaining exactly what needs to be done.

My third issue is that there seems to be no way to change the lead tenant. e.g. Husband moves out, wife gets a new STA in her name only but the deposit can not be transferred to the wife. It has to be refunded and but back in. So the house would be let and occupied without a deposit whilst the husband and wife sorted things out at their end. Not an ideal situation so I've left the deposit in the husbands name with his agreement that he wont request a refund.

In principle I don't mind the scheme but in practice the systems and website need an overhaul. As a landlord who considers himself good and fair it does seem pointless especially if so many who could the ones the scheme is aimed at don't bother with it.

Alan Loughlin

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13:30 PM, 9th September 2014, About 10 years ago

Reply to the comment left by "Andy Bell" at "09/09/2014 - 13:18":

yes a lot of hassle for no reward, consider the alternative I have suggested.

Neil Patterson

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14:29 PM, 9th September 2014, About 10 years ago

Reply to the comment left by "Adam Hosker" at "09/09/2014 - 12:06":

Hi Adam,

I am having problems with Paul's login but he says:

We have launched a Deposit Claim Service, acting for Landlords, that are being pursued by tenants, attempting to claim compensation, because of noncompliance of protecting deposit.

This is the link http://www.landlordaction.co.uk/site.php/deposit-claim

Andy Bell

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14:50 PM, 9th September 2014, About 10 years ago

Reply to the comment left by "Alan Loughlin" at "09/09/2014 - 13:30":

It is worth considering, a few question though:

How easy is it to explain to tenants?

Would they be willing to pay if the fee was more like £600 for a house?

Where is the incentive for tenants to leave things in a good state?

Could it be done with partial refund at the landlords discretion?

All food for thought.

Alan Loughlin

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14:57 PM, 9th September 2014, About 10 years ago

to start with the last point first, no definitely not, any whisper of refund and it is a deposit.
never had any problem explaining it, I just say this is what it is and do not give a choice, never had anyone refuse yet.
we charge 500 for a house.
there is no incentive either way to leave house in good order, less so with a deposit because by the time the last month comes around and the rent is not paid, they just say use the deposit, so you are left with no money to clean, and no incentive to leave it in good order, they know there is no money coming back, it is used for the rent, so where is the difference?

Yvette Newbury

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15:03 PM, 9th September 2014, About 10 years ago

I like Alan's idea, but I don't believe this would work for us, it really depends on your market. If a tenant does not pay the final month's rent and leaves the property dirty then you only have a small amount of money taken under this fixed fee deal which would no way cover the final month's rent yet alone the cleaning. At least with the deposit (take 6 weeks so you know you have more than the last month's rent held) you can take out the last months rent, the checkout fee and cleaning and have an amount (in our case it's always enough) to cover any small repairs etc stated on the inventory. We have been members of the deposit scheme since 2007 and have had no disputes to date. I do agree with the problems of dealing with the DPS though! Mydeposits we find much better.

Alan Loughlin

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15:18 PM, 9th September 2014, About 10 years ago

ok, fair comment, but we have been using this system for 6 years and find it wonderful.

Fred Bloggs

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4:02 AM, 10th September 2014, About 10 years ago

Reply to the comment left by "Alan Loughlin" at "09/09/2014 - 12:55":

Ok, but would a tenant take me to court when it was her idea ? anyway it would interesting to hear what a judge would have to say when it was her idea not to protect !

Sharon Betton

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13:02 PM, 10th September 2014, About 10 years ago

Reply to the comment left by "Alan Loughlin" at "09/09/2014 - 10:53":

I know quite a few landlords who prefer to use a fee at the beginning, rather than taking a deposit, with the addition of very careful referencing. If this can be combined with rent in advance too, so much the better.
The only word of caution I would give is that there have been rumblings that Shelter and the CAB may take this on board as a new campaign - in the same way tenancy deposit protection began.

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