Letting Agent not protected deposit and will not forward me the deposit

Hi Ryan,

Two things you need to find out:
Does the agent belong to a redress scheme, who is it and then make a complaint to them.
Do they have Client money protection insurance?

Useful links for you:
Tenancy deposit repair kit by Tessa Shepperson at Landlord Law >> https://www.property118.com/tenancy-deposit-repair-kit/92719/

Tenant eviction professionals >> https://www.property118.com/evicting-tenants/

Hi Ryan,

If you want to issue a section 21 notice you will have to return the deposit in full to the tenant or you will be ineligible to issue a valid s21. Ensure you retain proof that the funds have been repaid, for instance by use of a BACS payment to the tenants account. It seems unlikely that the deposit has been protected by your letting agent.

You will still be at risk of being taken to court by your tenants in an effort to get the penalty of 1 - 3 x the deposit amount awarded to them for your failure to protect their deposit. What I would say is that they will be unlikely to be awarded more than 1 x the deposit amount due to the fact that you have an agent who's job it was to protect the deposit and you presumably have correspondence to prove that you have chased them up over the term of the tenancy to obtain proof of protection etc.

Once you've repaid the deposit to your tenant, the funds held by the agent will be your funds and so you could begin a Money Claim Online for their return. If the business is solvent and trading you shouldn't have a problem getting repaid.

All good advice from Neil and Kate. Start doing some digging on your letting agent. Are they Ltd Co? Try Companies House Beta Service to check on accounts, officers etc. And Facebook. You would not believe what some people put on there. Check the lettings agents website for details of the redress scheme they use, memberships of the various trade bodies, their complaint procedure etc. But the priority is getting your rent or evicting the tenants. If they are not two months in arrears( in fact its one month and one day when they miss the second payment) then as you rightly say it's a Section 21. And however much it sticks in your craw then you can't serve until it's protected. But you could also use that £650 deposit as part of a "relocation deal" for the tenant to leave the property without recourse to court action. It's cheaper and quicker than court. I always find it's useful to sit down with the tenants and explain very sympathetically that you understand their current difficulties and you would like to help the best you can. That you would rather they left voluntarily rather than court as you would then need to seek a money order against them for non-payment of rent which would affect their future credit record and chances of renting in the future. Be non- judgemental and open with them. You would be surprised. They might take advice from CAB or the local council who tell them to stay put. But what they don't tell them is that the debt that builds up is theirs and not the councils.

Thank you for the comments. They are a Ltd company, I can't see anything about a redress scheme and I very much doubt they are a member of anything (even if legally they are supposed to be).I am still on OK (ish) terms with the agent and was thinking about a stern formal letter to the agent might be a next step to try and recover the deposit. Does anyone have any advice as to what to say in the letter to be taken seriously? (I was thinking I would give them a 7 or 14 day notice to return the deposit (or protect it) otherwise I will be taking legal action.

Re: Returning the deposit to the tenant - would it be a better option to protect the deposit with DPS now (before issue the section 21), or is this not valid and should return the deposit to them as you suggest. To complicate it further the tenants do not speak any English, so it might be easier to deposit with DPS rather than trying to explain and get bank details from them, etc.

I have also had complaints from the neighbours and my freehold management agents saying that my tenants are throwing rubbish over to the neighbours garden, blocking the drive with multiple cars, and the tenants being unapproachable - so I think I am best to keep this as formal as possible.

Many thanks in advance,

Ryan

Reply to the comment left by "Ryan Landlord" at "12/12/2016 - 22:16":

As regards your suggestion of writing a formal demand letter, I would agree that this is an essential first step. It is a requirement in any case before making a money claim that you have made an effort to resolve the issue direct with the defendant before you make a claim.

Check on the https://beta.companieshouse.gov.uk/ website for the Directors names and addresses for service & Registered Office Address. I would send a copy of any complaint to the Directors along with to the Manager of the office you have been dealing with and also to any address stipulated by their complaints procedure.

You should find details of their complaints procedure on their website, and even on your agency agreement paperwork. Also check their website for memberships of any professional bodies such as ARLA and/or details of any redress scheme. If you can't find the information on their website, then just phone and ask them for it.

You should read through your agency agreement and make a note of any relevant terms which explain how the tenants deposit will be treated and how any money due to you will be paid especially with regards to time frames.

In your letter you should also refer them to the penalties for landlords who fail to protect the tenants deposit which you are now vulnerable to being charged. You should point out that as your agent they will in turn be liable to you for any such costs which are incurred through their failure to carry out these actions on your behalf as they have contracted with you to perform them. You can quote the relevant term references and even quotes from their agency agreement.

Be sure to mention in your letter the discussions and emails you've had (and who you had them with) in trying to resolve this previously (this may be news to a Director who may be kept in the dark, and it will give details to the court of the efforts you've already made to resolve the issue prior to coming to court).

Explain that you need the deposit money back within 14 days or you will be forced to make a claim to the county court for its return. Give account details for payment.

To Be Continued...

Reply to the comment left by "Ryan Landlord" at "12/12/2016 - 22:16":

I will outline your options with regard to your second question about whether to return the deposit or protect it...

Firstly, if you wish to issue a valid s21 notice you have no option but to return the deposit. s215 (2A) (a) of the Housing Act 2004 as amended by the Localism Act 2011 makes it very clear that if you've missed your 30 day deadline you must return the deposit before serving a valid s21 notice. You can however deduct outstanding rent or other amounts owed to you by the tenant, but only with their express agreement which you should get in writing. This link gives a really good layman's explanation. http://www.landlordsguild.com/serving-a-section-21-notice-if-deposit-protected-late-or-never/

You could in theory try to blag it and protect the deposit, receive the DPS cert (which doesn't have the protection date on it by the way) and then serve your notice, relying on your tenants lack of English to prevent them from knowing their rights, or understanding that you've done something incorrectly (remember they will receive documentation from the DPS once you protect the deposit.) If you do this and it is discovered the court will take a dim view of it and not only will your court order fail (assuming the tenants do not move out by the end of the notice period), but they may well end up awarding the full 3x deposit penalty in any counter suit.

You've said your tenants are in rent arrears, do they respond to any letters or emails you send them? If so, you could write/email explaining that they are in £XXX arrears with their rent and that as they've paid a deposit of £650 at the commencement of their tenancy you would like to apply their deposit to the rent arrears to reduce them to £XXX. Would this be agreeable to them? If the arrears are less that the deposit figure, then you word it something like "...you would like to apply their deposit to their rent arrears, which will leave them a deposit of £XXX.

Get their agreement (preferably in writing via an email), then draft up a letter from the tenants perspective stating something along the lines of: - I, (tenant's name), tenant of (property address), agree to a deduction of £XXX being taken from my deposit for payment of my outstanding rent arrears. This will leave me (either) a remaining deposit of £XXX (or) rent arrears of £XXX as at (date). Signed and dated (and preferably witnessed by a neighbour); take two copies, along with a cheque made out for the balance (if there is one) to the tenant's property at a time agreed by the tenant and have him/her sign the document and hand over any cheque with the neighbour as a witness. Or have the tenant hold up the chq and take a picture with your phone as a dated record.

Leave a copy with the tenant for their records and you keep one also. That way if they do seek advice they will have a record of the agreement to show and it may save you having to defend yourself in court.

If your tenant has someone who speaks better English than them, you could ask to have them present when you call in. I suspect if they don't speak much English you are unlikely to have an email address for them, but it is worth making the effort to go through this process as it will save you trouble in the long run. You could ask the agent if they have details for anyone who helped them when they signed the tenancy agreement etc. They managed that so they can manage this.

Just make sure you approach all communications with them in a kind, calm and friendly manner. And remember how you phrase the request makes all the difference. Enphasis on the benefit to the tenant of what you are suggesting.

As an example of the importance of phrasing the request correctly, remember the very very old joke which goes something like this...

A young priest asks his Bishop "May I smoke whilst praying?"
The answer was an emphatic “No!”

Later, when he sees an older priest puffing on a cigarette while praying, the younger priest scolded him, “You shouldn’t be smoking while praying! I asked the bishop, and he said I couldn’t do it!”

“That’s odd,” the old priest replied. “I asked the bishop if I could pray while I’m smoking, and he told me that it was okay to pray at any time!”

Same question two different answers dependant on the phrasing.

Hi Kate,

Thank you very much for taking the time to respond. This has been very helpful and enabled me tonight to construct a formal letter to the agent, my log shows I have tried 11 times to get the deposit information from them over the past year in person and via email.

That is also very useful to know I should return the deposit to the tenant rather than protect.

I will digest your other comments and form a plan of action for the non-paying tenants.

Ryan

Reply to the comment left by "Ryan Landlord" at "13/12/2016 - 23:29":

Happy to help. It's one of my favourite forms of procrastination. I'm at my computer being far more interested in this than in completing my own boring paperwork... I'm sure I'm not the only one 😉

Where liability for being sued for up to 3 times the amount of the deposit is concerned, it is the party the deposit was paid to who is liable, not necessarily the landlord. In this case, therefore, the agent is the party to be sued, not Ryan. However, he needs to retain evidence that he contracted the agent to protect the deposit and serve the prescribed information on the tenants.

As for paying Ryan the deposit, this is legally the tenant's until the landlord makes a successful claim on the deposit at the end of the tenancy. Therefore, if it's to be paid back it is paid back to the tenant, not the landlord.