The Devil is in the Detail

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11:59 AM, 5th December 2011, About 13 years ago 107

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The Localism Act 2011 is another heavy piece of legislation and you might be forgiven for missing a very important detail. It has been overlooked in several articles that I have read this week, but the courts will not forgive you so you’d better read on.

In the Housing Act 2004 it became unlawful to take a deposit from a tenant and not “protect” it through one of the 3 schemes that have Government contracts. The Housing Act 2004 included Tenants Deposit Protection (TDP) because it was perceived that landlords were not treating tenants fairly when it came to stoppages at the end of the tenancy and therefore the tenant needed to be given the opportunity to have independent arbitration in the case of a dispute. The arbitration must be paid for and the landlord was given two options.

Put the deposit into a custodial scheme where it is held, at no cost to the landlord or the tenant, until it is returned the end of the tenancy. The interest made on the monies lodged pays for arbitration

Pay an insurance premium of £30 and hold the deposit yourself. The insurer will pay for the arbitration

I won’t go into the details of Tenancy Deposit Protection (TDP) but you can find them all here.

This had not been updated at the time of writing and the following statement at the top of that page is incorrect.

“There are currently no known outstanding effects for the Housing Act 2004, Section 212.”

The 2011 Localism Act, including changes made to this section of the Housing Act, can be found here.

These are the important changes made to the TDP legislation in this Act

We now have 30 days in which to protect the deposit from the date on which it is paid to us by the tenant – this is increased from 14 days
The legal penalties for not protecting a tenant’s deposit are now on a sliding scale, the minimum of which is the return of the full deposit (regardless of what a Tenant may owe you) up to a total of four times that amount. The court has the discretion to decide.
The tenant, and any other person who has provided the deposit, must be given the prescribed information and copy of the Deposit Protection Certificate within 30 days of paying the deposit – up from 14 days
If the deposit has not been protected within the first 30 days subsequent protection will not be legally compliant and a tenant may still take an action in the County Court, even after the tenancy has ended. The penalty may depend upon how long after the 30 days the deposit was protected.

The devil that is hidden in the detail is this

If you do not protect a tenant’s deposit within 30 days of taking it you will not be able to use Section 21 of the Housing Act 1988 to regain possession of your property at any time during the tenancy.

So say you want to remove a tenant from your property because you want to sell it (or for many other reasons) but the tenant is meeting all the terms of the tenancy and does not want to leave.

You did not protected the deposit within 30 days of taking it, so therefore-

You are stuffed

I have a couple of other warnings for you but I will let you digest that first.

*** Updated 7th December 2011 ***

This is the Link to the Localism Act Section 184 which relates to tenancy deposit protection

http://www.legislation.gov.uk/ukpga/2011/20/section/184/enacted

The details that I refer to are in

Sections 10, 11, 12, 13 and 2A

Given this situation what are the landlords option?

1. Do not take a deposit 

2. If you have missed the 30 day deadline you could give 100% of the deposit back to the tenant during the tenancy and this will enable you to serve a Section 21 notice if the tenant does not want to leave

3. You could try negociating with the tenant about any rent arrears, losses or damages and agree the amount to be stopped from their deposit and return the balance to them - during the tenancy - and then serve a Section 21 to remove them

4. You could try regaining possession using a Section 8 - with grounds - and hope that the court is not interested in the fact that you have not protected the tenants deposit within 30 days if this is used as part of a defence

YOU MIGHT TRY THIS 
Take a deposit and protect it under one of the three schemes within 30 days & give the prescribed information to the tenant within 30 days
 The date that these changes will take effect has not yet been announced but it looks likely to be April 2012

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Tags: Deposit Protection, Landlords, Letting property, NLA, Private Landlords, Property management, rent arrears, Tenancy, Tenant eviction

Comments

Mary Latham

17:38 PM, 12th December 2011, About 13 years ago

Michelle Mark is right about the amount of notice. You also have ground to make a claim in the small claims court against the landlord who has not potected your deposit and given you the required information about the scheme and a copy of the Protection Certificate. As the law stands at the moment the landlord can protect your deposit even after the tenancy ends so long as he does so before the court hearing he is unlikely to be found in breach of Tenancy Deposit Legislation. It would be worth pointing out to him that he has broken the law if he tries to withhold monies from your deposit to cover the "short fall" on the 3 months notice that he was expecting. Make sure that you give one months notice ending on a rent due date - in other words not mid month notice.

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1:18 AM, 13th December 2011, About 13 years ago

I think that you should be of a generous disposition towards your landlord.
Clearly he does not know what he is doing or he may have done it deliberately.
Advise as to these posts and the error of his ways.
Give him 1 months notice and point out if he fails to comply with return of your relevant deposit amounts then you will take legal action against him.
I am sure that he will thank you for your timely intervention preventing him losing a lot of money in court action you would take against him and which a judge HAS TO give judgement in your favour.
He will know what to do with future tenancies.
Make sure you obtain a written reference from him just incase he put negative info on sites like tenantid and lrs.
You will therefore part on good terms and you know what goes around comes around.
You will I am sure get assistance in the future from some benificent person when you are in a bit of a hole!!
You would receive plaudits as a tenant for helping the landlord; probably a first for a tenant, so all power to you.I would imagine it is not your landlord being malicious, he just doesn't understand how some things work most probably.
It would be a turn up for the books if a tenant didn't try to stitch up a landlord but actually helped them!!?

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Mary Latham

11:51 AM, 13th December 2011, About 13 years ago

Nice post Paul. You are right of course it is always best to part on good terms where possible and I expect that you are right, a landlord who doesnt understand that a tenant does not have to give more than one months notice to end a tenanct probably is also unaware of the law related to tenancy deposit protection. More landlords get it wrong because they dont know what is "right" than because they are just ignoring the law. This is the point of my warnings to landlords and Michelles post is a good example of a landlord who does not understand his job.

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14:03 PM, 13th December 2011, About 13 years ago

My original tenancy was 12 months and then I signed a new one for 12 months. Is that normal practice?

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14:08 PM, 13th December 2011, About 13 years ago

The inventory that she provided me with has not been signed by either of us. There is mention of a wardrobe door that had slight damage to the mirror. This has since shattered. Should I be responsible for this or should the landlord pay as it was already broken?

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Mark Alexander - Founder of Property118

14:25 PM, 13th December 2011, About 13 years ago

There are a variety of strategies and debates around this, neither method is techically wrong. When did you sign the latest 12 month tenancy agreement.

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Mary Latham

14:31 PM, 13th December 2011, About 13 years ago

Michelle Some landlords start new agreements every six months, some 12 some do not renew the contract and let it roll on a monthly basis all are "normal" and legal. I from what you have told us you are only at the beginning of the new 12 month contract and if this is the case you would need to talk to the landlord and negoicate based on the fact that you want to break a contract that you are legally tied to and he did not protect your deposit. You both need to give the other some slack and I hope that you will both do so and reach a happy agreement to part fiends and move on.

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Mark Alexander - Founder of Property118

14:47 PM, 13th December 2011, About 13 years ago

I agree Mary, it sounds like "mistakes" have occurred on both sides here. Worst case scenario is that landlord claims for the broken mirror and rent to the end of the contracted tenancy and Michelle takes Landlord to task over the unprotected deposit, both wasting lots of time and money on court costs and legal fees. It's time for them both to get together over a cup of coffee and have a grown up conversation I think.

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Mary Latham

20:40 PM, 13th December 2011, About 13 years ago

The deposit is your money until and unless the landlord can justify taking some or all of it to cover damages/losses. The onus of proof is always on the landlord. An unsigned Inventory will not help the landlord to prove his case

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8:24 AM, 14th December 2011, About 13 years ago

When you think of the money you would be saving these landlords due to decreasing their ignorance; perhaps you should charge more!!!?

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