UK Landlord Forum / Life

Our tenant moved into a property in Jan 2013 on a 6 month AST. £595 was taken as a damage deposit and was protected with DPS within 1 week. The Prescribed Info was provided as per the DPS template. In July 2013 the tenancy agreement lapsed to a statutory periodic. The original deposit was left with DPS and was not re-protected.

In July 2013, as the tenant could no longer provide a guarantor, a charity provided the equivalent of 3 months rent up front (£1,485). They stipulated that it was to be held by the letting agent for the purposes of covering non-payment of rent only. Any money unclaimed at the end of the tenancy needs to be repaid direct to the charity, not to the tenant. The tenant's rent is paid by the local authority in the form of housing benefits every 4 weeks. The £1,485 was transferred to us by BACS in Sept 2014 when the agent stopped managing the property.

We want to sell the property so issued a S.21 Notice in August 2015. The tenant did not leave on expiry so we applied to the court for a possession order. The tenant qualified for legal aid via Shelter and has issued a defence and counter claim as follows:

- Landlord should have re-protected the original £595 deposit in July 2013 when the AST lapsed to a statutory periodic.
- Landlord failed to provide a tenancy deposit reference number from DPS for original £595 deposit.
- Landlord failed to protect the additional money provided (£1,485) by the charity.
- The Tenant has asked for the £1,485 to be returned to her.
- The Tenant has asked the court to award damages to her up to a maximum of £8,910 (six times the deposit of £1,485!)
- The Tenant has asked that we pay her/Shelter's costs (currently in excess of £3,000!)
- The Tenant has asked the court to invalidate our S.21 Notice.

Our solicitor has recommended we appoint a barrister to review the case but we can't afford to take the tenant on in court. We don't have any insurance and need to sell the house ASAP.

Can anyone provide some input on where we stand? We're of the opinion that the additional £1,485 was a deposit and should have been protected so unfortunately our S.21 is invalidated. However, can the tenant bring a claim for damages on an additional deposit that was provided by a third party and that was paid directly to the agent? Whose legal rights have been breached by us not protecting the charity's money?

Always be wary of advice from a blog (especially my own)
Do your own research

Hi Smuk (I dont have much time and can provide more info if need but in short):

Landlord should have re-protected the original £595 deposit in July 2013 when the AST lapsed to a statutory periodic.
No according to the DeRegulation Act 2014 this is not required for tenancies after April 2007

Landlord failed to provide a tenancy deposit reference number from DPS for original £595 deposit.
This is not part of the prescribed information as per the The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 however you do need to comply with the scheme rules so call the scheme administrator

Landlord failed to protect the additional money provided (£1,485) by the charity.
Yes correct

The Tenant has asked for the £1,485 to be returned to her.
Yup looks like you may be asked to return it to the charity (not the tenant)

The Tenant has asked the court to award damages to her up to a maximum of £8,910 (six times the deposit of £1,485!)
No under Localism Act 2011 only "up to three times".  The judge can take into accoutn mitigating circumstances when determining the award.

The Tenant has asked that we pay her/Shelter's costs (currently in excess of £3,000!)
If the Landlord fails in his claim he may be liable to the tenants legal costs (you might argue the tenant has not incurred £3,000 of costs if they had legal aid but that is a thin argument).

The Tenant has asked the court to invalidate our S.21 Notice.
I think it will be invalidated unless the judge misses it (known to have happened)

However, can the tenant bring a claim for damages on an additional deposit that was provided by a third party and that was paid directly to the agent?
Yes the tenant can, but you might be able to chase the agent if their T&Cs in the agreement between you and the agent included an obligation to protect the deposit

Whose legal rights have been breached by us not protecting the charity's money?
The tenants and the charity's legal rights

Look what will happen is that the judge will invalidate the s.21 -  likely it is being handled under the accelerated scheme but the defence will most likely result in a dismissal of your claim or a hearing and then dismissal of your claim
It is unlikely he/she will award costs or even the deposit back or the 3 times deposit as that requires the tenant to bring a separate claim (in the small claims court) but if it goes to hearing then that could happen

You could return the deposit (although there was another post recently about a tenant not accepting the deposit (yikes!) and re-submit a section 21 before the tenant brings a claim in the small courts (might succeed but I am clutching at straws for you).

Another course of action is that you will now have to take the hits on the s.21 but you could serve a section 8 notice if rent is unpaid(?) although I hate the very idea of section 8 as it is so fraught with danger for the landlord. 

If the rent is being paid on time (and there are no other s8 grounds open to you) then I hate to tell the only way to get the tenant out is to return the deposit, have them make a claim and settle it, then re-submit a section 21.

Sorry, best of luck though.