UK Landlord Forum / Life

I hold my hands up and admit I am a very inexperienced landlord. I protected my tenants deposit but did so late and outside the 30-day time limit. They stayed for 3 years and I sent them a new AST agreement each year but did not re-protect the deposit each time. I just left it with the DPS untouched.

The tenants have now moved out and they have rent arrears and have left damage which amounts to around 3x the amount of the deposit.  Am i able to claim any of their deposit to cover the rent arrears/damages? If I give them the whole deposit back can they still sue me for 3x the deposit amount at any time? At the moment I am not sure whether to just swallow the rent arrears damages so as to avoid them sueing me or to go to ADR with the DPS to try to get the outstanding money owed (the tenants are disputing the amount they owe).

Confused.  Why did you renew the AST every year. What was the fixed term?. Why did you not just let it roll into a Static Periodic after the fixed term?

Tough call on which way to go with ADR and the deposit.  On one hand, if you do nothing they can still come back and take you to court in a few years if they want to and they will win (1x-3x) that is a slamdunk I think.  On the other if you haggle you are only likely to get the deposit back and have to chase the rest through the courts.  If they get a solicitor involved at that point it is likely he will sniff our the unprotected deposit and come after you.

If it were me I would suck up the damage I think and hope they go away.  Like I said really tough call, I'm sure others will disagree with me.

If you give them the deposit back, whole or part, then they can still sue you for non-protection.

And it's not 1x to 3x you need to be worried about, it seems... but a number of individual separate tenancies.

They have up to 6 years to take action.

If they are disputing what they owe... is it that you are saying they owe £5,000 and they're saying they owe £4,600 or £0? There's a massive difference in the approach you might take depending upon that answer. Have they raised the spectre of making a claim against you or is this in your mind only at this stage?

Thank you for your advice.

Hippogriff - I've said they owe £4,000 (I've spoken to a lawyer who says i have sufficient evidence to claim this amount which includes rent arrears), the tenants after initially saying they owe nothing have now conceded that they are willing to pay around £400. They haven't mentioned making a claim against me, despite being obviously very disgruntled on being sent details of the damage costs / rent they owe, they definitely know the deposit was paid in late though.  Unfortunately at the stage when I spoke to the lawyer I was unaware that the deposit being secured late might be an issue so didn't ask about it.

I was hoping I could just return the whole deposit and forget about it, but it now looks like that isn't the case.

Martha I naively renewed the AST each year (fixed term of a year) thinking it would leave me better protected.

Once you commence any kind of legal case against them their Defence will enquire about deposit protection. What was the deposit?

If it was £1,000 then you might be best letting this go. 3 x 3 x £1,000 being your theoretical maximum penalty.

It seems strange for such a discrepancy to exist... £400 vs. £4,000 is not rounding. Rent arrears, you would think, are hard to be disputable... so is the major part damage? If it is, you need to be careful... what examples can you share for sanity-checking?

The deposit is £1500. The major part of what is owed is rent arrears.

They're refuting they owe any arrears because they say there is no court order saying they need to pay. I wonder if they are attempting to lead me into mentioning court action to get the outstanding rent and they will then mention to counterclaim for the late deposit.

The £400 they've agreed to pay consists solely of damage. At this stage I'm thinking it may be better to point out that despite me not having a court order for the rent it doesn't mean that they don't need pay it but then saying as I gesture of goodwill and in an attempt to obtain a rapid resolution to all this I will just agree to them paying the £400 and give the rest back and hope they don't sue.

Thanks again for your advice, I will never make this mistake again - it's given me so many sleepless nights 

It's usually the damage amount that is disputed (and often with good reason as Landlords can try all sorts).

It's hard to dispute rent arrears... they were in occupation at the property, or not; they either paid the rent due, or they did not. Assuming the rent is a set amount (which it always is) then how is it possible for a dispute to arise? How has the grey area of a dispute arisen? Had they left but not returned the keys or something?

And, yes, the legislation is effectively designed if a little unyielding. A Landlord that is bitten by this through ignorance probably will not be ignorant again. More likely to be paying extra-special attention to this aspect in future... and it is so easy to do after all.

They were at the property the whole time yes, the move out date was agreed and the keys were returned via post.

There isn't a grey area to speak of - just a disagreement at the moment. I have sent them a rent statement detailing what they owe and they have said I don't have a court order saying that they need to pay the outstanding rent. My worry is that should I now tell them they still need to pay the arrears court order or not they will say they are going to sue for the late protection of the deposit.

I'm just thinking whether I should suggest that we use the alternative dispute resolution service offered by the deposit protection scheme as surely that would award the full deposit back to me to cover some of the arrears. I'm just worried then that if the tenants are dissatisfied with this result they will sue for 3x the deposit. I'm not sure whether it's an easy process for them to sue for late deposit protection, I've heard that 'no win no fee' companies are quick to take on cases such as these.

In this kind of scenario "no win no fee" becomes "guaranteed win guaranteed fee" so firms do like to take these cases on.