UK Landlord Forum / Life

Hi,

My mum became an accidental landlord due to caring for her mother and moving into her property and rented out her home in Jan 2013.

Stupidly she didn't put the deposit in the protection scheme and instead in a separate bank account.

She gets on great with the tenants but now her mother has passed away and she has to serve notice on the tenants.

They would get the deposit back in full but what options does she have?

I know there are no excuses but could she return the deposit now for example?


Any advice would be great. 

Please provide some information:

  - what is the value of the deposit taken?
  - did the tenancy renew each year and, if so, what is the total number of renewals (could it be 5 separate tenancies, or more?)?
  - is the tenancy currently within a fixed term period (6 months or 12 months), or did it transition to a SPT (monthly rolling) in mid-2013 or Jan 2014?

Thanks

The deposit was £1350.00

It was renewed for 3 years (2013, 2014, 2015) in yearly contracts and then went to a rolling one.

The best outcome is that the Tenant is not a money-grabbing so-and-so and remains on good terms with the current Landlord, and things just end without rancour.

The worst result is that the Tenant make a claim for the deposit not being protected, which will succeed in a Court, for each actual tenancy - so that's either 3 or 4 tenancies in the scenario you describe - and the Court makes an award for a penalty of at least 1x the value of the deposit, up to 3x the value of the deposit, for each tenancy, plus the original deposit (which you've already said would go back in full anyway, but we'll include it in the calculations).

So... that worst case looks something like 4 x 3 x £1,350 + £1,350 = £17,550.

But, before anyone jumps off a bridge, it usually would not come to that, of course.

Are the Tenants the type of people who would be aware of this? Are you intending to serve a Section 21 on the Tenants - because that will be invalid due to the deposit not being protected (and to serve a valid Section 21 you may need to draw their attention to the deposit angle, which could open up promise of a pay-day, which can change people from being nice to nasty in a heartbeat) - or is everything really amicable at the moment and they are expected to leave in good humour, without issue?

Were other things forgotten about? Like, were any gas appliances checked annually etc.?

Wow. Yes everything was sorted out gas etc and they were charged well below the norm for the area as it was never a money making scheme. That probably doesn't help but it was around £600 below the average for the area as they were so good.

We need to issue the section 21 and that's when this came to light. Without a section 21 how can notice be served?

A Section 21 cannot be served right now, but it does not mean there is no remedy. Section 215(2A) of the Housing Act 2004 sets out the circumstances in which a Section 21 may be delivered, notwithstanding that the deposit was not protected, and that basically amounts to it being returned (in full, or with agreed deductions) - after that a Section 21 can be served.

I then hope things remain amicable. The key thing is - is the Tenant's ears going to prick-up when you start to do things in what appears to be a wrong order... giving them their deposit back just before you serve a notice ending the tenancy - usually it would be the other way around. Good luck.

Quote from: Joanna.S on March 26, 2018, 10:49:43 AMThat probably doesn't help but it was around £600 below the average for the area as they were so good.

No, nothing helps. It's a black-and-white open-and-shut case, as far as the legalities go.

Thanks for all your help.

Regarding the return of the deposit. If we did that now then how does that transaction take place? Can it for example be placed into their bank account via transfer  or does it need to be a cheque?

If they take the deposit back now I assume they can still claim?

And final question. If the property was not sold and they stayed (which is what they want) then is there anyway to rectify the deposit situation or will be hanging over our heads forever?

How? Something provable would be good. BACS, cheque, not a bunch of used twenties in a brown envelope with no receipt.

Once done? They can still claim, yes.

Ah... if not sold, and not asked to move... the remedy remains the same, but they can still claim at any time (the tenancy does not have to end)... but it may make this all a lot more challenging as I'd hoped the good relationship would persist through the eviction (Section 21).

To be clear... the deed is done on the deposit front. There's no way to pro-actively rectify it, or rescue the situation, now that obviates the possibility of a penalty. If the Tenant wishes to make a claim, they can. That is... until up to 6 years after the date of each transgression... so a number of years to go yet, although only 1 or 2 for the first failure way back in 2013.

Thank you. They have asked for our help with references etc and we are trying to get a buyer who will rent. Hopefully it will end amicably but as you say no guarantees.

I guess the law is the law, a shame there have been bad landlords who don't return a deposit.

But we will pay back their deposit now via BACS and get the section 21 sorted. Then we will see where it goes.

Well, the law has been this way for over a decade, our community now says bad Landlords are the ones that don't protect deposits. Returning, or not, is not really the issue per se - it was the unilateral nature of a Landlord being sole decision-maker on what was retained and what, if anything, was given back to the Tenant - from what is the Tenant's own money. I'd be interested in where it goes. Obviously you all could provide excellent references, they could move out, your mum could sell up, then a letter arrives on your mum's doorstep... we'd like to take advantage of the free money we hear that you're giving out... you could get this on the day after they've left, or some years in the future (when a conversation down the old boozer gives them a wild idea... something they've never heard of before). It's not good to have that hanging over you. There might be a quid pro quo approach... right? That is if you want to grab the tiger by the horns or the bull by the tail...

Thanks.

We did think about just owning up and then giving them more than the deposit, maybe double.

But how does that help down the line, as in how does that end it? Do they have sign something?

Although the provision of a good reference should - in no way - be contingent on the Tenants suing you [your mum] for not protecting their deposit, there might be a way you can work with the Tenants, while they're friendly and reasonable, to come clean - as it were - and say that you would be willing to assist them in getting a new place, above and beyond what is normal... possibly those excellent references, coupled with a nod towards moving costs, or their first month of rent... that's not bribery, really, as bribery is such a dirty word... it's more of an exchange, an enlightened one... where they leave happily, and are willing to sign something (possibly witnessed) that says they accept they've given up any right to make a claim.

It's quite a dangerous thing, because the potential prize here could be really, really attractive. So it probably needs playing down.

You mentioned you might try to sell to another Landlord. I did think, though... whether someone who's taken on a let property after a Landlord has died can be considered responsible for non-protection, after all they had no part to play and they didn't step into the Landlord's shoes willingly, like a new Landlord buying an already-let property would be doing, and is considered quite normal. For example, with your idea of selling to another Landlord - one of the first things their Conveyancer will ask is about the deposit - is there one, is it protected? The fact you've returned it (there isn't one any longer) doesn't actually mean it suddenly became protected, or a non-issue - it doesn't. The 'crime' still exists and the new Landlord might become liable... what new Landlord is going to want to take on a, even a potential or theoretical, £17,000 liability?

I wouldn't.

I'd like things cleared up effectively. Try and have a think if there's a way to do that and keep everyone happy. There might be.

Hippogriff,can you clarify something please? If deposits are not protected,does this only become an offence if the actual tenant makes a claim? If it came to light in some other way e.g.Conveyancer,letting agent,would the authorities sue the landlord even if the tenant was not bothered?

Thanks so much for the advice. I will keep the forum updated on progress and final outcome.

One final question do you think a company like Landlord Action LTd is required to issue the section 21 etc or is it pretty straight forward?

Quote from: heavykarma on March 27, 2018, 08:13:00 AMHippogriff,can you clarify something please? If deposits are not protected,does this only become an offence if the actual tenant makes a claim? If it came to light in some other way e.g.Conveyancer,letting agent,would the authorities sue the landlord even if the tenant was not bothered?

If a deposit is not protected then it is already an offence. Like so many offences, many will go unpunished. The ones that go punished are the ones where Tenants bring action against the Landlord. The Tenants must bring the action (or someone paid by them to do so)... not any authority, like a Council or suchlike, on their own cognition.

Quote from: Joanna.S on March 27, 2018, 12:47:16 PMOne final question do you think a company like Landlord Action LTd is required to issue the section 21 etc or is it pretty straight forward?

As long as you are able to serve a valid Section 21 Notice, then it is simple to do so.

Thanks Hippogriff.