UK Landlord Forum / Life

Hello

Would be pleased to hear from anyone with sound advice please?

My tenants gave adequate notice and vacated the property. I returned their deposit in full paying it directly into their bank account within 10 days of their vacation. They are now suing me as I inadvertently did not register the deposit in any scheme whatsoever. I have no defence whatsoever I simply forgot to do. I am aware that one of the tenants actually works in property so knows the law and I have a feeling that this is a way of them earning easy money. As I say I have no defence but it seems somewhat harsh when I returned the deposit without quibble, and only after this was hit with a threat of being sued? Any suggestions would be gratefully and sincerely received. Thanks

If you have returned their deposit what is it that they are suing you for ?

hi on the basis "'If we do not receive payment of £*******, this being the amount of the deposit, plus the penalty for failing to comply with your legal obligations, or a substantial response from you, we will issue court proceedings in the county court without further notice. We reserve the right to include a claim for interest on the £******, being the amount of the unreturned deposit. We will also be asking for an order to cover our costs.'

as I mentioned I returned the deposit and was then hit with this?
Thanks

They've obviously just crossed each other.  If you've returned the deposit then 'end of' surely.

The tenant acknowledges and accepts I have returned the deposit, after which advised via email that as I cannot provide the details of where the deposit had been kept (as I should have) he is suing? Thansk

No, no.

The ex-Tenant is entirely within their rights... and they will succeed if this goes to Court.

The Landlord did not protect the deposit - that is an offence. There is also no excuse. Ignorance is not an excuse. Having a busy lifestyle is not an excuse. Electing not to bother is not an excuse. Returning the deposit in full does not absolve the Landlord of their liability, not at all.

The Tenant can sue you for non-protection for between 1x and 3x the value of the deposit.

So, if the deposit was £1,000... you've already paid them the £1,000 back, but you could end up paying them another £1,000 or £3,000.

In this kind of situation I always advise trying to find a settlement with good faith. You don't really want to go to Court - the Court cannot find you 'innocent' of this... if it goes to Court, the minimum you'll be paying them is the £1,000 (theoretical, as we don't know what deposit you took from them).

Is this easy money for the ex-Tenants? Absolutely. But they are not the ones who broke the law.

P.S. - you cannot predict what a Court would award the ex-Tenants, but it cannot be £0. If you were a nasty 'orrible Landlord who played the system repeatedly and shrugged off Tenant protection legislation like this as though it didn't matter to you, and you'd acted this way with all your many properties... blah, blah, blah... you could easily expect the maximum penalty... 3x the deposit.

If you are a 'novice' Landlord (all Landlords should be professional) and you have a single property and you didn't comply through genuine ignorance and you acted swiftly to correct your mistake once you found out... then you should expect the minimum penalty... 1x the deposit.

In your case I suspect the latter.

The Tenant may think (or want you to think) that it's a definite 3x, plus costs, plus interest... but it isn't... so if you decide to offer any kind of settlement, do it with your eyes open.

Quote from: Sltj on March 11, 2015, 03:24:39 PM"'If we do not receive payment of £*******, this being the amount of the deposit, plus the penalty for failing to comply with your legal obligations, or a substantial response from you...

There isn't a set penalty.

There is no benefit to you in obscuring the £s... just tell us what the deposit was and what their demand is, it's not a secret.

Novice and stupid would probably be more appropriate , I was actually doing the tenant a favour at the time as they had been serviced notice to vacate heir previous property. Prior to this tenancy with them I actually let the council rent out the property through their letting schemes so they did all the paperwork etc. no excuse I know for not knowing the law. I accept that tenants need deposits protected of course, but when the deposit has been returned without quibble and everyone has moved on it seems quite unconscionable that a tenant has the means to receive easy money. Thank you genuinely for your help even if it wasn't necessaryily what I wanted to read

Quote from: Sltj on March 11, 2015, 03:46:58 PM...when the deposit has been returned without quibble and everyone has moved on it seems quite unconscionable that a tenant has the means to receive easy money.

While I agree that the Tenant has not been damaged in any way, nor have they lost out financially... the Landlord in this situation (you, sorry) has still broken the law and there is a penalty to pay (to the Tenant) for that. Being a Landlord is quite a serious business and not for the faint of heart or harum-scarum amongst us.

You start to worry about Landlords who didn't protect the deposit - as it really is such an easy thing to do - because that Landlord might've also not bothered with a Gas Safety Certificate, right? You can imagine the same kinds of excuses, can't you, coming from a Landlord who didn't - "I didn't know I had to", "I was quite busy at the time", "I just thought I'd check it myself".

Anyway, if you come back for advice I'm sure there'll be more for you... don't take it to heart, though, otherwise it'll drive you nuts. You need to suck it up and see how you can get out of this with something that makes sense to you! Other people might also recommend you call their bluff... all the talk of Court proceedings might be bluster... but I sense, with Tenants like these, it's probably not.

As Griff says, regardless of how nice you've treated them it's free money/money for old rope.

So it seems , frustratingly I let the property well below the market rental in the area as well, i have also found out the tenants have a property they let out themselves, clearly conversant with the regulations and now it makes sense , theytook the property without even viewing it and transferred the first months rent and deposit immediately. At no point did they mention the deposit scheme, choosing to leave it until they left and then to cash in, maybe that was their plan from the off.... Who knows, I won't change who I am because of unscrupulous tenants. Thank you all for listening anyway

Rules are rules but sounds like they've done you

Well I guess if the law is an ass change it. surely one should look at the "intention" of the law or particular regulation.... It is my understanding that the intention here is to safeguard a tenants deposit from them not receiving it back without justifiable reason... When a deposit has been returned in full and in a timely manner the rules shouldn't apply as there is no dispute? Thanks

I disagree. You broke the law, you may suffer the penalty... indeed you should. Being a Landlord means you should be professional for reasons like I outlined above. I would act on this imminently and not waste time mulling over how unfair it all is. You, really, have no-one to blame but yourself... protecting a deposit is so easy and the need to do it has been around since 2007. No-one here can know, for sure, that you didn't intend to pilfer the entire deposit and only returned it in full, hoping to avoid an issue, when you realised your Tenants were on the ball in this regard. It's certainly feasible.

I dont disagree that protecting a deposit is easy, its also free, that is not my point. For your information I have been a landlord for 20 years. I have 5 properties that I let out. 4 of which I have had the same tenants in for 19, 15, 12 and 10 years.  None of these tenancy agreements are subject to these regulations as the agreements were made prior to the introduction of this scheme.

This issue relates to a new property I purchased and as I mentioned earlier I gave it to the local council to let out initially, so they did all the paperwork.  When those tenants left the property I was approached by these other tenants and it was all very much a rush as they were vacating their property that week!. I was genuinely not aware of the deposit scheme at this time. I was only made aware of the scheme AFTER I returned their deposit, it was the tenants who made me aware by (after receiving the deposit) asking me for the scheme certificate etc.

I am not wasting time mulling over how unfair anything is, I am merely stating what has happened in an attempt to ensure this doesnt happen to genuine caring people, and there are many of us out there.

I realise, and I'm not kicking you while you're down - I just disagree with your PoV saying the law should be changed 'cos you've gotten caught-out by it. You could easily be a very unscrupulous Landlord. Will you be making a settlement offer to the ex-Tenants or waiting for them to make the next move?

Anyway, always be careful of deposits... I hope the Tenants you've had for many years haven't been having annual AST renewals (sorry, just teasing)? You (and others) could also consider not taking a deposit, of course.

BTW - it seems these ex-Tenants timed everything quite well to scupper you. Obviously they could have asked for the Deposit ID and all the other information when they handed the deposit to you (or shortly afterwards) but they had a Plan, a plan that meant they waited until the end, knowing you would not be able to provide, as you'd already failed to provide them with the details (and Prescribed Information) within the 30 day timescales required from taking a deposit. So they knew exactly what they were doing and what response they were going to get.

Quote from: Sltj on March 12, 2015, 06:59:05 AM
Well I guess if the law is an ass change it. surely one should look at the "intention" of the law or particular regulation.... It is my understanding that the intention here is to safeguard a tenants deposit from them not receiving it back without justifiable reason... When a deposit has been returned in full and in a timely manner the rules shouldn't apply as there is no dispute? Thanks

I disagree on this stance aswell unfortunately.  Maybe only issue a speeding ticket to someone who does 120mph and crashes rather than the sensible driver who does 120mph at 4am and doesn't crash?

Well I agree with the OP.

This law is bollocks.

But I also agree it is the law, and if you dont want rogering you have to abide by it.

Although even more bollocks is when it goes periodic, and you can be rogered for not reprinting a form they had six months before!

RIDICULOUS

Quote from: Hippogriff on March 12, 2015, 07:51:08 AM
I disagree. You broke the law, you may suffer the penalty... indeed you should. Being a Landlord means you should be professional for reasons like I outlined above. I would act on this imminently and not waste time mulling over how unfair it all is. You, really, have no-one to blame but yourself... protecting a deposit is so easy and the need to do it has been around since 2007. No-one here can know, for sure, that you didn't intend to pilfer the entire deposit and only returned it in full, hoping to avoid an issue, when you realised your Tenants were on the ball in this regard. It's certainly feasible.

I understand what you are writing and agree with you. The law was broken, and therefore it is correct that the landlord pays for the mistake, especially as it's so easy to do this properly. What I don't understand, and no argument put forward will convince me differently, why should the ex tenant profit?
Go to court, yes. Pay a fine, yes. But why to the bloody tenant?

Because it's their money?

OK, it's their money, and I'll also agree that they are entitled to claim interest, and for arguments sake, lets make it a whopping 10%.
Once they have been returned their deposit with interest, what entitlement have they got to any more of the Landlords money?
Take him/her to court, OK
The law was clearly broken, OK
The landlord is found guilty and a punishment is decided, OK
But why should the punishment/fine be paid to the tenants?
is this legislation Criminal or Civil, because if it's the former, I just don't get it.

Sorry, I was on a bus when I wrote my last entry, it was very bouncy, I should've written more.

What I meant was - it's their money that stands to be risked if the Landlord is a bad 'un and pilfers it, therefore, it's them who should benefit from any action taken. It's their money (likely) that would have to be stumped-up up-front to take a case through the Courts, therefore they should benefit from the result. No-one would ever sue a Landlord for non-protection if the benefit was going to be given to the State... there would be more people who would just agree to 'lose' their deposit in an unjustified way.

If your deposit was £500 and the Landlord just stole it... then many Tenants would think it would be too much hassle if all they would get back would be £500 plus the costs they incurred when bringing the case - e.g. no 'profit'. The Landlord would then get away scot-free. The Tenants need to see that there is a benefit to them - beyond resolving the injustice - and the Landlord is penalised financially for them to contemplate it being worthwhile to bring a case. The Landlords shouldn't really care where the money of any penalty goes - after all, it's just leaving the Landlord's pocket and going somewhere else - so I really don't get what your particular problem here is. If it goes to the ex-Tenant or the State or the RSPCA - it's still leaving you (as Landlord).

I am all in favour of Tenants bringing cases against Landlords who fail to protect deposits, whether they subsequently steal it or not. I do have zero sympathy with Landlords who elect not to take part, or forget or who are ignorant. I always recommend a Landlord who finds that they are in this situation tries to take control and offer a settlement to avoid Court.

I hope my point of view acts as a counterbalance to yours.

P.S. - I don't think the interest idea you gave would be enough of an incentive for many Tenants to bring a case against a Landlord... it needs to be somewhat punitive in nature (hence the 1x to 3x) for Landlords to get in-line.

Going to Court for what is owed you already, the £500 deposit, and a measly £50 (let's call that compensation) if we're talking 1 year of interest at 10% or £150 if we're talking 3 years, say, isn't that attractive. £500 + £500 is. £500 + £1,500 certainly is.

Sorry, back again... I know I don't need to say this... but the problem doesn't even exist if Landords just protect the deposits they receive.

I accept that the law is in place to protect tenants from landlords using any excuse not to return a deposit. However the principle objectives of tenancy deposit protection schemes are:

1.to safeguard deposits;
2.to provide a fair and effective mechanism to resolve disputes;
3.to encourage tenants and landlords to reach clear agreements before tenancies begin on the condition of property.

So when a deposit has been returned almost immediately, where there was no dispute whatsoever, where NOONE has lost out on anything
Is it then appropriate that a tenant can should gain? Absolutely NOT.

Where in the legislation is there a section that protects a landlord from unscrupulous tenants who are simply using the law for financial gain?

I could accept this situation more even if any monies a landlords is forced to pay out actually when into a charity  "pot" but not to greedy tenants who are using the law to their advantage.

Quote from: Sltj on March 17, 2015, 10:17:31 AM
So when a deposit has been returned almost immediately, where there was no dispute whatsoever, where NOONE has lost out on anything
Is it then appropriate that a tenant can should gain? Absolutely NOT.

That goes back to it becoming an optional scheme.  "I'm a good landlord, I am sensible and can handle someone elses money, therefore I choose to opt myself out of the legislation that is set out in Law, I advocate the use of a deposit protection scheme, but obviously only for the bad landlords, of which I am not"

Not going to happen is it.  You are still arguing that you are allowed to speed in the middle of the night, noone got hurt therefore you should not be penalised.

The deposit protection scheme is there to protect tenants from bad landlords and penalises the bad and stupid in equal measure.  It's not hard to administer and comply with.  If you're a good landlord and know your obligations you will never have to suffer a penalty and you'll never have to be in the position where you question the injustice of where this money is going.

Not trying to sound smug or anything but I will never have a claim put in against me with regards to the protection of the deposit.  The reason for this is when I was researching becoming a landlord it was clear as day that there would be harsh financial penalties for no compliance.  I therefore found out what I needed to do to avoid these penalties and have done so ever since.  As a result, my sympathy on this matter is quite low.

Quote from: Sltj on March 17, 2015, 10:17:31 AM
Where in the legislation is there a section that protects a landlord from unscrupulous tenants who are simply using the law for financial gain?

That's the funniest part of your post.  The legislation that protects the landlord from tenants who gain financially from this is called DEPOSIT PROTECTION LEGISLATION.

If you protected the deposit, as you should have, then there is no claim to be made.  It's impossible for the tenant, unscrupulous or not to gain financially if you had been doing your job.   Your view is totally slanted and not reasonable in the slightest.  Even more so considering that this legislation came in in 2007, 8 years ago.  It's not a new 'thing'

Where is the protection for a hotel owner where one of the guests grabs a bare wire on the wall on purpose in order to make a personal injury claim?  It's called not to have a bare, live wire in the first place, unless your so negligent and slack that you don't take care of your duties then you are open to a perfectly valid claim.

What level of 'fine' would have to be in place to ensure that you followed the law? 

No Fine
3 x Deposit
£10,000
£20,000

I have a feeling none of the above options would have made you do anything differently.

I still can't get it. The law was broken and a financial punishment is established by a Judge, I think it's fair to describe this financial punishment as a fine. Up to here I have no arguments. What I'm unable to comprehend is why this fine is paid to the tenant??
A fine should be paid to the court, a charity, some form of insurance pot...I don't know, but NOT to the tenant. Why should the tenant be compensated, and for what? At this point it's no longer a fine, but compensation.
There's no excuse, the bond should have been deposited, it's that simple. But when this stupid mistake is made, fine the Landlord by 1x, 3x, even 10x the amount, but do not compensate the tenant.
As it was commented on a few replies ago, "it's free money for old rope" and THIS is not right.

Quote from: mickeyblueyes on March 17, 2015, 11:14:58 AM
As it was commented on a few replies ago, "it's free money for old rope" and THIS is not right.

It is if it's available.  Don't make it available and it won't be, fairly simple concept.

The deposit protection legislation is in place to protect the tenant.  Prior to this, it would have been a trip to court to sort out deposit issues, where an award would have been made for 'damages'.  'Damages' don't have to be something physical do they, it's just a name for an award.

As Griff has already said a T had their deposit mishandled (by a bad landlord or a stupid one, they are all lumped in the same pot as are the 3am or 3pm speeders) what is the incentive for the T to bring action against the bad landlord (or the stupid ones, they are all lumped together) if the money goes to charity?  Zero, none, zilch, nada.  More than fair, easy to avoid.

You are saying compensate the T if the LL has been bad and not followed legislation and made off with the deposit, however if the LL is just plain stupid, still 'fine' them, just make sure the T doesn't get any of it.  Makes absolutely no sense whatsoever.

Maybe you'd propose drink drivers who get in the car straight from the Pub should be treated differently from those who are over the limit in the morning?  One did it on purpose and the other one had an unfortunate lapse.  Bad v stupid.

What should be a 100% guarentee is that once a LL has fallen foul of the deposit protection legislation (the law) and paid the 'compensation', 'fine' or 'damages' that they should never have to pay it ever again in their whole landlording career.  It's a shame it's such an expensive lesson to learn though.