UK Landlord Forum / Life

We have recently had a 'friend' rent a house from us, sole occupation. She was desperate and it was all very friendly and foolishly we did not have a tenancy agreement drawn up. There was a rent agreed with no period stated, and she has now left at her reuequest, deposit back no issue (in lieu of rent).

We did not protect the deposit due to ignorance!. However we did not have a term agreed, she moved in and just paid monthly....no fixed term and we have been told she may not have the penalty rights. She has now turned nasty and is looking for £ and the citizens advice have told her she has an  AST and we are liable for the penalty. We have paid back her deposit (she took it in lieu of rent at her request). we are not pursuing any costs. She is now threatening to go to county county if we do not give her a substantial offer.

My head says just pay her off and learn from the mistake. But it seems very unfair. We have a letter from her when she moved out clearly stating she has had no tenancy agreement from the start. Clearly there was a tencay agreement but of what nature? but we think it should be deemed as a periodic tenancy from the start and not an AST. We appreciate we will have no section 21 rights but she served notice on us and shes out so no issue., we would just like to clarify -

Does she have an Assured shorthold tenancy (verbal or otherwise, certianly NOT WRITTEN) ? if not, we should not allow her to go for the money, it seems so unfair - weve not held the deposit back and there's no dispute!

Any help would be very welcome..

CN

An AST does not have to be in writing, believe it or not.

You should have protected the deposit - you know this, so I won't castigate you over it - and therefore, if there's a day in Court, you will lose.

My advice is always to negotiate your way out of this kind of situation... at least then you are in some control of what goes on.

There are always cries of "unfair" from Landlords on here who didn't protect the deposit (and ignorance is often the excuse) - but is isn't unfair, really, you broke the law. A quick Google on "what do I need to do as a Landlord" will bring this back many times over... the consequences of not doing such a simple thing can be quite heady. The law has been around for about a decade.

What was the deposit amount? What is your maximum exposure at 3x?

The ex-Tenant needs to understand the most likely outcome for her is 1x as a penalty... but people might be whispering in her ear that 3x is likely and there are £ signs in her eyes.

There would be no requirement to pay the deposit into a protection scheme if she was - for example - a Lodger (not the case here) or a company (not the case here)... so it is very likely you were supposed to protect it. It's the safest approach anyway.

Hi and many thanks,

I know it can be verbal and appreciate that so we may have to bow.

Indeed she has pound signs. The legislation shows 1 to 3 times the deposit. However She has her deposit and also had no tencay signed so wed hope they would see it fair that x1 would be good.

My lawyer is finalising but it does look like she had no AST......therefore no protection? this is the key to it.

Sorry, what does your Lawyer think she had? It's a tenancy.

I'd be interested in the detail.

£1250 a month rent.
£1250 deposit.

so exposure is £ 3750.00

Best way i feel is to offer a months rent.....

They are saying if its not an assured shorthold tenancy, but a periodic with no initial fixed term, there is no penalty for not protecting the deposit.   Not confirmed however and I'm doubtful!

I'm very doubtful!

I would make your offer... possibly even £1,000. Justification of this would be quite simple... you feel your exposure is 1x, you've read nothing that would ever make you feel the Court would award the ex-Tenant 3x, so they can either chase you through the Court system for an additional £250, or get £1,000 in their greedy and sweaty little paws before Christmas in full and final settlement. You could also throw a little doubt in there, regarding what your Lawyer is saying... but I'm dubious.

A bird in the hand...

If having no fixed term - and being able to go instantly periodic - would remove the need to protect deposits - then every Landlord out there would be doing this.

I would be doing this.

I wouldn't necessarily be doing it for the same reason... but I always do a fixed term of the bare minimum, 6 months, for reasons of flexibility. If there was the double-whammy of being able to start off periodic and end the tenancy when I wanted (with at least 2 months notice) and not have to protect the deposit... wooo! Maybe your Lawyer has found the pot of gold at the end of the rainbow...

...when it eluded everyone else for years (humour).

Few quick comments/observations.
1. Make sure that you are talking to a property lawyer, not just any old lawyer as property law can get very complex ...
2.  You are right in saying that if she does not have an AST then you do not need to protect the deposit. https://www.gov.uk/tenancy-deposit-protection/overview.
Albeit, most tenancies granted are ASTs and they can be verbal (verbal tenancies have a maximum length of 3 years) or written.
3. For a lease not to be an AST; "Any new tenancy since 28th February 1997 is automatically an assured shorthold tenancy, unless the landlord serves a notice to say it is NOT to be an assured shorthold tenancy. Or it is written into the agreement that it is not an assured shorthold tenancy." http://www.compactlaw.co.uk/free-legal-information/private-housing/assured-shorthold-definition.html
4. However, by the looks of things the tenant does have an AST as an oral, periodic assured shorthold tenancy (but I could be wrong so get advice from a property lawyer if you are that worried.)

In the end I would follow Hipps suggestion.