UK Landlord Forum / Life

Hi, I'm hoping someone out there can help. We've just had a tenant move out, and she is now trying to claim that we didn't protect her deposit ( she wants nearly £7k) . My point is our our STA clearly states that we do not take a deposit, merely two months rent in advance (we find this helps, especially as the dss insist on paying in arrears) it merely means we don't get stitched up at the end of the contract. Could anyone advise us where we stand.

The key factor is not so much what you call it as what you do with it. If it looks like a deposit and quacks like a deposit, then you're on a sticky wicket.

Was the amount you took upfront exactly equal to two months' rent? What happened at the end of the tenancy: did you let it cover the last two months or wait until the tenant moved out and then give it back?  Is that made clear at the start of the tenancy?

As Simon says if the 2 months advance rent are given back to the tenant on the last day of the tenancy it sounds like a deposit to me.

Ignore the tenant or try and head off any potential claim with a counter offer below 7k or go to court and see if the judge sees the advance rent as a deposit.

Hi, it was exactly 2 months rent. At the end of the tenancy we gave her back her money all except about £70 which we used to replace broken light fittings and repair the oven. We didn't charge her for replacing carpets and doors witch she had trashed. We thought we were being fair. We had tried to help her when she got in arrears with her rent, bent over backwards, just so she can try and shaft us. Leaves a really bad taste in the mouth, and will definitely affect how we treat other tenants.

Bit of  case law story here.

https://www.landlordzone.co.uk/information/case-law/is-rent-in-advance-a-deposit

You have learned the hard way."No good turn goes unpunished".From now on,do everything by the book,but don't play the role of social worker.Can't you refuse to take DSS from now on,so the rent is paid in the normal way?

In essence what you've done is take an amount at the start of the tenancy, and paid it back at the end of the tenancy, less a deduction for damages. Quack.

It's got webbed feet and feathers but there's a good chance you can minimize the size of the bill. Your former tenant has presumably asked for 3x the "deposit" back. If you've been an otherwise good landlord and your intentions are benign, it's likely that a judge would award closer to 1x the deposit if it came to court. You might even get lucky and land a judge that concludes the amount was not a deposit at all. Use these as a basis for negotiation. Indeed, your first response might be to say "What deposit?" and direct her attention to the tenancy agreement. She might fall for it: stranger things have happened!

I agree. That was a Deposit. You have tried to be clever and circumvent the Deposit protection legislation. I think it's good that people like you may get caught-out. The legislation must be watertight so that everyone is on a level playing field. The fact that you don't call it a Deposit is irrelevant - you returned some money to the outgoing Tenant at the end - for what? Goodwill? A bonus? No. What actually happened is that you retained some of her Deposit, and gave her some money back.

Maybe in future you won't try to be so clever. You are a Landlord who is disguising their attempts at avoiding current laws as some kind of altruism. Beggars belief this.

Now, onto practicalities - wanting almost £7,000 implies a hefty deposit indeed. It is coming up to Christmas time... a bird in the hand and all that. If you elect to not ignore the claim (something I wouldn't recommend myself) or dig deeper by claiming there wasn't a Deposit then it's time to counter-offer... something low. I think part of your calculation here needs to be based on whether it's the Tenant contacting you themselves, or whether they've engaged legal assistance in the matter. Can you advise? If the person was in receipt of LHA then you assume they're not well-off... (although the claim implies the rent was very high)... so something might be seen as better than a long-fight for the potential, almost theoretical, £7,000 being demanded as of now.

She is not trying to shaft you. You already shafted her. Perspective please!

Hi, thanks for your comments.
The "deposit" was one months rent I.e.£550 (which for a 4 bed house is more than reasonable).
She is using a firm of ambulance chasers who are wanting 3 x times the deposit for each tenancy agreement (even though at one point it was on monthly roll over). Surely this is just one tenancy?
Before we returned any money to her we did a full inventory, discussed it with her, agreed with her what she needed to do, also agreed with her what we would do as she could not. Also agreed with her how much we would charge her ( no where near what it actually would and did cost us )
This was all very amicable, as indeed it had been during her complete time in the house.
Contrary to popular belief, not all landlords are Rachman derivatives.
If I have broken the law then yes I will take it like a man. This does not stop me believing that this tenant is now out to make as much as she can even though she has suffered no loss what so ever. If I do have to pay any amount what so ever then this should not go to her, she should not be rewarded for my short comings
Again I welcome your thoughts.

No financial loss is suffered in almost all of the deposit claim proceedings.  It's a penalty that must be paid rather than financial recompense for a loss suffered.

If the ambulance chasers are involved you need to settle and make an offer asap.  They couldn't care less about the deposit from the possible 1-3x penalty but instead will want their 'fees' to be paid when they will 100% win their case in court, these fees will be high.

I realise from reading all the replies that I have broken the law and as such I accept I should be punished. What I can't get my head round now is that rather than being fined and having to make good any loss to the tenant, what is going to happen is that the tenant ( any tenant, not just mine) is going to be hugely financially rewarded for nothing, she has no material loss so how can this possibly be right?

Quote from: Ender1411 on November 05, 2017, 12:02:27 PM
I realise from reading all the replies that I have broken the law and as such I accept I should be punished. What I can't get my head round now is that rather than being fined and having to make good any loss to the tenant, what is going to happen is that the tenant ( any tenant, not just mine) is going to be hugely financially rewarded for nothing, she has no material loss so how can this possibly be right?

It would make a mockery of a decade old law if you didn't follow the law, paid the deposit back and all was good.  Makes the law pretty pointless.  Thankfully, prior to letting I researched and found out the ramifications of not handling the deposit correctly, consequently I've done it correctly from day one so won't be getting any nasty letters in the post.  You learn by your mistakes, sometimes this is a free lesson, sometimes it's not.

You're missing my point, I'm not saying I shouldn't be punished, and I fully accept any punishment handed to me. I just believe that any monies i hve to pay, in excess of returning her deposit, should not go to the tenant as a reward, but should be paid into the justice system as a fine. As I say how can it be morally right to reward the a tenant who has suffered no loss!

Quote from: Ender1411 on November 05, 2017, 11:33:43 PM
You're missing my point, I'm not saying I shouldn't be punished, and I fully accept any punishment handed to me. I just believe that any monies i hve to pay, in excess of returning her deposit, should not go to the tenant as a reward, but should be paid into the justice system as a fine. As I say how can it be morally right to reward the a tenant who has suffered no loss!

You're not the first person to say this.  Break the law, the tenant instigates legal action to get the LL to pay money to the crown and get nothing for doing so.  This would result in zero instances of these cases and again making a mockery of the law.  It is free money for a tenant, some people have called it stupid tax for landlords who fall foul. 

Sorry,but I don't share the total contempt shown for Ender.I have from day one always protected deposits.Looking back to the time before this was the law,I was way too soft with tenants.I have spent many hours repairing, cleaning,gardening etc.and never kept back a penny.The only few times deposits have been kept it has been as part payment towards rent arrears,or expensive items removed by the tenant (e.g.chairs,tables taken to car boot sale!)

Ender has no excuse for not following the rules.What I can't agree with is that he set out to shaft the tenant.What did he stand to gain? The protection fee is negligible,if anything.He will hardly have been living the high life on the interest paid on £550 in his bank.He took a modest sum to cover damage.and repaid the rest.It should be a set fine,like failing to get a T.V. licence.If anything is paid to the tenant to encourage reporting it should likewise be a set fee,say 50% of the deposit.Reports from the courts in our local paper show much smaller fines being given for quite serious offences,driving without insurance for instance.

Unless someone is a repeat offender,refusing to protect or return deposits without real justification,the current punishments for the likes of Ender don't fit the crime.If a tenant fails to pay arrears,you can't go to court and claim that he pays you up to 3 times the amount due,that would be wrong.     

As Riptide says, if there were nothing in it for the tenant, nobody would go to the expense of enforcing the law. If you want to make it the responsibility of the Crown to enforce the law, then it would have to become a criminal offence, and I'm pretty sure you wouldn't much care for that. Saying your tenant  hasn't incurred a loss is a bit like saying driving without insurance shouldn't be an offence if you never have a crash. The protection that should have been there was missing.

It's understandable that you'll feel a sense of betrayal, having done all you can to accommodate (literally) your tenant over the years, but when you've been living hand-to-mouth for years, struggling to keep a roof over your head, and one day somebody offers you the equivalent of a year's rent, possibly more money than you've ever had at one time in your entire life, and tells you you're legally entitled to it, then it's very difficult to hold the moral high ground.

Ultimately, this mistake is going to cost you a couple of grand. You can either let it make you wise, in which case it's a bargain, or make you bitter, in which case it'll cost you tenfold in heartache.

Quote from: heavykarma on November 06, 2017, 09:44:15 AM
Sorry,but I don't share the total contempt shown for Ender.......

It's not contempt but you can't apply the 'no harm, no foul rule' I'm not hollier than thou, I'm not trying to preach but there is a system in place that can't be fought based on fairness or lack of real damage.  It really is money for old rope and in every sense free money, which is harsh on one party and a bonus to another.  As I've already stated I won't fall foul of this unfairness ever as I comply with what needs done, I learnt this lesson prior to falling foul of it, a lot of people learn the very hard way.

Driving along at 3am in an area unknown to you and you're doing 40 in a 30 and a camera flashes you and you get a ticket seems very unfair but you don't have mitigation if you went to court.  Were you speeding? Yes.  Guilty.  It was a mistake, no one suffered loss, it's tough though.

Quote from: Simon Pambin on November 06, 2017, 09:46:27 AMUltimately, this mistake is going to cost you a couple of grand. You can either let it make you wise, in which case it's a bargain, or make you bitter, in which case it'll cost you tenfold in heartache.

I love the philosophy of this. Top marks.

Quote from: Ender1411 on November 04, 2017, 09:53:14 AMShe is using a firm of ambulance chasers who are wanting 3 x times the deposit for each tenancy agreement (even though at one point it was on monthly roll over). Surely this is just one tenancy?

Probably not a single tenancy - but only you will know how many times you got them to sign a new AST. One assumes, from the claim, that's more than once. But when a tenancy moved from fixed term to SPT it does not mean a new tenancy has arisen, you're correct.

I would work out your theoretical maximum penalty here - the ambulance chasers may have already done that quite professionally for you - and start to make a counter offer.

As least you accept that the extra additional payment you didn't want to call a Deposit is actually a Deposit. I don't think you want to go to Court with that - I think the Court would take a dim view on your attempts at circumventing the legislation... possibly allowing that to influence them towards a 3x penalty. Who knows? The issue is the doubt and uncertainty that comes from going to Court... avoid it, try to take control of the situation, if you can.

Many thanks for all your help, we've taken professional advice, now that they've seen all the documentation, emails and texts between us and our tenant, their view is that we make a counter offer giving her back the amount we withheld. They think that as we have been good landlords and really tried to help her a judge would take a lenient view of our indiscretion. Anyway it's a starting point and I will keep you informed as to how this pans out.
Again, many thanks

Yes, but a lenient view is still 1x the deposit for each valid tenancy - the Court simply doesn't have discretion to offer any less as a penalty. Question your professional advisor on this, please. You do not want something like this to end up in Court... unless you are sure there was only a single tenancy where this Deposit wasn't protected and your liability is 1x to 3x the value of that, and you can swallow that potential 3x... even then, it's a tough decision.

Good that you are making a counter-offer... but only a stupid ex-Tenant would accept the amount you deducted from their Deposit when so much more is available. That said. I acted for someone recently where all she wanted was what she felt was due her... she got back a few small number of Pounds her ex-Landlord had unilaterally decided to retain. She wasn't interested in suing for more - good on her. Maybe your ex-Tenants are this kind of calibre too.

Quote from: Ender1411 on November 07, 2017, 07:54:15 PMThey think that as we have been good landlords and really tried to help her a judge would take a lenient view of our indiscretion.

P.S. - your professional advisor should really be told this is irrelevant. A Judge / Court doesn't have discretion to be lenient to the point of you not being penalised if you took a Deposit and failed to protect it. We all now believe you did that, on at least one occasion (as it were), so you will be liable for a penalty. It seems to me the absolute minimum penalty that could go against you is more than what your current offer is - and there is no much more on the table, prospectively.

You being good Landlords is kinda meaningless if you think about it... what's defining "good" here? Good at doing repairs? Good at protecting Deposits? Good at giving them a Christmas card? It's totally subjective - and irrelevant - all the Court will be concerned with is - a) did you take a Deposit, b) did you protect that Deposit?, c) what level of bad Landlord are you (to decide your penalty)?

By not protecting the Deposit you took you are already not defined as a good Landlord - more a bad one. That's not supposed to be offensive to you, it's intended to try and get you to see that - in a black-and-white way.

You: Oh, I was a good Landlord, except I didn't follow-through on my legal obligations.
Judge: Which legal obligations?
You: Well, any of them, really... I didn't protect the Deposit, I didn't do a Right To Rent Check, I didn't get a GSC, I even illegally evicted them at one point.
Judge: And why did you not do these things and yet you still consider yourself to be a good Landlord?
You: Well, I was trying to help the Tenant out you see, by letting her rent my property in exchange for money.
Judge: Send him down!

I suppose, as the first offer is almost invariably rejected, it doesn't matter if it's ludicrous. You've got the preliminaries out of the way: you're not going to pay seven grand and they're not going to accept seventy quid. Now the real negotiation starts. At the moment, nobody wants this to go to court, not you, not the ambulance chasers, not even the courts themselves, and it'll stay that way as long as you're reasonable. It's going to end up costing you about the same as a boiler going pop. These things happen.

Hi, just an update. After meeting with our lawyer we have made a global offer for settlement of £2k, and this is now with the ambulance chasers. During the meeting we also decided to return the deposits to our other two tenants (they've both been with us a long time). Does any one have a suggestion on how we could word a covering letter for them to sign, waiving their rights to make any claim on this. Clearly we also do not want to alert them to make a claim in the first place. Again any help/thoughts will be greatly appreciated.

That's a tricky one: if you ask them to waive their rights to sue you, they're immediately going to wonder why and, if all you're offering in return is to give them their own money back, they'll more than likely say "thanks but no thanks" and reserve the right to take you to the cleaners at a later date for up to 3 x the deposit for every tenancy since they moved in. If you give back the deposit without requesting a waiver, then you've still got that sword of Damocles hanging over your head for six years.

Your best bet might be to come clean-ish, admit you've ballsed up and offer them their deposit back plus the same again. They get a nice lump of cash just before Christmas, with a clear conscience because you've insisted they're entitled to it, they don't have to worry about finding a new home before they can sue you, and you don't get stiffed for 1-3x the deposit for each and every tenancy period.

Um... what is a "global offer"? Are we now saying this is your MO across multiple properties and tenancies? I thought it was a one-time mistake. As soon as you highlight the situation to people who are blissfully unaware all they need to do is a very quick Google (even on the local library computer if they're at the lower-end of society, or a chat down the local with their knowledgeable mate) and the Pound signs will light up in their eyes... you could be looking at this £2,000 again and again. That's if your £2,000 offer is even accepted (I hope it is, no-one has suffered financial loss). Now... how long have they been with you and have you renewed the tenancy annually or have they just been running for, say, 20 years?

Oh Dear,my sympathy for you has diminished considerably.I thought this was a one-off strategy to deal with the delayed payment of rent for one tenant on  housing benefits.Can someone actually waive their legal rights in this way,would it stand up in court if they accepted an offer,then a few years later came back wanting the full amount? I am at a loss to see why you have refused to comply with the law on deposits,it costs very little to protect,and it can benefit both parties in the event of dispute.

A global offer takes into account all of their expenses, I.e.thats all that is paid. As regards to the other two tenants we have one has been with us in excess of 8 years, the other over 6. We haven't protected their deposits, because we genuinely didn't realise that this was a legal requirement. We are not full time landlords and both my wife and l have full time jobs, so in my defence (which is no defence at all ) I hadn't even heard of this until it was just brought to light.

Crap. That's tough man... the law has been in place since 2007 and even a part-time Landlord ;-) would / should know this very basic stuff... it's like Landlord 101 and will be top of any Google search about being a Landlord and obligations. I hope this doesn't cost you too much, but it does kinda sound like you won't be bothered that much... you must be raking it in if you're not that interested in the financial aspects of your properties. I am not a full-time Landlord either - I guess not many people are, truly - but I wouldn't fall foul of this and what I had said tongue-in-cheek earlier now seems to count a lot more - what other obligations are you not aware of? I do hope that you're doing GSCs and suchlike if the property has gas? I am strongly recommending you set aside an hour of your time to do a quick Internet search on current obligations and ensure you don't have other gaps.

Hi, just an update, we have today settled this claim after much negotiation and bending over for £3850. This has however brought several ideas to mind, one of which is to sell our three rentals. Does anyone know how we can value these properties for sale without alerting the tenants. If we did decide to go ahead and sell, obviously we would tell the tenants, I just don't want them to start looking elsewhere if we decide in the end not to sell. Any ideas anyone?