UK Landlord Forum / Life

As first time landlords I did not realise the full implications of not securing a tenants deposit in a government scheme.
I had tenants for 3 years and renewed their tenancy every six months on a (AST)
The first agreement I did include the part where it says The Deposit of £....which will be deposited with one of the government Schemes, but didn't realise it had to go in a government scheme, on the renewal every six months thereafter I never filled this part in!!
The said tenants signed a six month tenancy in January 14th 2017 then gave notice on January 14th 2017.
When they vacated the property in the February it was a mess I deducted the amount of £150 which I felt was being very reasonable.
Seven months down the line I received a solicitors letter with a claim to recover money due for failure to comply with section 213 housing act 2004.
To cut short the tenants are saying we breached our statutory obligations on 6 occasions, and require payment of £12.150.00.
Maybe I'm clutching at straws and not being very knowledgeable about these situations, but would the fact that each new 6 month agreement the deposit was never entered on the agreement and therefore would it still apply that we failed to do it every six months.
Hope this all makes sense, I could go into it a lot more but at this stage I'm just trying to keep it brief.

I believe they can claim up to 3 times per tenancy agreement. That said I have been informed even yesterday most cases do not reach up to 3 times and are most likely 1 or 2 x the amount. I would expect given the deposit is repaid the judge may not award the full amount but it's a risk.

It's a disgraceful law especially when you have repaid the deposit minus a reasonable amount.

I have paid mine back to my tenants and they are since refusing to pay and have done for 4 months so I am starting court proceedings in 2 weeks of which they can counterclaim against me but the arrears sufficiently outweigh what they can sue me for so I will at least get my property back albeit an absolute mess too!

Thank you for your reply.
So the fact that 5 of the 6 agreements did not have any amount in the deposit section is irrelevant?

It would be useful to know when the tenancy originally started. It's not clear from your original post whether you a) didn't protect the deposit at all or b) protected it but didn't formally "re-protect" it very six months. If, to all intents and purposes, the deposit was safe in an approved scheme for the whole of the tenancy, then, assuming you're an otherwise decent landlord, a judge would almost certainly award the minimum penalty, rather than the full 3x the deposit. Indeed, I think the 2015 Deregulation Act effectively did away with the requirement to "re-protect" every time the tenancy agreement was renewed, as long as the basic circumstances of the tenancy remain the same.

Quote from: Lou on October 05, 2017, 03:51:33 PM
Thank you for your reply.
So the fact that 5 of the 6 agreements did not have any amount in the deposit section is irrelevant?

If there was a deposit but you didn't fill something in it is irrelevant, yes. After all, your problem is really not filling things in (and doing things right) you can't expect that same failing to save you now.

However, if there wasn't actually a deposit in existence for 5 of the 6 agreements, then it is relevant - but I fear not, reading between the lines.

Can you tell us how much the deposit was? Was it £675?

Quote from: ile28 on October 05, 2017, 01:56:46 PMIt's a disgraceful law especially when you have repaid the deposit minus a reasonable amount.

Is it not a disgraceful law. Only Landlords that get caught out by it think so. It is fair. Landlords have no excuse. This is not new or hidden. Anyone thinking of letting a property can do a quick Google and find out what the obligations of a Landlord are - rest assured this Deposit protection lark will be at the top of nearly every list going.

It is simple to do. It takes a matter of minutes. As this law came in a decade ago it is harder and harder to find sympathy for people falling foul of it - however, we will try to help even if that means setting expectations realistically - as you comment, it's not very likely that a Court would award 6 x 3x for this failing. However, it is not beyond the realms of expectation that 6x 1x would be on the cards - as the Court has little discretion, if the Deposit wasn't protected then it is a black-and-white case;  the Court must find in favour of the Tenant.

The grey area for me is whether the Court would look upon this as 6 tenancies and the dates will be important too. I suspect they must do that also, depending on dates. But this could be the wriggle, the leeway here. Even 6 x 1x is going to be a lot - around £4,000 if my original guesstimate is correct.

In cases like this, I always suggest negotiation and making an offer. I would not fancy going to Court as a Landlord who's repeatedly failed to protect a Deposit taken. While some may it is a shame that ignorance is not a defence, there have been too many cases of Landlords treating Deposits as some kind of perk of the 'job' and, basically, stealing them.

Anyway, you basically have someone taking a chance here... negotiation and an offer can work in your favour. People like this will want something quick, for nothing. A bird in the hand once they realise the truth of the matter might make them go away for only a small amount of pain. But I sense there will be some pain ahead for the OP.

Simon Pambin
The tenancy originally started January 2014 and I didn't protect the deposit.
The tenancy agreement was renewed every 6 months thereafter....July 14, January  15, July 15,
January  16, July  16.
January 2017 was renewed, although on the same day the tenants signed the renewal they informed me of a months notice and moved out in February.
I do not look at deposits as a perk of the job, and would never dream of stealing them.
The tenants were family friends and I honestly did not realise the implications of not protecting the deposit.

Quote from: Lou on October 05, 2017, 06:50:02 PMI do not look at deposits as a perk of the job, and would never dream of stealing them.

I am sure you're correct. However, we don't know you at all and you could be a right one. The law is there to protect Tenants from people who you might be like, or not. Anyone who intended to steal the deposit and got caught would probably say the same as what you are saying. There is no real point being offended - you've already committed the offence. The question now is how do you go about resolving the situation so that you pay out the least.

Is the relationship with the family friends completely destroyed? Are they now out for revenge? If so, they could make you squirm while you make reasonable offer after reasonable offer.

There is the ostrich approach. Only you will know how serious they are. You could call their bluff. They've already been to a Solicitor, so you would think they're out to follow this through. Remember that they'll want to try claim their legal fees as well, if they win. I say "if", of course - but they will win. There is no doubt in that. So you want to avoid Court if at all possible.

Don't hold out false hope you would win at Court.

Not a mistake you'll make twice... well, you already did - sorry... I mean - not a mistake you'll make seven times.

Well, you've made a couple of mistakes but there's no point crying over spilt milk. On the plus side, it's one less Christmas card to write this year.

It's a hard lesson to learn and it's going to cost you, but it's not going to cost you twelve grand: that's the highest penalty that could be awarded, but they keep that for landlords who really take the piss. It's unfortunate that you issued a new AST every six months: if you'd just let it roll into a statutory periodic tenancy after the first six months, you'd only have been liable for the one breach, and you let your tenants go on one month's notice anyway, so it would have been all the same to you.

It might be worth making an initial offer on that basis, say £1350. You might eventually have to go to 5 x the deposit - I think you could reasonably argue that the last agreement was nullified by their giving you one month's notice on the same day - but if they still hold out for much more than 6 x. then you're probably as well letting them have their day in court: judges tend to have little sympathy for litigants who waste their time by persisting with a case after the other party has made every effort to settle.

Many thanks Hippogriff and Simon for your advice.
Very much appreciated.

Just to add. I think the idea of a statutory periodic tenancy (which I had never heard of before, I thought you had to renew every six months) is the route I will be going down from now on.

It is the best way. An initial 6 months fixed term and then onto SPT, which you can both leave forever if you want (with a relatively short notice period on both sides). The Deposit scheme used will ask your intention as the fixed term end point approaches, you'll say it's gone to SPT, and then you just leave it.

Making a reasonable offer is important, I think.

Consider what you think is reasonable. It's not £0... and it's not £12,000. Remember that if it goes to Court you will lose, and then it's just how much. You need to be thinking what you can swallow and then writing that back - formally - to the Solicitor laying out your case...

  - first-time Landlord with no track record of stealing deposits
  - multiple ASTs issued through ignorance, there was a single ongoing tenancy (try it)
  - you don't believe the Court would award 3x for any breach - that's a theoretical maximum
  - you understand that the Court must award something - it's what that minimum must be
  - position your offer either just below or just above that

Just below because even though it's less than what you think will happen maybe they'll take the bird in the hand (all depends on what advice they're taking - I'd not expect it to get done in one fell swoop)... or a little more to sweeten the deal (they're actually being offered more than what the minimum / expected could be.

As I say - that offer is not £0, and it's not £12,000.

A lot will come down to whether these people are fundamentally reasonable... and the advice from their Solicitor (who will be fundamentally unreasonable).

If your reasonable offer is rejected, and maybe a follow-on, then retain those - use them in Court as proof that you were trying to come to an accommodation - but they refused. I do think people will be swayed by that - it's obvious greed at that point.

An earlier quip of mine - don't do an ostrich!

Lou has obviously broken the law regarding the deposit,and I agree that after so many years there can be little excuse.If he/she looked up how to set up an AST it must have been mentioned in the information?
I am wondering if Lou made the grave error of thinking that letting to a family friend made everything a bit more informal.To sign another lease on the same day as handing in notice is bizarre-did you have an argument with them,or were they planning to screw you for another sum for an AST?
However this works out,for God's sake be a bit more savvy next time.Never ever let to friends,collegues,family etc.You made an error for sure,but in this case the punishment does not fit the crime.They really sound like scumbags if you are telling the truth.Do negotiate  as advised above,it's all you can do. Good Luck.

Many thanks to everyone for your comments, you have all been very helpful.
Heavykarma......No argument with the tenants. I also do not understand why they would have signed for another six months then give notice later the same day, obviously they had viewed the property.
Lesson well and truly learned.
I am being honest and yes I've made a grave mistake a mistake that I won't be making again.
It's just so hard to comprehend that someone who as been known to us for 20 plus years could stoop so low.
On receipt of the first solicitors letter I did go and speak to the tenant as I did see them as friends, she assured me she would drop the claim, then low and behold the next solicitors letter informed me if I called again they were within their rights to call the police!! Unbelievable.
The latest is the tenant have now said they will except £4.500.00 down from £12.150.00.

This is not good, but better than the original demand.

Some people simply aren't in a position to pay out £4,500. Are you?

It will, of course, hurt a lot - financially, but also emotionally. However, I stress again that I would not wish to go to Court. Due to the certainty of the fact that the Court will find against you and the uncertainty of what the penalty would actually be.

Did they come up with the £4,500 figure, or was it a feeler from you? It's not a multiplier of £675 like before...

Just a thought-what was your reaction to them signing for 6 months? Did you formally release them from the contract? You can't just walk away from a lease,you are still responsible for paying the landlord  until the place is relet.If agents are involved you can also claim your additional fees to relet.Could you threaten to counterclaim?

Hippogriff.....I certainly do not wish to go to court.
I would just like to settle, but not for £4,500 which was a figure from them.
I did think to counter offer 2 x £675 plus the £150 I deducted for the painting and decorating to have the property ready for the new tenants.

Heavykarma.....I was more than happy when they signed another six months as we had no problems with them at the time. She messaged me with a months notice and I accepted. They vacated on a Monday and on the Friday we had new tenants move in. No agents involved.

Settlement figures are pleasing if they have some rationale behind them. The initial £12,150 demand had some rationale, I believe. The new demand of £4,500 does not. What would the rationale be behind your offer of, I believe, £1,200?

Christmas is coming and I do hope they've got a good present list... as you'll be paying for them. I would hold out for a while... as Christmas gets nearer they'll want something (and possibly anything).

So, while they may balk at £1,200 tomorrow... it may become a tad more appealing closer to the time when they can see what their winnings might be spent on. The issue is that their Solicitor will likely try to put the frighteners on you and write you letters with terms in like "without prejudice" and "for the avoidance of doubt".

Good luck, let us know how you get on.

I've just been reading the ultimate guide to new landlords.
I have always done an electrical check.
Can someone confirm if this is essential as I don't see it mentioned in the guide.
Many thanks.

There's no equivalent of the legal requirement to have an annual gas safety inspection and certification, if that's what you mean. You just have to ensure that the electrical installation and any provided equipment is safe. If you feel competent to check it yourself, there's no need to pay a qualified electrician to sign it off.

Personally, I do pay an electrician to do periodic checks, partly for my own peace of mind and partly so that I've got a bit of paper to wave if there's ever a problem, but that's just how I choose to spend my money: it's not mandatory.

Many thanks Simon Pambin.

Hi Lou

I'm so sorry to hear about this, as someone who is just starting to let a property I understand how the whole process can be an absolute legal / technical nightmare - made all the worse by the fact that such information is available online but often only read in retrospect.

I'm learning a lot from this forum - I'm also now totally paranoid (which may not be a bad thing).

For my learning and just to be clear: 

1.  I protect the deposit in one of the three government approved schemes.
2.  I send the tenant (within 30 days) all of the paperwork associated with the scheme and ask them to sign a release when they have received said paperwork.
3.  At the end of my six month AST, when the AST starts to run on a month by month basis as an SPT I just tell the deposit protection scheme.

I hope I have that right:
Do I have to send any more paperwork to the tenants at the end of the six months when moving to SPT? Or is it just a case of let the deposit protection scheme know?
Is there any deposit protection scheme better than the other?

Thanks again and good luck Lou!

Hi Hadventure

Like you this forum has been very informative for me too.
I'm not sure myself of the answers to your questions, but I am sure somebody on here will.
Everyone has been absolutely brilliant with their help and advice and I am learning a lot.

I will keep updating with any progress.

For 3 - the Deposit Scheme will contact you and remind you (more than a month before) that it's coming to the 'end'... and you [both] need to make a choice. Well, that's the Deposit Protection Scheme anyway. You just then log in and advise them of the route it will be going.

You don't need to send any more paperwork if the tenancy goes to SPT. You'll advise the DPS of what's happening and they'll do the communication (email) in the background.

I only have experience of the DPS. It's OK. Their website is quite nice and easy to use. It allows you to print stuff off you'll need. Their helpline is populated by robots, tho'. Well, people doing excellent impressions of robots.

Having said that, I still quite like the DPS. Fair warning - I started to move all my deposits to the Insured Scheme - paying £22.20 for each one - as I then moved all of the deposits into a 'jam jar' account that helped offset my own mortgage (the maths said it worked out well - if a deposit was held by me for more than 6 months I would be winning) but as soon as you go over £5,000 the DPS starts to become a little intrusive in terms of asking you to validate things about yourself - like they want your original (or formally witnessed as copies) Driving Licence and stuff like that. I really didn't like that, so I started to move a number back to Custodial. When I asked why they want to know all this personal stuff about me (after all, they already have a lot of info.) they couldn't really tell me - just saying it was "procedure", so I demurred.

Thanks for that... I am almost ready to rent now.

I have one quick questions regarding my Assured Shorthold Tenancy agreement / contract:

Does the AST automatically run into periodic tenancy at its end (six months in my case) according to the Act or does this have to be specified in the AST contract / agreement?

Thanks again!

A SPT automatically arises, but nothing stops you from mentioning it either. I do. I give my Tenants at least a week to review the AST before saying it's OK and signing it.

Thanks for that.

I have just received another solicitors letter this morning.
My offer has been rejected for the second time.
The tenants are now asking for £4,050.
Please could I ask for any advice as to what my next move should be?
Many thanks.

What did you offer? What did they want?