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Not such a Good Friday for the Private Rented Sector...?
11/04/2012
1:35 pm
lrs_keeper
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Section 184 of the Localism Act 2011 came into force from last Friday, 6 April 2012 -

whereby you must now protect all of your tenants’ deposits by 5th May 2012, whether they are existing or new tenants within 60 days of a tenancy starting.

The changes apply in England and Wales, giving landlords 30 days to protect the deposit (on any Assured Shorthold Tenancy agreement) after receiving it – up from the previous 14 days. Landlords must also give their tenant the required Prescribed Information and Deposit Protection Certificate as proof that the deposit is protected within this 30 day period.

2011 c. 20 > PART 7 > CHAPTER 6 > Tenants’ deposits > Tenancy deposit schemes > Section 184:

(1)The Housing Act 2004 is amended as follows.

(2)In section 213 (requirements relating to tenancy deposits) —

(a)in subsection (3) (landlord’s requirement to comply with initial requirements within 14 days of receipt of deposit) for “14” substitute “30”, and

(b)in subsection (6)(b) (landlord’s requirement to give tenant information within 14 days of receipt of deposit) for “14” substitute “30”.

(3)Section 214 (proceedings relating to tenancy deposits) is amended as follows.

(4)In subsection (1) (grounds for an application to a county court) for paragraph (a) substitute —

“(a)that section 213(3) or (6) has not been complied with in relation to the deposit, or”.

(5)After subsection (1) insert —

“(1A)Subsection (1) also applies in a case where the tenancy has ended, and in such a case the reference in subsection (1) to the tenant is to a person who was a tenant under the tenancy.”

(6)In subsection (2) (conditions for a remedy) —

(a)in the opening words for “if on such an application” substitute “in the case of an application under subsection (1) if the tenancy has not ended and”, and

(b)for paragraph (a) substitute—

“(a)is satisfied that section 213(3) or (6) has not been complied with in relation to the deposit, or”.

(7)After subsection (2) insert—

“(2A)Subsections (3A) and (4) apply in the case of an application under subsection (1) if the tenancy has ended (whether before or after the making of the application) and the court—

(a)is satisfied that section 213(3) or (6) has not been complied with in relation to the deposit, or

(b)is not satisfied that the deposit is being held in accordance with an authorised scheme,

as the case may be.”

(8)After subsection (3) insert—

“(3A)The court may order the person who appears to the court to be holding the deposit to repay all or part of it to the applicant within the period of 14 days beginning with the date of the making of the order.”

(9)In subsection (4) (amount of penalty payment)—

(a)omit “also”, and

(b)for “equal to” substitute “not less than the amount of the deposit and not more than”.

(10)Section 215 (sanctions for non-compliance) is amended as follows.

(11)In subsection (1) (prevention of service of notice under section 21 of the Housing Act 1988)—

(a)at the beginning insert “Subject to subsection (2A),”, and

(b)for paragraph (b) substitute—

“(b)section 213(3) has not been complied with in relation to the deposit.”

(12)In subsection (2) (prevention of service of notice under section 21 of the Housing Act 1988) at the beginning insert “Subject to subsection (2A),”.

(13)After subsection (2) insert—

“(2A)Subsections (1) and (2) do not apply in a case where—

(a)the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or

(b)an application to a county court has been made under section 214(1) and has been determined by the court, withdrawn or settled by agreement between the parties.”

(14)In Schedule 10 (provisions relating to tenancy deposit schemes) in paragraph 5A(9)(b) (modification of section 213(3)) for “14” substitute “30”.

The changes were made to the Localism Act to close a legal loophole, which saw some landlords successfully appeal against penalties for failing to protect a deposit.

 

If a landlord fails to protect their tenants deposit, they could be taken to court and fined between one and three times the deposit amount (at the courts discretion) and will also be unable to apply for a possession order, with a Section 21 notice, until the matter is fully resolved.

Meaning that any deposit taken since April 2007 must be protected under the Housing Act 2004, and any deposit taken since then must be protected under the same legislation but also must comply with the changes made in the Localism Act 2012.

Any deposit not protected by 5th May (30 days grace from 6th April changes) will be held outside of the law.

For tenants this means they can make a claim against a landlord who did not safeguard a deposit in an approved scheme for up to six years after they have moved on – instead of 30 days, under the previous rules.

Landlords or agents must use one of the three government approved tenancy deposit schemes to protect tenants' deposits where these conditions apply. If any other scheme is used, deposits will not be legally protected.

The three approved schemes are:

The information that you must provide your tenant, within 30 days, is:

  • contact details for yourself or your agent
  • which of the three schemes you are using to protect the deposit
  • information about the purpose of a tenancy deposit
  • how the tenant can apply to get the deposit back at the end of the tenancy
  • what happens if there is a dispute about the deposit.

 

At Landlord Referencing we are all wondering HOW this can possibly be administered properly and the judicial process be maintained fairly, when (in our experience) more than 50% of all tenancies end in some form of dispute…?

 

  • Will this provide better protection, for both landlord & tenant, if there is a dispute?

  • Is this just another poorly constructed law that's in favour of the tenant and will further exploit good landlords in the future?

  • When is the government going to stop interfering with contracts between two adult parties, in the private rented sector?

Whatever your view is we would love to hear from YOU.

11/04/2012
1:53 pm
roy@evolutionlettings.com
Ashford, Kent
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My view!

1st-Of course it will as the deposit is held until either party agree or it is adjudicated

2nd-not at all. if Landlords ahd done what they were advised in the first place, i.e.register the deposit, then this wouldnt have come around anyway

3rd-when both parties stop abusing the system and looking for loopholes! 

 

That does sound harsh and one sided but im sorry to say i agree that deposit should be registered from day one for both parties sake! I am a landlord and also an agent and i have always abided by these rules and never had problems from not doing it properly. I dont, however, agree that tenants have now 6 years to follow up a claim! thats just ridiculous! Bring back 30 days!

People are happy with what we do and that we insist the deposit is registered as always!

http://www.evolutionlettings.com

 

Evolution Lettings sponsor landlordreferencing.co.uk

Consistently Setting New Standards!

http://www.evolutionlettings.com supporting landlordreferencing.co.uk 

11/04/2012
2:42 pm
Paul Routledge
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I would love to know how anyone can adjudicate such a massive scheme properly and fairly. Can anyone provide the statistics as to how many deposits are disputed because unless I am mistaken the small claims courts could not keep up with disputes before and now every single deposit in the land is subject to a form of arbitration who will do it and who will pay the price?  

Over 50% of tenancy's end in some sort of dispute, how many millions is that going to be and who is going to arbitrate them fairly.  ha ha I can see the advert now   Vacancy – 35,000 arbitrators required :-) 

11/04/2012
3:19 pm
roy@evolutionlettings.com
Ashford, Kent
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But on the plus side as a landlord, if you have a proper inventory with decent digital photos before and after then there should be no doubt that you get your share of the deposit, hope that makes sense!? again though, there will be people who abuse the system that spoil it for everyone and I strongly feel that there will never be a perfect way! Just a logical and sensible way!

Consistently Setting New Standards!

http://www.evolutionlettings.com supporting landlordreferencing.co.uk 

11/04/2012
4:41 pm
The Metcalfe Partnership
Bournemouth, Dorset
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I am also an inventory provider and relatively new to the industry however what I am finding is that letting agents want to pay as little as possible for an inventory (would love to know what their mark up looks like) and unless you are using the latest time and money saving technology; I do wonder how traditional inventory clerks / agents will be able to continue to deliver a quality product?

Some letting agents don't seem to be all that bothered but again wonder what the landlord and or tenant has to say ??? A recent conversation with a letting firm was that as they had never had anything go wrong they were not that concerned about providing a detailed inventory for their client; famous last words?!

11/04/2012
4:51 pm
Samii
Somerset
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@TenancyDeposits just tweeted to me:

2010-11 was 1.4% at TDS.
We protected 960,148 and 13,847 disputes were raised.
Annual Report.

Social Media & Content Manager at LandlordReferencing.co.uk.

Follow me on twitter @LandlordRef

Add me on facebook https://www.facebook.com/samii.landlordreferencing

11/04/2012
5:00 pm
Paul Routledge
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Who in gods name is going to arbitrate 13,847 disputes properly in 1 year.Yell 

11/04/2012
5:16 pm
PaulBarrett
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Clearly therefore if there are going to be these disputes, the monies will be suspended.

So therefore the logical choice for any LL is to use a deposit scheme which enables the LL to hold the deposit monies.

At least the LL will have the benefit of these monies whilst any dispute rumbles on.

Of course the credit interest on these deposit monies would be yours.

Under no circumstances would one or should one consider one needs these deposit monies for certain cashflow circumstances.

If you do not hold the deposit monies yourself you will not even have the opportunity to use such deposit funds for any cashflow requirements, which of course you would 'never' do!? 'Wink'

11/04/2012
5:39 pm
Paul Routledge
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I don't think that's how it works Paul when we had a dispute we had to immediately pay the money over until the dispute was resolved.

I don't know if it has changed but it is my belief that the minute a dispute is raised by the tenant the landlord needs to submit the deposit in full.

11/04/2012
5:54 pm
MikePankiewicz
Bristol
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Paul Routledge said:

I don't think that's how it works Paul when we had a dispute we had to immediately pay the money over until the dispute was resolved.

I don't know if it has changed but it is my belief that the minute a dispute is raised by the tenant the landlord needs to submit the deposit in full.

As far as I understand and unless its changed recently, if you are using TDS or DPS (where landlord/agent holds the deposit) the undisputed amount of the deposit should be returned immediately to the tenant (fair enough as there's no reason not to) while the disputed amount is retained by landlord/agent until the dispute has been arbitrated.

11/04/2012
6:20 pm
Paul Routledge
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I know the tenant in my case disputed the deposit and we were told to pay the whole amount over until the dispute was resolved and then the DPS would apportion it according to there decision That was about 2/3 years ago though. 

11/04/2012
6:32 pm
MikePankiewicz
Bristol
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Paul Routledge said:

I know the tenant in my case disputed the deposit and we were told to pay the whole amount over until the dispute was resolved and then the DPS would apportion it according to there decision That was about 2/3 years ago though. 

I just checked. The DPS website says: "Once a valid dispute has been raised by the tenant, the following process:
Step One – The disputed amount of the deposit will need to be lodged with my|deposits by our registered member within 10 working days of our letter."

So only the disputed amount needs to be lodged with them. By lodged, I assume they mean actually send it to them. I've never been through arbitration so I don't know. My own experience reflects the TDS figure of 1.4% quoted above. I almost never get into dispute with tenants about deposits. I find if you are very clear upfront about what you expect from them and have a detailed photographic inventory, there really isn't much room for dispute.

That's my own experience, anyway.

11/04/2012
6:46 pm
Paul Routledge
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Ah OK the tenant disputed the whole amount with no evidence and we were ordered to cough up. After they had seen the evidence we got the whole lot back as he was running a brothel and had trashed the flat. however again the tenant had no evidence and the whole exercise was a lot of time wasting for all parties and cost  just to prove our case.

So my point is what stops a tenant disputing a claim just for the sheer hell of it and if they offer no evidence who picks up the tab. Don't we think that every tenant will chance their arm if they have nothing to lose and can only gain.

Why cant we have a scheme whereby the loser pays the other side a mandatory £300 compensation if thei claim fails :-) That will make both sides think twice.

11/04/2012
9:02 pm
MikePankiewicz
Bristol
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Paul Routledge said:

Ah OK the tenant disputed the whole amount with no evidence and we were ordered to cough up. After they had seen the evidence we got the whole lot back as he was running a brothel and had trashed the flat. however again the tenant had no evidence and the whole exercise was a lot of time wasting for all parties and cost  just to prove our case.

So my point is what stops a tenant disputing a claim just for the sheer hell of it and if they offer no evidence who picks up the tab. Don't we think that every tenant will chance their arm if they have nothing to lose and can only gain.

Why cant we have a scheme whereby the loser pays the other side a mandatory £300 compensation if thei claim fails :-) That will make both sides think twice.

I see your point but what actual cost is there? The deposit protection schemes don't charge for the arbitration process, do they? If the tenant offers no evidence but the landlord does then I assume the landlord would be successful and be awarded the deposit claims they are claiming.

I agree it will be a bit of a pain having to go through the process especially if you think the tenant is doing it just to make life difficult. I guess it depends how much value you put on your time!

12/04/2012
9:47 am
Samii
Somerset
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From @TenancyDeposits last night:

…and 66% of TDS letting agents achieved the zero dispute 60% subscriptions discount this year.

Social Media & Content Manager at LandlordReferencing.co.uk.

Follow me on twitter @LandlordRef

Add me on facebook https://www.facebook.com/samii.landlordreferencing

12/04/2012
12:54 pm
Paul Routledge
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MikePankiewicz said:

Paul Routledge said:

Ah OK the tenant disputed the whole amount with no evidence and we were ordered to cough up. After they had seen the evidence we got the whole lot back as he was running a brothel and had trashed the flat. however again the tenant had no evidence and the whole exercise was a lot of time wasting for all parties and cost  just to prove our case.

So my point is what stops a tenant disputing a claim just for the sheer hell of it and if they offer no evidence who picks up the tab. Don't we think that every tenant will chance their arm if they have nothing to lose and can only gain.

Why cant we have a scheme whereby the loser pays the other side a mandatory £300 compensation if thei claim fails :-) That will make both sides think twice.

I see your point but what actual cost is there? The deposit protection schemes don't charge for the arbitration process, do they? If the tenant offers no evidence but the landlord does then I assume the landlord would be successful and be awarded the deposit claims they are claiming.

I agree it will be a bit of a pain having to go through the process especially if you think the tenant is doing it just to make life difficult. I guess it depends how much value you put on your time!

Hi Mike,

There must be a cost involved someone or a whole army need to consider each 13,800+ cases on their merit and that must take a long time which has to cost lots of money. So they may not be charging Landlords or the tenants for the service which brings back the question who is meeting the cost if its being done properly.

I am no mathematician but at a cost of £30 to insure or an interest rate of a few % I cant see those revenue streams being able to fund 13,800 cases that are in dispute and that need to be arbitrated on every submission in order to be fair..

Even if you said that each case only took a couple of hours each and 1 person covered 4 a day you will need a small army to administer fair justice on those statistics let alone a big wallet.

I think this is one that time will tell! Laugh

12/04/2012
2:19 pm
Neil
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So therefore the logical choice for any LL is to use a deposit scheme which enables the LL to hold the deposit monies.

At least the LL will have the benefit of these monies whilst any dispute rumbles on.

Of course the credit interest on these deposit monies would be yours.

Unfortunately you are so wrong about this…

But that's what most Landlords think, and why they choose an insurance based scheme.  In fact it appears that a tenant can make the most spurious, false claim, and your friendly insurance-based scheme will instantly demand the full deposit be sent to them ! (there's a new thread on here about MyDeposits, which is an awful story)

This issue does need to be very widely publicised, and I notice the NLA are promoting MyDeposits on their website in very misleading terms… leading landlords to believe exactly what you believed before seeing this thread.

Almost every landlord believes that using an insurance-based deposit scheme means thay keep the money, and only hand over if they lose a dispute with a tenant.  In reality, full amount is immediately demanded by the scheme, and I would not be surprised if that's the last the landlord see of it (think, let's hold the money for 6 months+ just in case tenant is upset or comes back with another complaint – i don't know this for a fact, but suspect)

12/04/2012
4:19 pm
Samii
Somerset
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@The_DPS have replied to me on twitter:

" 5,087 adjudications were completed in 2011 – hope this helps. "

Social Media & Content Manager at LandlordReferencing.co.uk.

Follow me on twitter @LandlordRef

Add me on facebook https://www.facebook.com/samii.landlordreferencing

13/04/2012
3:51 am
Paul Routledge
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As I have said I my previous posts herein when my tenant disputed his deposit I had to go to great lengths in time and expense to put a case together to prove my case and show he was running a brothel from my converted church and after inventories and all the other actions I needed to take, eventually the case was proven in my favour.

Now don't forget – I never had a little earner here I just got payment for damages that they had inflicted, but really  I lost out because of the time and money it took me to prove my case.

He on the other hand just told the deposit scheme that he had done nothing wrong and waited for us to do all the work to prove him a liar and then said "Oh well see you" and walked of down the road without even a smudge on his character or credit history.

So apart from a reference with us that will now tell you what he is really like if he applies to you for a property, what is the deterrent for a tenant to just lie about the circumstances and make everyone else do the work to prove them a liar and then what stops them just walking off down the road without any recourse – if  an individual was to lie about the evidence in a criminal court case would it not be perjury. 

So where is the deterrent and why has the onus been placed on the landlord to prove his case first as it is he that has to give up the cash as soon as the tenant raises a dispute rather than the tenant having to prove the landlord was lying to get their deposit returned.

I think what we landlords on these posts are saying is that they feel, yet again,  the rules surrounding these schemes are weighted towards the tenant being innocent until proven guilty (which is right)  whereby the landlords seem to be guilty until they prove their innocence and even then they don't really listen.

And that agian bring into question who is going to arbitrate all these disputes fairly and properly?

13/04/2012
4:06 am
PaulBarrett
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I can see now why some LL have just given up on taking deposits

If you took 2 months rent in advance

Got RGI

Did LRS checks

Got LL contents insurance; making tenant pay the annual premium in lieu of paying a deposit.

Might not be a better way to proceed

Do complete inventory.

Do you do stand alone contents and theft a malicious damage isurance?

Forget bothering with deposit

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