Deposit Protection Scheme rules | Discuss

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Deposit Protection Scheme rules
12/07/2012
11:04 am
Steve@PolarProperty
Manchester
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Message for Mary Latham

 

Hi Mary

I recently listen to you speak at the Manchester landlord Show. During the presentation you mention that a Guarantor should have a copy of the ‘Prescribed Information Relating To Tenancy Deposit’ within 30 days. If it is not then a section 21 would be thrown out of Court by the Judge.

I have checked the Deposit Protection Scheme rules and I cannot find any reference to this. It does state ‘if a third party has paid the deposit’ they should be given a copy.

Can you verify your understanding?

If a judge has thrown a section 21 out of Court because the ‘Prescribed Information Relating To Tenancy Deposit’ information was not given to a Guarantor can you please post a link?

 

Regards

 

Steve

12/07/2012
11:28 am
Mary Latham
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Hi Steve, the case was where a mother had provided the deposit and had not been given a copy of the Protection Cetificate and prescribed information.  I will try to find the link over the weekend and post it

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12/07/2012
1:15 pm
Mary Latham
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I have just re-read your post Steve, the case was not about S21 it was where the mother was given 4 times the deposit back because she was considered to be a third party to the deposit and had not been given the information that had been given to the tenants.

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13/07/2012
8:41 pm
Steve@PolarProperty
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Hi Mary

Thanks for the up date.

20/07/2012
1:56 pm
J.V.
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Hi everyone.

 

Wondering if you can assist?

 

I have a friend who is letting a property and has found out that her deposit hasn’t been put into a scheme.

 

What can she do?

 

The letting agent said it wasn’t in a scheme as she paid 2 months rent upfront.

 

Can agents still take money and class it as rent rather than a deposit?

 

Thanks.

 

J.V.

20/07/2012
5:06 pm
Chris@TDS
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If a landlord fails to protect a deposit, they can face a penalty of between one and three times the value of the deposit, and must return the deposit in full to the tenant.

The subject of what is a deposit can be difficult though, because the line between ‘advanced rent’ and ‘deposit’ can be unclear. The key question is why did your friend pay the rent in advance? What was the money for? A deposit is money held as security for the performance of obligations or discharge of liabilities of the tenant in connection with the tenancy.

If your friend paid the money in advance because (for example) the agent couldn’t obtain references for her, then he was asking for payment because of the risk she wouldn’t meet her obligation to pay rent. This might make it a deposit, as happened in a recent court case – see details in the Landlord Law blog: http://www.landlordlawblog.co……ays-judge/

You need to find out the specific circumstances of your friend’s tenancy, and what the money was for, to establish if the money is a deposit or not. We advise landlords to err on the side of caution if there is any doubt, because if there is disagreement over whether it should be protected, it is a court who decides (not the tenancy deposit scheme) – and potentially will result in hefty penalities for the landlord.

20/07/2012
5:13 pm
jv
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many thanks Chris

 

I think the agency is trying to skip the deposit scheme by treating the what is meant to be the deposit as rent!!

20/07/2012
6:19 pm
steve
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in the Landlord Law blog: http://www.landlordlawblog.co…..ays-judge/

 

Hi Chris

The link does not work, can you repost it?

Regards

Steve

Polar Property Services

20/07/2012
6:24 pm
steve
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JV

Re: I think the agency is trying to skip the deposit scheme by treating the what is meant to be the deposit as rent!!

 

The landlord or Agency does not have to take a deposit.

 

They can choose to take two months rent in advance which is a strategy that some choose to use.

 

Regards

Steve

Polar Property Services

20/07/2012
6:51 pm
Chris@TDS
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Correct, landlords don’t have to take a deposit. And the landlord may well be taking ‘rent’ to avoid deposit protection law; but simply calling money “rent” doesn’t mean it isn’t a deposit. It’s the purpose of the money which matters, and if a judge thinks money falls under the definition of deposit as per the Housing Act, then it is a deposit – whatever you call it!

 

The link works when I click but here is is again http://www.landlordlawblog.co……1123046875

Otherwise Google “Six months rent in advance is a deposit says Judge”

20/07/2012
9:33 pm
PaulBarrett
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There is nothing wrong in taking 2 months rent in advance.

However that is all it is………rent!

Therefore if a tenant wishes to terminate the AST either in the 6 month or SPT  period he can stop paying rent 1 month before he leaves.

NONE of this rent may be retained for ANY other purpose than rent.

If it retained for ANY other purpose it was a deposit and should therefore have been protected by a deposit scheme and a DPC issued within  or rather by 30 days of receipt of that advance ‘rent’.

LL would be ill-advised to take MORE than 1/6 th of the annual rent for the risk of creating a Premium tenancy and you don’t want one of those.

This generally means taking no more than 2 months rent in advance.

If the LL uses ANY part of the rent for a deposit he will be unable to obtain a Section 21 notice until he has repaid any money taken from the tent for any other purpose than rent.

If he doesn’t he will be unable to evict a tenant if that tenant chose to stay and not pay any rent.

Also the tenant would be able to claim 3 times the deposit/rent and the 1 month rent/deposit aswell

So £1000 per month rent, £4000 to the tenant from the LL!!!!!

You don’t have to take a deposit but you just can’t take any of the 2 months advance rent for anything other than rent.

I was speaking to propertytribes Nick Tadd and he had a startling stat that only 18 % of deposit disputes are settled in favour of LL!!!!!

At least I think that was the right way round.

So if you have LL insurance and RGI that might be more worthwhile than taking a deposit.

20/07/2012
11:23 pm
Chris@TDS
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“I was speaking to propertytribes Nick Tadd and he had a startling stat that only 18 % of deposit disputes are settled in favour of LL!!!!!”

 

Paul that is a common misunderstanding of the statistics, and not accurate information.

Take a look at the recent TDS Report An evaluation of the Scheme five years on. https://www.tds.gb.com/resources/files/Evaluation.pdf

At TDS between 2007-12,  19.2% of disputes resulted in 100% award to the landlord. However, only 22.8% were 100% awards to the tenant – the majority, 57.9%, were actually divided between both parties.

If you take the value of disputed deposits as a whole, 53.79% was allocated to tenants and 46.21% awarded to landlords or agents.

So, landlords are not losing out in 82% of disputes, results are broadly equal between landlords and tenants.

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