UK Landlord Forum / Life

As an accidental landlord I thought I had protected a deposit but something went wrong with the transfer and subsequent DPS emails went unnoticed in junk mail.  As a result the deposit was protected about a month late.  After a harmonious tenancy of a few years the tenants decided to move on. They pay rent on 1st of each month and handed notice in on the 4th Nov leaving them liable for tenancy until 31 Dec.  They left at the end of Nov, owing rent for Dec and although it is indisputable the tenants noticed that the deposit was protected late and now want to reclaim the entire deposit and sue me for more.

The law seems to be an ass here.  They have suffered no loss or harm, the deposit is in 3rd party hands yet they can benefit financially.  My questions;  if a deposit is protected late, does it cease to be valid regardless of the length of tenancy, or any other mitigating factors?  Why should tenants stand to gain sue for 'compensation'  when they have suffered no loss?  Will the courts use any common sense in assessing a decision or simply apply the Localism Act?

I respect the law for protecting tenants against unscrupulous landlords, is there any protection for unsuspecting landlords against opportunist tenants?

First of all... let's all agree that the only person who has done something wrong regarding the deposit is you. No-one else. Not the Tenant. Not the DPS.

Worse still... this is not from complete ignorance on your part, you knew that you had to protect the deposit, and within a certain timescale, and you still seem to have fallen foul of this. How that can be the case is beyond me.

Personally, I'd say that it all seems a bit slapdash from your side.

Once we agree that you are at fault... then we answer the question... can you be sued? The answer is "yes". You can be sued for protecting the deposit late. If it gets to Court then the Court will have no choice but to award the ex-Tenants between 1x and 3x the value of the deposit. If it's a "first offence" and you only protected it a little late, rather than not protecting it at all, then you would think the Court would err towards the 1x penalty... but it can't be predicted with 100% assuredness.

You mention a tenancy of a few years, did you re-protect the deposit and re-serve the Prescribed Information when the tenancy moved from its original fixed term to a SPT? Or did you agree multiple further fixed terms? Each counts as a separate tenancy and you should have done things for each new tenancy. Be wary of this angle.

The original deposit is their money, it should be returned. It seems, from your post, that you are some way into the discussion with your ex-Tenants and they are, possibly?, threatening Court? I would, personally, try to settle out of Court for an amount that suits both parties. Don't let the Tenants have the impression they are due 3x the deposit - they are not, but that kind of headline figure can create £ signs in their eyes... it is between 1x and 3x.

The law being as ass, as you put it... well, I disagree... many unscrupulous Landlords have thought that the deposit is theirs over the years and had no intention of ever giving it back. We don't know that you aren't an unscrupulous Landlord masquerading as a naïve Landlord. It's certainly not difficult to follow the rules that are in place (I've done it enough times to know how extremely simple it all is), you didn't follow those rules. What do you think you deserve?

You want mitigation because you are one of the 'good' landlords unlike the 'unscrupulous' landlords who don't comply with legislation, obligations, the law etc. 

There is no mitigation unfortunately regardless if you are an accidental landlord (I fail to see how someone can buy a property, find tenants, rent it out, collect rent etc etc by accident though).  The simple black and white question is "Did you protect the deposit within 30 days and issue the PI within that timeframe" anything apart from a yes will leave you open to a tenant making a claim via the courts and they will be awarded between 1-3X the deposit plus the deposit amount.

Regardless of 'something going wrong' and the 'emails going into junk' you still didn't comply with the legislation correctly as you would have needed to issue them the PI which I'd imagine can only be done once you have the reference number of where you put the deposit, so not only was the deposit not protected you hadn't given the tenants the information that is required by law within the 30 days either.  Quite a strong case for getting the maximum penalty awarded I'd think.

Did you issue PI again when the tenancy changed if they've been there a few years?  i.e from fixed term to periodic or from fixed term to another fixed term?  If you didn't thats another breach and will go against you. 

The situation you are in really sucks, but if I was a tenant, instead of 'damage' money, I'd be calling it 'money for old rope'

Goddamn you griff and your speed typing!

It is not a competition... 2 people saying, effectively, the same thing should assist the OP no end.

Quote from: Hippogriff on January 08, 2015, 10:17:45 AM
It is not a competition... 2 people saying, effectively, the same thing should assist the OP no end.

True - and you are a hero member afterall!

The responsibility sometimes gets to me.

Thanks for the replies.  I think i can see where the court's sympathies will lie!

Just to answer a few points, 'how did I buy, let etc 'accidentally?"  I bought the house next door to try to do some jiggling with land etc, with intention of selling it again.  Things changed and I needed to keep it a while longer so as I said, became an accidental landlord.  With regard to the deposit, i pressed' direct transfer' thinking that would transfer the money to the DPS, and didn't think about it again.  I was working abroad to switched off from the rental.  As I said all DPS stuff went into junk and only spotted it when directed to junk for something else. Obviously direct transfer means I have to do it with my bank, seems obvious now and yes, I guess i was an idiot.

All pretty lame mitigation by the sounds of it, but I still don't get how even an unscrupulous landlord could benefit from this, or why the tenants deserve some money to compensate them for, well, nothing.

That the tenants owe a month's rent is not in doubt, can I still try to recoup the money from the guarantor?

Different issues. Rent owed should be pursued. Don't let them get away with that. If there's a Guarantor, great. Put pressure on them. They may put pressure on the Tenants. If you can get it in writing that the deposit can be used to cover arrears would that suit? Them pursing you for the deposit angle is still their right. Maybe a compromise could be reached in full and final settlement of every issue?

I'm thinking a zero-sum game... it may suit you, it may not. It could bring some certainty.

Thanks again Hippogriff,

I have offered to split deposit 50/50 because he will chase me for 800 and I am chasing him for 800.  If it wasn't for the Deposit oversight he would have nothing so I think he should consider himself fortunate. Unfortunately he won't accept so my intention is to return deposit and then attempt recovery of the rent arrears.  I have explained that he will get 800 and then owe 800 plus costs, or he can have 400, but he is adamant - and short sighted.  Perhaps he has another technicality up his sleeve.

Are there lawyers who will chase this on a no win - no fee basis?

Quote from: crispinread@btconnect.com on January 08, 2015, 02:31:29 PM
Are there lawyers who will chase this on a no win - no fee basis?

For you or for him?  For him yes, but it's so simple to do yourself and the result of receiving a penalty is a foregone conclusion, it's just a question of how much.

What you are offering to the Tenant doesn't, objectively, appear to be a good deal.

The Tenant sees the possibility of the £800 deposit being returned plus 3 x £800, so £3,200 in total... right? Any costs incurred by them bringing a successful case against you would also fall to you.

The rent arrears would appear to be small beer in comparison.

You refer to it as a deposit oversight, but the undeniable fact is that you broke the law and, due to that fact, the Tenant certainly has something... a potential something, anyway. They also know you are a bit 'on the ropes', sorry.

Yep it looks bleak, although case history would suggest that as the tenants suffered no loss and the deposit was protected, albeit late, and it is my first offence, that it would be the minimum fine. They will get 800 plus costs and I will get rent (800 plus costs).  By the way, does anyone know any other situations where someone can claim compensation without suffering any harm or loss??!!  In fact the tenants didn't even know about it (nor did I), and by the time the deposit was in dispute it had been in 3rd party hands for over a year.  Opportunist I think is the word.  You'll have to excuse me, I am going out to look out for people with out of date tax discs and then claim the tax money for myself to compensate me for...... for someone else breaking the law even though it had no effect on me.  Sorry for the sarcasm, i'm a teeny bit miffed

Understandable, but if you'd done what you were supposed to do it wouldn't be an issue. The country is full of accidental or amateur Landlords falling foul of this all the time; you are not alone. It's not like it's new legislation, we are talking 2007 here. Don't bank on 1x as the penalty, Court can be unpredictable, and if you get a penalty of 3x you will be so much more miffed. Try to keep a good record of any attempt(s) - genuine ones - where you try to settle before it ever reaches Court, they may help you. Also make sure the Tenant hasn't been given the impression by anyone that 3x is a sure thing.

Priceless advice Hippo, just one more, I promise.  The tenant has agreed to take the full deposit in settlement, does this mean he can't chase me  retrospectively for failure to protect the deposit?  I don't want to give him the money if he's gonna go ahead and sue me, but I will have his arm off if it means he has no further claim

Quote from: crispinread@btconnect.com on January 08, 2015, 09:45:47 PM
Priceless advice Hippo, just one more, I promise.  The tenant has agreed to take the full deposit in settlement, does this mean he can't chase me  retrospectively for failure to protect the deposit?  I don't want to give him the money if he's gonna go ahead and sue me, but I will have his arm off if it means he has no further claim

Unfortunately not.  Could be up to 6 years after the event.

....and one more thing.  Why is it called compensation? What are the tenants being compensated for? I feel like going all the way to get the ruling overturned!  I can understand paying a fine, but WTF does it go to the tenants?

Compensations a better word to use than damages.  Should be called 'free money' by rights.

You can go all the way (which it will if they make a claim) but you won't get it overturned, on what grounds would it be?  The legislation/law wasn't followed and that's pretty much the start, middle and the end of the story.

Quote from: Riptide on January 08, 2015, 10:20:59 PM

Quote from: crispinread@btconnect.com on January 08, 2015, 09:45:47 PM
Priceless advice Hippo, just one more, I promise.  The tenant has agreed to take the full deposit in settlement, does this mean he can't chase me  retrospectively for failure to protect the deposit?  I don't want to give him the money if he's gonna go ahead and sue me, but I will have his arm off if it means he has no further claim

Unfortunately not.  Could be up to 6 years after the event.

Well, hold-on... if you get the right piece of paper signed, you could be golden. I would also bite his arm off if that is the deal on the table. You will need to create something you can both sign (if you have a tame Solicitor to-hand it might be worth engaging but I think anyone could do this themselves with a bit of care and attention).

You both want to be protected... so it's in "full and final settlement with no future claim from either party upon the other for any reason relating to [property address]" or something akin to that.

You are both being protected by this... him from you chasing him further for rent arrears or damage etc., you from him chasing you for anything to do with the deposit.

It can be done.

I would try to do it.

Quote from: Riptide on January 08, 2015, 11:25:49 PMYou can go all the way (which it will if they make a claim) but you won't get it overturned, on what grounds would it be?

This is true, don't hold onto any false hopes.

Quote from: Hippogriff on January 09, 2015, 10:51:37 AMI would try to do it.

I'd consider getting it signed and witnessed... I don't think you can count on an email here.

'You can go all the way (which it will if they make a claim) but you won't get it overturned, on what grounds would it be?'  I am dreaming of course but if i had more time on my hands i would challenge the ruling in the High Court and suggest that these issues should be dealt with on a case by case basis;  I could have been given the deposit and then taken hostage before I had a chance to put the deposit into the DPS, allowing the tenant to claim compensation. Absurd extreme example I know but there will be varying degrees so why follow precedent?  It is absurd that the tenant is rubbing his hands at the thought of being compensated for nothing other than spotting a technicality which ceased to have any impact well before he noticed the error, and well before it could benefit or hinder either party..  I made a mistake in the eye of the law and deserve what comes my way but the tenant doesn't deserve the spoils.  It would be like spotting someone parking on a double yellow and collecting the fine myself.  Even a PPI windfall seems hard earned compared to this; at least this was money wrongly paid out in the first place.  Rant rant rant blah blah etc......... Sorry to bore everyone and thanks for all the great advice, esp Hippo and Riptide

What you say is all understandable if we can put ourselves in your shoes and feel what you are feeling.

However, as Landlords, I know that Riptide and myself both feel that deposit protection is easy. It's not overly onerous. There are no traps. Imagine how many people come onto the varied forums with deposit related questions. It's lots. It's Landlord and Tenants alike. It's like this piece of legislation has been hiding somewhere, just to catch people out all over the place... but it really hasn't.

We don't feel there are any genuine excuses for Landlords to not protect deposits correctly... that means a) protecting them at all, b) protecting them on time and c) serving the right information on the Tenants.

Landlords who fail to do this shouldn't really carp about it... after all, it was your own action / inaction that caused the situation to arise. All this said, it's probably a mistake you'll never make again, so maybe there's that small silver lining.

Have you reached an end point with your Tenant now? If so, be thankful for that.

People have made far worse mistakes when becoming a Landlord.

Hope you sort it... I have to now go and sort (which will mean replace) a garden fence in one of my properties where the wind has done its damage overnight... entire side has come down and the gate has flown off its hinges and across the garden. I don't think I want to claim on the insurance for this, so that will all be coming out of my pocket. That's something to gripe about - and I've not even got anyone to blame!

When does the deposit usually have to be protected by?

Within 30 days of receipt.

o/p must be kicking himself