Repaying the tenancy deposit.
Prior to this stage the landlord should have already decided whether they are going to withhold any of the deposit. Remember when assessing the amount of the deposit to withhold a landlord will need to make an allowance for 'fair wear and tear
'. It would also be useful for a landlord to have a look at this recent article on how an arbitrator views any attempt by a landlord to withhold any part of the tenant’s deposit
. What is abundantly clear is that arbitrators see the tenancy deposit as the tenant’s and any deductions will have to be clearly and unequivocally evidenced by an inventory and ‘check in’
and ‘check out’
statement for it to be upheld by the arbitrator.
LANDLORDS USING THE DEPOSIT PROTECTION SERVICE (DPS)
Landlords who have deposited the rental deposit with the Deposit Protection Service (DPS) will have already had a login name and password as a result of the registration process. They need to begin by logging on to their account. They can then initiate the process of the return of the tenant’s deposit by selecting ‘Request a Payment’.
Procedure for tenancy deposit to be returned.
Having requested the return of the rental deposit the Deposit Protection Scheme will contact the tenant either by post or by email (where an email address is available). This notification will advise the tenant of the landlord’s request and will ask the tenant to go online or to fill a paper form to indicate their agreement or disagreement. This notification is only sent on one occasion and it may be worthwhile for you as the landlord to also contact the tenant to advise them of the pending claim, so not to incur any delay. It is also possible for the tenant to initiate the repayment in which case the landlord will be contacted instead.
Repayment of the tenant’s deposit should be fairly straight forward where both parties agree, with repayment made within 10 days of initiation of the process. The speed that the landlord, tenant or letting agent receives the money will depend on what method they elects to receive the money, whether cheque or direct transfer into their bank account.
If there is a disagreement with the tenant and you the landlord have sought a judgment in the county courts against your tenant and you intend that the deposit held by The DPS be paid to you in satisfaction of the judgment, it is required that you as the landlord ensure that the final Court Order includes a term which refers to the deposit, or the scheme administrator holding the deposit and a direction as to how much of the deposit/all of the deposit is to be released directly from the scheme administrator to the successful Claimant.
In the event that neither the Claim Form or the Final court order refer to The Deposit Protection Service or the deposit the Claimant may apply to the Court for either an amendment to the Final Order or a Third Party Debt Order which could direct the DPS to pay part or all of the deposit to Claimant. Alternatively, the Claimant may follow the Single Claims procedure (set out below).
SOME COMMON PROBLEMS
With the return of the tenancy deposit under the DPS:
The tenant disappears or does not respond
Where the other party such as the tenant has disappeared in this case it is still possible for a landlord to make what is called a single party claim. This involves a landlord having to make a statutory declaration. This can only be done at least 14 days after the tenancy has ended.
The Single Claim Process is a method of repayment for use if:-
1. the agent/landlord has no current address for the tenant
2. the tenant fails to respond to the agent/landlord’s written notice requiring that the agent/landlord be paid some or all of the deposit within 14 calendar days of the end of the tenancy
3. the tenant has no current address for the agent/landlord
4. The agent/landlord fails to respond to the tenant’s written notice asking whether the agent/landlord accepts that the tenant should be paid some or all of the deposit within 14 calendar days of the end of the tenancy.
If the Deposit Protection Service receives a Statutory Declaration Notice disputing part or the entire amount claimed by the Single Claim during 14 days of statutory notice, the DPS will write to both parties notifying them of the dispute, and requesting that all additional evidence be submitted before the case is referred to the Adjudicator. The dispute will be referred to The Deposit Protection Service’s Alternative Dispute Resolution (ADR) service, unless either party indicates that they do not wish to use The ADR service or notifies The Deposit Protection Service in writing of their intention to resolve the dispute using the county courts, or another dispute resolution service.
There is a disagreement between the parties over the repayment of the deposit.
Where there is a disagreement between the tenant and the landlord then if both of the parties agree, then they can elect to use the Alternative Dispute Resolution (ADR) procedure. If both parties don’t agree then the tenancy deposit will only be released if the Deposit Protection Service receives a Court Order or agreement is received from both parties indicating a resolution of the tenancy deposit dispute.
The start of the dispute process begins with the notification of a dispute to the Deposit Protection Service via a duly completed Joint Deposit Repayment Form. The DPS will issue an Agent/Landlord’s Evidence Form to the agent/landlord. This Form must be fully and properly completed and returned to the Tenancy Deposit Service within 14 calendar days of it being issued. On receipt of this form, the TDS will summarise the evidence and send the summary to the tenant with a blank Tenant’s Evidence Form. This Form must be fully and properly completed and returned to the Tenancy Deposit Service with 14 calendar days of it being issued. If there is a lead tenant, they must complete the Tenant’s Evidence Form on behalf of all tenants.
Finally the Deposit Protection Service will provide the agent/landlord with a summary of the tenant’s evidence and allow the agent/landlord seven calendar days from the issue of the summary of the Tenant’s Evidence Form to either accept or disagree with the contents of it and to submit any additional evidence which they wish to be taken into account. If the Deposit Protection Service does not receive a response from the agent/landlord within seven calendar days, the dispute will be referred to the adjudicator. If either party wishes to have copies of the other party's evidence, a written request must be made to The DPS.
The dispute relates to only part of the tenancy deposit.
It is likely that if there is a dispute between the landlord and the tenant then it will only relate to part of the tenancy deposit. In such cases not all the tenancy deposit is withheld by the Deposit Protection Service. If it is agreed by both parties then even when part of the tenancy deposit is in dispute the undisputed amount will be released within 10 days of notification of the DPS.
The letting agent has paid the money in, but refuses to get involved.
A common problem with the deposit process is where the letting agent protects the deposit initially but has entered into a let only agency agreement with the landlord. In these situations responsibilities often become blurred as to what the responsibilities of the landlord and their letting agent is in dealing with the return of the tenant’s deposit. The starting point for any confusion on this point should be the exact terms and obligations of the agency agreement between the landlord and their letting agent. This is one of the reasons why a properly drafted agreement should be insisted on by the landlord when appointing a letting agent. If the letting agent has submitted the deposit but refuses to act then also see the single party claim process above.
INSURANCE BASED SCHEME (My Deposits)
Where a landlord has used the insurance based tenant deposit scheme to protect the tenancy deposit then they will need to use the following procedure to unprotect the tenancy deposit.
Firstly the landlord will need to return all or part of the tenancy deposit to the tenant within 10 days of agreeing the amount of the tenancy deposit to be returned, or within 10 days of the tenant requesting the return of the tenancy deposit.
The landlord can unprotect the tenancy deposit by phoning My Deposits on0844 980 0290 or going online and using the website www.mydeposits.co.uk .
My deposits will then advise the tenant that the landlord has unprotected the deposit.
Where the landlord and tenant disagree about how much of the tenancy deposit that should be returned (and if both parties agree and satisfy the requirements), the landlord and tenant can use the free Alternative Dispute Resolution (ADR) service.
Landlord and tenant fail to agree over return of tenancy deposit.
In the event that landlord and tenant cannot agree over the return of the tenancy deposit. Mydeposits will provide advice and assistance to help the tenant and the landlord to reach agreement over the amount of the deposit to be returned. If Mydeposit’s advice does not help the landlord and tenant to reach an agreement, the tenant can register a formal dispute with Mydeposits.
Tenant disputes the return of the tenancy deposit.
The tenant will then need to request a Dispute Notification Claim Form from the mydeposits Customer Service Centre
. The tenant is then required to complete and returns the Dispute Notification Claim Form with any evidence supporting their claim e.g. inventory, photos, rent statements, bills, or other correspondence within 10 days.
The landlord can then lodge a counter claim. Mydeposits will notify the landlord of the claim and request the landlord counter claim and evidence within 10 days.
In this event the landlord will also be asked to lodge the disputed amount with Mydeposits within the same 10 day period, where it will be held in a secure client account. This disputed amount will be held by Mydeposits until a fair distribution has been agreed – either through the Alternative Dispute Service (ADR) or the court.
Landlord fails to pay disputed amount to Mydeposits
If the Landlord fails to pay the disputed amount to the Scheme within the time allowed, Mydeposits will apply the Scheme's discipline procedures to the Landlord leading to their expulsion from the Scheme (DPS). Mydeposits will then distribute the amount of deposit in dispute based on the decision of the ADR service or court.