Tenancy Deposit Changes

All landlords know what a pain in the backside the tenancy deposit scheme has become.

Remember the days when it was all so straightforward. Taking a bond from the tenant and then giving most of it back at the end of the tenancy unless the tenant had thoroughly wrecked the place. Now, with the tenancy deposit scheme landlords find it to be it another administrative nightmare.

Now it’s a case of jumping through hoops, remembering passwords, justifying and explaining your actions to a trained arbitrator and then possibly even a court of law. Having to argue and prove that any money you require from the deposit is reasonable for the damages or neglect that your tenant has committed and that you aren’t just trying to rob the tenant blind.

Oh, being a landlord just isn’t fun anymore?

More regulations called for…

Unbelievably, despite the Tenancy Deposit Scheme only being brought into force in April 2007 some people are already calling for the legislation to be tightened. Simon Raymond of Raymond and Co has voiced his view that the legislation has become toothless and is open to abuse by unscrupulous landlords. He has even set up an e-petition calling for a tightening of the law.

Well he would say that wouldn’t he – he is a lawyer.

Recent case law in the form of the High Court tussle between Universal Estates and Tiensia has held that so long as the landlord protects the deposit and gives the prescribed information "by the time of the possession hearing" the landlord will not be liable for the deposit fine and can still get a possession order.

My view

Surprisingly, my view is that Mr Raymond has a point. I don’t generally support more legislation when it comes to the control of the residential letting; because it rarely improves the outcomes for landlords or tenants. It normally makes life more complicated for both and more profitable for lawyers. In this case there is no denying that the "law is an ass".

It proposes to fine landlords that don’t protect the tenants deposit, but it has been worded so badly that even tenant friendly judges can only interpret it to mean that as long as the landlord protected it as late as the possession hearing no fine will be payable.

Landlords getting a raw deal.

Don’t get me wrong. I’ve not gone soft. I still think that many landlords get a raw deal if there is a dispute over the tenancy deposit. Most arbitrators give the benefit of the doubt to the hapless tenant, who are very much seen by the ‘establishment’ as the underdog in the age old struggle for rights between the lessee and the lessor. Recent research bares this out with only 19% of disputes cases being won by landlords.

Law about to change

If latest proposals in the Localism Bill make it into law this badly worded legislation will at least finally make sense to both landlords and tenants. The proposals being put forward are that a landlord would have 30 days from receiving the deposit instead of the current 14 days to protect a tenants’ deposit and issue them with the prescribed information. A much more sensible timescale. In addition, a sliding scale for fines is proposed with the fine being between 1 -3 times the deposit rather than the current 3 months flat rate. This should discourage opportunist cases from tenants trying to fleece unsuspecting landlords irrespective of any actual real detriment being suffered by them.

The good news is that landlords still have a bit of respite even if the law gains Royal Assent, as the law isn’t schedule to come into force until April 2012. The bad news is that landlords will still have a raft of procedures and regulation and passwords to remember and still then stand less than a fair chance of winning if there is a dispute.

For more information on winning a tenancy dispute read Tom Derrett’s excellent series of posts of winning a tenancy deposit dispute.

Email your experiences and comments on Tenancy Deposit Disputes

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I have had no problems with the new tenancy deposit schemes. I make sure that I have a good inventory in place (with photographs). Have it signed by the tenants at check in and agree any damages on check out. When an agreement is not reached, I have on two occassions won the case with the TDS as the tenants have not bothered to provide evidence. New 31 day time to register will be good. Nisha

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We are considering using the Tenancy Deposit Scheme for Olympic
visitors’ deposits because there have been reports of unscrupulous
landlords refusing to return deposits to foreign visitors after their
stay at past Olympics for no good reason, other than the difficulty
the foreigner faces in their attempts to retrieve the deposit from
abroad. I would welcome any comments or suggestions.David

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"Badly worded legislation" aside, I find this article bizarre. It must have been either written by an amateur or an old-school relic of a Landlord:

"Now it’s a case of jumping through hoops, remembering passwords, justifying and explaining your actions to a trained arbitrator and then possibly even a court of law…"

That’s a bit melodramatic! Any landlord that is unable to process and maintain the simple administration for the Deposit Protection Scheme within 14 days of receipt is probably not fit to be a landlord. I personally feel comfortable that the deposit is being held independently and that there is no insinuation that I have unfair intentions for the fate of the deposit.

Secondly; it’s probably no wonder that only 19% of landlords win their disputes as most probably haven’t grasped that deposits cannot be used for fair wear and tear. Also, the age of and the potential usefulness (in an undamaged state) of any items that are damaged through neglect have to be taken into account – eg a 5 year old carpet that is totally trashed that would have otherwise been expected to last 10 years would only attract 50% of the replacement cost from the deposit.

Thirdly; in defence of the 3 DPS – most organisations/companies that hold clients monies are regulated – residential landlords should be no different – afterall, in the current climate where first time buyers are priced out of the market, the wealth gradient between tenant and landlord is often steep; they shouldn’t exposed to landlords that unfairly retain their money.

Finally – landlords should concentrate on getting good tenants in the first place, keep accurate inventories and crucially make their best efforts to keep their tenants for as long as possible.

So… wise up!

Chris

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Our experience with the Tenancy Deposit Scheme is not encouraging. We own, let and manage around 600 properties and insure all the deposits with My Deposits. Recently we had a tenant who moved out of a 3 storey, 4 bedroom town house which was brand new when he moved him. He had allowed his 4 year old child to draw all over the walls with a thick black felt pen in EVERY room. In addition the carpets were filthy and lets remember they were brand new when tenant moved in. We retained the deposit which was £775 whilst we sought estimates to repaint the whole house and clean the carpets. In the meantime the tenant went to My Deposits and complained and we agreed to use their dispute scheme. Never again. After protracted correspondence during which we supplied all necessary paperwork to make a good case, My Deposits awarded us the grand sum of £200 to completely redecorate a 4 bed, 3 storey house and clean the carpets. This was a joke, the actual materials for the job cost more than £200! We now go county court with our disputes and to date have won every one! The My Deposits "trained arbitrators" need to get real.

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To the writer of the previous article, I’d be interested to know how long the tenant was in the property for and how often an inspection was carried out? Could regular inspections have prevented this and given you a chance to act earlier?

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