AST Bond never placed in a tenancy deposit scheme

[colandbev]

I am seeking advice on the following,

 

in nov 2008 i and my fiancee rented a property from an estate agent, we paid a bond of £550 which was according to our rental agreement placed with the deposit protection service. at the time we thought that was all we needed to know on that but alas had we known then what we know now then i wouldn't be seeking advice. needless to say that although we ended the tenancy on 7th december 2010, we are still awaiting the return of our bond. we have now established that our bond was Never placed with any of the 3 bond protection schemes, contrary to what our agent claimed on our agreement. we never received any paperwork or id code etc, which we now know is against the law. we have been in contact constantly with the agent with regards to the return of our bond. Yesterday we phoned them and asked which bond scheme they used, the lady we apoke to, said she couldn't tell us, which is odd, since they claimed to use the deposit protection service. We stated that unless they returned our bond plus 2 times the amount, then we would be taking the matter to court and that if successful, they would be liable to pay the bond & 3 times the amount plus interests too. we received a call yesterday to say that the full £550 would be returned to us by cheque in the next few days. what i want to know, is .. should we accept this cheque or take the matter to court, with regards to the fact that our agent had broken the law section 214 of the housing act 2004 and indeed gave false information on our rental agreement. Any advice would be very much appreciated,

 

Best regards,

 

Colin Aldous & Beverley Spencer

[Steve__M]

My suggestion is to take the money as making a claim is costly and time consuming. The courts seem to be taking the view that as long as the money is protected prior to the case being heard, that there is no entitlement to the 3x penalty in the act.

[colandbev]

Thanks for your reply steve,

 

But our bond has never been protected and the agent is paying us the money back, minus any interest we would have earned had it been placed with deposit protection service. surely an agent cant use the service once a tenant is no longer a tenant.

 

regards,

 

Colin

[mariner51]

The bond does not accrue interest in the DPS, not for LL or T. Interest is used to run scheme and ADR service.

[Ed999]

My advice is applicable only if the rented premises are entirely within England and Wales, and only if you were granted a shorthold tenancy (under which you [and your spouse/partner/children if any] had exclusive use of a seperate dwelling, which was not shared with another tenant nor with the landlord) and you were over 18 years of age when the tenancy was granted.

 

 

I would like to clarify this thread, now that the long expected decision in Potts v Densley has been given.

 

 

The Court of Appeal decided, in the case of Tiensia v Vision Enterprises, that if the Landlord protects or repays the deposit even as late as the day of the court hearing, or at any time before judgement (if later), the court will not be able to award the penalty, of three times the amount of the deposit.

 

This was NOT overturned by the High Court decision in Potts v Densley. Read the full transcript of the Judgement, in that link, as it will give you some idea of the Court's approach to this type of case.

 

The High Court in Potts v Densley was not bound by the Court of Appeal's earlier decision in Tiensia, because in Tiensia the landlord had protected the deposit at a time when the tenancy still existed; but the High Court in Potts nevertheless rejected the argument that the Act requires the landlord to protect the deposit before the tenancy ends [at paragraph 55 in the Judgement].

 

In Potts, the tenant might still have won, if she had raised the related point that the landlord had failed to provide her with the prescribed information pursuant to section 213(5). But she failed to do so, thus she lost the case.

[xoAmyox]

Also see this appeals court judgement only handed down yesterday:

 

http://nearlylegal.co.uk/blog/2011/05/eviscerated-now-also-drawn-and-quartered/

 

This further complicates the whole deposit protection legislation, and leaves anyone who has not had their deposit returned after a tenancy has ended with no recourse for the 3x the deposit compensation.

[Ed999]

Here is a summary, after Gladehurst -

 

The Court of Appeal decided in the case of Tiensia v Vision Enterprises that if the Landlord protects or repays the deposit even as late as the day of the court hearing, or at any time before judgement (if later), the court will not be able to award the penalty of three times the amount of the deposit.

 

This was NOT overturned by the High Court decision in Potts v Densley. In Tiensia the landlord had protected the deposit at a time when the tenancy still existed. In Potts, the Court rejected the tenant's argument that it was too late for the landlord to protect the deposit once the tenancy had ended [see paragraph 55 in the Judgement].

 

 

In Gladehurst Properties Ltd v Hashemi [2011] EWCA Civ 604 (19th May 2011), a case in which the tenancy deposit was never protected by the landlord, the Court of Appeal has decided that section 213 of the Act only makes sense if both options contained in it (i.e. return of the deposit or its payment into a TDS scheme) are available to the Court. As this can only be the case if the tenancy is still on-going, the penalties for non-protection of the deposit are NOT available to the tenant after the tenancy has come to an end: the tenant CANNOT succeed in a claim for three times the deposit once the tenancy is over.

 

The practical effect of this is that the tenant must make his claim at the BEGINNING of the tenancy. Remember, a shorthold tenancy can't be brought to an end by the landlord, by notice, in the first six months; and can't be ended by a section 21 notice at any time after that if the deposit is not protected.

 

 

In Potts, the tenant might still have won, if she had raised the related point that the landlord had failed to provide her with the prescribed information pursuant to section 213(5). But she failed to do so (she based her claim solely on the landlord's failure to pay the deposit into an authorised scheme), thus she lost the case.

 

 

Suing for the penalty, or merely threatening to do so, might cause the landlord to return the entire deposit to you, without any deductions, thus resolving a dispute, if the tenancy has not ended.

 

The Act expressly states that the parties to the tenancy cannot agree not to protect the deposit. So it's futile for the landlord to raise this defence - but many still try to!

 

While the deposit is not protected, any section 21 notice given to the tenant is invalid, so will not end the tenancy. But a section 8 notice - e.g. for rent arrears - can validly be given.