Landlord now admits deposit not protected

[plkdelta]

Hi, We have been at our current property for 18 months, and throughout the tenancy, the landlord has said that the bond is protected..... I kind of knew it wasn't but let it go.

 

Now we are moving out next week, and I asked the landlord about the details of the scheme.

 

He replied.... "it's in my own scheme!"

 

I asked what he meant by this and he said it's in his building society and not protected and informed me that if I wanted to do anything about that, to do-so, but it will only p***s him off.

 

He's not a nice guy and I'm sure he will try to make up some excuse for keeping the bond.

 

What should my course of action be here?

 

Thanks all

[Ed999]

My comments only apply if the premises are entirely within England, and you were granted a shorthold tenancy (under which you have exclusive use of a separate dwelling, and the landlord does not live in the same building), and you were over 18 years of age when the tenancy was granted.

 

This posting is supplemental to the information in this forum's "sticky" threads and is NOT to be read in isolation.

 

 

Tenancy Deposit

 

The landlord or agent must pay the deposit into a custodial deposit protection scheme, or must hold it in a separate account protected by insurance.

 

The tenancy agreement must state which scheme is to be used, and the circumstances in which all or part of the deposit can be withheld at the end of the tenancy.

 

 

If the tenancy is continuing: you CANNOT sue for the return of your original deposit; but you CAN sue for the statutory penalty of three times the amount of the deposit.

 

But it seems likely you will lose. The landlord, if properly advised, is sure to protect the deposit if you sue for the statutory penalties, and to give you the prescribed notice also. And if the tenancy still exists when the hearing date arrives, a claim for the return of your original deposit would fail.

 

 

If you paid a deposit, read the FAQs about the tenancy deposit scheme, under which you might be entitled to sue for compensation if the deposit has not been protected, under the Housing Act 2004, if you were granted a shorthold tenancy:

 

• Tenancy Deposit Scheme

 

• Tenancy Deposit Protection - First High Court Decision (Draycott v Hannells Lettings Ltd)

 

• TDS eligibility, implication of breach and legal questions answered

 

 

A tenant can apply to the Court under section 214 of the Housing Act 2004, on the grounds that section 213(4) or 213(6)(a) or 214(b) has not been complied with.

 

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, the court cannot award the penalty of three times the amount of the deposit.

 

This was NOT affected by the High Court decision in Potts v Densley (6th May 2011). In Tiensia the landlord had protected the deposit at a time when the tenancy still existed; in Potts the landlord protected it after the tenancy had ended. 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 a further development, the Court of Appeal decided in Gladehurst Properties Ltd v Hashemi (19th May 2011), a case in which the tenancy deposit was never protected, that section 214 of the Act only makes sense if both options contained in it (i.e. return of the deposit or its protection in a TDS scheme) are available to the Court. The Court of Appeal said that this is so only when the tenancy is still in existence, that therefore the penalty for non-protection of the deposit is NOT available after the tenancy has come to an end [see paragraphs 37 and 42 in the Judgement], and that a tenant therefore CANNOT succeed in a section 213(3) claim once the tenancy is over.

 

Tiensia and Potts have to be considered in the light of the decision in Gladehurst; but only time will tell which is the more important decision.

 

The practical effect of Gladehurst is that the tenant must make any claim arising under section 213(3) 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, nor during any fixed term; and it can't be ended by a section 21 notice at any time after that, either, if the deposit is not protected.

 

Hence, as a result of Gladehurst, a claim under section 213(3) for failure to protect the deposit can ONLY be made BEFORE the tenancy has ended. The Court of Appeal in Gladehurst has overruled the High Court in Potts on this point.

 

If you sue, Gladehurst says the crucial point is whether the court hearing takes place BEFORE or AFTER the tenancy has ended, not whether the tenancy existed when you began the court proceedings.

 

 

Due to the above-mentioned court decisions, the practical effect of a tenant suing for the statutory penalty is likely to be that a properly advised landlord will protect the deposit, so as to avoid the penalty, if the tenancy still exists. Even though that's not what the court claim asks for, such protection is some benefit to the tenant.

 

Suing for the statutory penalty, or merely threatening to, might cause the landlord to return the entire deposit, without any deductions, thereby resolving a dispute.

 

None of the foregoing prevents the tenant succeeding in a claim for the return of the original deposit (a claim which can only succeed AFTER the tenancy ends, as the deposit is security for non-payment of the rent and for damage caused during the tenancy).

 

 

The Act expressly states that the parties to the tenancy cannot agree not to protect the deposit [section 213(9)]. So it's futile for the landlord to raise this defence - but many still try to!

 

Whilst the deposit is not protected, and until the tenant is given the prescribed information about the scheme used (including the account number), a section 21 notice given to the tenant is invalid, so will not end the tenancy [section 215, Housing Act 2004]. But a section 8 notice can nevertheless validly be given (e.g. for rent arrears).

 

 

Where you paid a rent deposit to the landlord or his agent at the start of the tenancy, you probably won't get it back; so if the landlord is holding the equivalent of one month's rent your best tactic is not to pay the final month's rent, when the tenancy ends, i.e. to let him take it out of the deposit.

 

Treating the deposit as the final month's rent, and thus already paid, allows the tenant to have enough money to pay the deposit on the next tenancy.

 

 

Summary -

 

If the tenancy still exists, because of the confused state of the law it might be prudent to claim:

 

(a) the statutory sum for breach of section 213(3) [securing the deposit], and

(b) the statutory sum for breach of section 213(5) [provision of prescribed information], and

© refund of the original deposit - if the tenancy may end before the final court hearing.

 

Even if the tenancy exists when you start the court claim, you cannot know at that point whether it will still exist when the hearing date finally arrives; so it is prudent to keep all your options open.

 

The practical effect of a tenant suing for (a) or (b) may well be that a properly advised landlord will protect the deposit, so as to avoid the penalty.

 

The County Court cannot order (a) if the tenancy ends before the date of the court hearing, or if the landlord protects or refunds the deposit at any time up to the date of the court hearing.

 

The County Court can order (b) if the tenancy is still in existence on the date of the court hearing, and might have power to do so even if the tenancy ends before the date of the court hearing.

 

The Court probably cannot order © if the tenancy is still in existence on the date of the court hearing.

 

On 6 May 2011, the High Court decided in Potts v Densley that the landlord has no duty to protect the deposit, unless the case goes to court, and can then protect it at any time before the court hearing; and that it is NOT too late to protect it once the tenancy has ended.

 

 

Appealling Gladehurst

 

There are several reasons why the Court of Appeal decision in Gladehurst might not apply in your case.

 

But I won't go into them here unless you insist, because the amount of money at stake in your case may be too little to justify the expense and risk of attempting to challenge the ruling in Gladehurst.