Landlord witholding Deposit

[sim1234]

UPDATED, see reply #9 or this link which takes you to it:

Landlord witholding Deposit


Any advice appreciated!


Back in December 2007 myself and 2 flatmates moved out of a flat but have had trouble getting the deposit and excess rent back from our landlord. The tenency was joint in our 3 names, but we paid the deposit separately and rent separately (i.e. approx 1/3rd of the total rent came out of my bank each month) we started the tenency in August 2005, each paid a portion of the full deposit and each paying approx 1/3rd of the rent each month to the Landlord.

The landlord is currently holding onto all of the money. In my case he is holding onto £487 deposit and approximately £205 of overpaid rent (this is because the rent was paid by standing order on the 7th of each month and we moved out on the 17th December, so only 10 days worth of rent should be kept out of the £303 that was paid by standing order on the 7th December)

I took care of the gas and electric bills but one of the other flatmates was supposed to be taking care of the water (which is in our 3 names, not the landlords) but apparently it is £500 in arrears and that flatmate owes 1.5 months of his portion of the rent too. The landlord is stating these as the reasons that the deposit is being witheld.

Foolishly I didn't keep a copy of the contract as the landlord has a flashy professional website and did not think I would have problems.

Basically is the landlord allowed to:

1. Keep hold of my excess rent that I overpaid?

2. Withold the deposit due to the water bills? (I see some posts saying that this is unenforceable and some other people saying that if there is a clause in the contract he can do this)

The unpaid rent from one of the flatmates I understand, but surely he could just keep that flatmates part of the deposit (which amounts to 1.5 months of his part of the rent) and return my deposit back?

Thanks in advance

[Planner]

Well all depending on the wording of the contract. The usual wording of the joint contracts is that all tenants are severally (sp) and jointly responsible i.e if one of you doesnt pay rent (has as happened) or one of you leaves, then the other tenants are responsible for paying the shortfall, this appears to be whats happened. Without knowing this is the wording of the contract (I suspect it is) then he can keep hold of some of your money.

First you need the total of the deposits you all paid and then the total over paid rent of you all.

Then you need all the deductions, which in this case appears to be just 1.5 months unpaid rent. If the waterbill was in your names then its nothing to do with the landlord... how do you know he wont just pocket the bill money and six months down the line that particular utility will be knocking on your door for payment (again!)

The deposit amounts + the overpaid rent - the 1.5 months unpaid rent is what you should get back. YOU will then need to take the unpaying joint tenant to court to recover what you have paid towards this 1.5 months of theirs, and anything you have overpaid in terms of the unpaid water rate.

[Hobbie]

Hi Sim,

I've dealt with landlord under similar circumstance in the past, let me answer your questions first.

Keep hold of my excess rent that I overpaid?

No, he can't.

Withhold the deposit due to the water bills? (I see some posts saying that this is unenforceable and some other people saying that if there is a clause in the contract he can do this)

Again, no the landlord can't hold on to your deposit due to any outstanding bills.

Now...
Since you paid your deposits before new rules came into effect the Association of Residential Letting Agents rules sadly doesn't cover you.

Have you tried requesting a copy of the tenancy agreement from the landlord? The reason is it might have some clause in explaining that he has a right to withhold full or part deposit for any outstanding utility bills, although “best practise” for a landlord is to simply return all deposit back to the tenant (subject to the property left in a satisfactory order of course) and then any outstanding bills the landlord receives, he then informs the utilities of a forwarding address for them to follow up any repayments due.

Some landlords however, don’t do this, instead use the deposit to pay off any outstanding balances owed to his property, this is against the law, as the monies the landlord has regarding a deposit is YOUR money, and you have a right to it back.

I think, the best course of action would be to firstly request of copy of the tenancy agreement that all parties signed at the beginning of the tenancy, if that fails, I’ll find you a draft letter which you can send the landlord.

[Planner]

I would have to disagree on one point,

He can keep hold of any excess rent you have paid should the deposits he holds not cover the 1.5 months shortfall of your joint tenant (dependant on contract wording as mentioned previously) plus delapidation deductions.

[Hobbie]

As for a letter, here is something for you to adjust and consider, but if one or more of the other tenants have fallen behind and not paid some or part of the rent, then you will most definately need a copy of the contract, as it may be the need to take 1 or more of the other tenants to the county court in order to claim any monies back.

Your Name
Your New Address

The LandLord
1 ABC Street
Some Town
Some Where, Postcode
Dear Sir,

REF: [[FULL ADDRESS OF PROPERTY]]

On [[DATE]], Myself and 2 others entered into a tenancy agreement at the aforementioned address, a deposit of [[AMOUNT]] was payable upon commencing the tenancy which was duly paid by all parties involved, also to the best of my knowledge all subsquent monthly rent was paid to your nominated account on time.

On [[DATE]] Myself and the other two persons vacated the property, all rent payable by myself was paid up to and past the date I remained at the property, in fact [[NUMBER OF DAYS]] was over paid, the amount over paid was [[AMOUNT OVER PAID]].

If I can just point out that any monies held by landlord(s) in relation to a tenancy bond remains the property of the tenant, and that good practice requires that the landlord keeps the deposit in a separate client account, providing written statements detailing exactly when the monies will be returned, you can not withhold monies for general “wear and tear”.


I would like to inform you that I expect your reply within [[SET TIME LIMIT]], if no reply is received then county court action will be instigated. The court can order you to return the bond and the proceedings are very straight forward, you may also be ordered to pay my court costs, I sincerely advise you to comply with my request. The courts are very sympathetic to tenants whose landlords do not follow good practice guidelines and do not fulfil statutory requirements regarding issues of deposits.

I look forward to hearing from you within [[SET TIME LIMIT]].



Yours faithfully


[[Unhappy Person]]

As with any time limit, ensure you stick to it, and if you state you will instigate CC Action, you will need to do it, as the landlord may just call your bluff.

[Planner]

I cant help thinking this is all very premature and heavy handed. The fact is that 1.5 months rent is owed for the property. From whats been posted a joint tenancy has been signed so they are ALL liable for any shortfall which can be taken out of the bond and if this is not enough, the over payment. The moral of the story is amend the standing order accordingly, this is a tenants responsibility.

A more reasonable letter would be to ask for the reasons and figures for deposit deductions and withholding over payments in writing. Point out that the water bill is the tenants responsibility so you wont stand for any deductions for that reason. You expect the balance of the deposit and overpaid rent to be returned with the response to this letter. Theres no use threatning court at this stage as money is owed not only by the landlord but also by the departing tenants.

[Hobbie]

Planner,

It might seem to be heavy handed, but landlords to appear to also use a very heavy handed approach too, in just stating "I'm keeping your deposit" and not justifying the reasons for doing so. So many landlords who are either untrustworthy or uneducated in the whole letting system seem to think that the deposit belongs to them and can keep it and use it for property improvement or use other excuses in order to retain the deposit.

But if you do allow the landlord to just sit back and keep saying "I'm keeping it because of ..... xzy ....." and the reasons are not justified then they'll continue to do so.

[Planner]

Thanks for that insight in to tenant/landlord relations. I did wonder.

[sim1234]

A bit of an update, after hearing nothing for some time I sent a LBA to the landlord. I have now received an email from him 'without prejudice' at the top and he's added some new items (£15 per day for XXX's rent arrears) onto which he will withold/take the deposit. I've included a copy below. Am I basically going to have to take it on the chin and accept the loss of the money if he is going to use the deposits for XXX rent arrears (and £15/day fines) and the water bill?

I feel as though I'm being skinned a bit, I can understand where the landlord is comming from, but he didn't inform myself or YYY of the rent arrears (caused by XXX) until around 26th Feb, more than 2 months after moving out. If he had contacted us at the time I could have poked that other flatmate into paying the rent.

Also he didn't inform of the £15/day charge for the arrears caused by XXX until today (after he recieved the LBA).

Is it also reasonable of him to charge £20 to get my overpayment of rent back, as he didn't inform me of how much to pay for the final rent which covered 10 days so I left it as a 1 month payment as standing order and thought I would get it returned with the deposit.

I guess my question is this worth trying to claw my money back or is it a lost cause now?

I guess the moral of the story is don't trust your flatmates, always get proof that they are paying the bills etc... :S


Without prejudice


Dear ZZZ

Thank you for your letter dated 21st April 2008 and my apologies for not replying sooner but I have been out of the country

As mentioned in previous e-mails, when you, XXX and YYY vacated my property on the 17th December there was in fact arrears on the rent of £918.24. This amount was reduced via a bank transfer from XXX by the sum of £353.17 Which resulted in arrears of £565.07. This amount still remains outstanding. Your tenancy agreement states in paragraph B6 that any arrears outstanding will attract interest at 4% above ***** bank rate and in paragragh B7 that a fee of £15.00 per day would be payable for each day the rent remains in arrears by seven days or more. The arrears where outstanding for the whole of October and November and for the 17 days in December and therefore some 78 days late which would result in 71days x £15.00 being £1,065 arrears charges not including interest at 4% above base rate on the arrears.

Furthermore the tenancy agreement quite clearly states on page 5, paragraph C6 “the deposit will be used to pay for; Any amounts outstanding to utility supply companies for services consumed or enjoyed by the tenant at the premises.”

In this regard the gas and electric where indeed paid up to date, however, the water charges from Southern Water still remain outstanding. The sum outstanding amounts to £449.81.

I therefore propose that the deposit held by me is withheld to cover the outstanding arrears, interest and charges and also to settle the water bill outstanding and that I refund you the overpayment of rent less the £20 handling fee for returning rent that is overpaid as a result of a tenant failing to cancel a standing order as detailed in paragragh B5 of your tenancy agreement.

[Hobbie]

Hmmmm....

If all these clauses are indeed part of your contract, then I can't see any reason why the landlord shouldn't keep monies owed. All but the £20.00 handling fee to return money, he can charge a reasonable fee, but I doubt it will cost him £20.00 to write a cheque and post it.

Also if he proposes to use any monies to settle the water bill, you have a right to request proof of payment from him, as what you don't want is in a few years time getting threats from debt collectors for the outstanding balance.

Personally If I knew he was out of the country at the time, I would have filed the claim with MCOL, and if he was out of the country he would have been unable to respond, and therefore won by default. Hindsight now though.

If I can come up with something else in a next few hours, i'll be sure to post.

[Esio Trot]

Originally Posted by sim1234

... in paragragh B7 that a fee of £15.00 per day would be payable for each day the rent remains in arrears by seven days or more.

There are other issues that can be raised, but the clause above is an unfair term, and thus unenforceable. It bears no relation to an "loss" that the landlord might suffer, and IMO is profiteering.

Go onto the OFT's site and look up their code on tenancy agreements. Although only guidance, if the bits about late payment interest were placed before a judge I am certain that the £15 a day would be ruled invalid.

[sim1234]

Thanks for the info, i did indeed check OFT's guidlines and it seems to be unfair as i found this section in there:

"3.46 We regard a requirement to pay unreasonable interest on arrears of rent, at a rate substantially above the clearing banks' base rates, as an unfair penalty. We regard the imposition of a fixed daily or monthly charge for overdue rent, and regardless of the amount due or the surrounding circumstances, as being penal rather than compensatory in nature, and unfair. Tenants would have to pay more than the cost of making up the deficit caused by their default."

many thanks for the feedback