Is Landlord avoiding TDS??

[Asmodean]

I've been looking through the TDS threads, and I have something a little different......

I paid my Landlord a months rent plus £100 in advance, which I assumed was a deposit. My contract states that I've paid an Early Termination Fee of £595 (which is the amount I paid upfront) and a Deposit of Nil.

The two clauses regarding this are:

'Early Termination fee

The Landlord will arrange for the early termination fee to Be refunded to the Tenant once the Tenant has vacated the property and the end of the Tenancy period provided the required notice has been given in accordance with Clause C1'

Clause C1 reads like this:

' Tenants right of Termination

The Tenant can terminate the agreement at any time, and will be accepted PROVIDED

(a) The tenant is not in arrears, and no damage or redoraction is required to the property

(b) At least one months written notice is provided

(c) The early termination fee will be retained by the Landlord should the Tenant not remain at the property for the duration of the contract'

To me, this reads like he will keep the fee if there are arrears or damage, which tells me it is a deposit, not a fee for leaving before the end of my agreement.

I’ve had a look at the Housing Act 2004, which indicates that monies that are returnable are a deposit, and should be protected.

In subsection (7) “deposit” means a transfer of property intended to be held (by the landlord or otherwise) as security for—

(a) the performance of any obligations of the tenant, or
(b) the discharge of any liability of his,
arising under or in connection with the tenancy.

I admittedly know very little about legal stuff, but to me part (b) means that monies held in case I discharge my responsibilities, i.e. by terminating my agreement early for example, are classed as a deposit and should be protected.....

As my Tenancy agreement says:

(c) The early termination fee will be retained by the Landlord should the Tenant not remain at the property for the duration of the contract'



Does anyone have any thoughts or experiences with something like this?

I really do feel my Landlord is just trying to circumvent the legislation, and I should perhaps write to him and let him know……

[MrShed]

I agree - definite attempt to circumvent TDS. Whether it is a successful attempt or not I am not sure....I am fairly positive that the "deposit" aspect is based upon the "spirit" of how the money is held, as opposed to the name of it. But I am not 100% sure.

[Zamzara]

I hope it isn't successful or it would effectively mean the end of the TDS.

[MrShed]

Agreed - although ironically pre-TDS was actually better in many ways IMO!

[Asmodean]

I certainly hope it isn't successful as well. It would mean that this part of the act would be pointless really

I am very tempted to take this to a solicitor and get their views on it.....

In my opinion this is a deposit in all but name and should be protected, hopefully calling it something else would not stand up legally, but who knows.

I've found very little case law on this so far, maybe it's because the legislation is so new.

[MrShed]

Absolutely correct Asmodean - I fully agree with your opinion. And you are right - there is basically no case law on this as of yet.

[Asmodean]

Hi Mr Shed,

Glad someone does agree with me!

I have only found one case, that of Stankova v. Glassonbury, where the judge ruled that the 3x penalty was to be paid as deopsit wasn't protected on renewal of the tenancy, which a little different to my situation.

I'll pop into my CAB and see what they think next week I think.

[MrShed]

can you post the link for that case??????? We have basically all been looking for TDS case law for some time!

I wouldnt bother with CAB personally....worse than useless in this situation.

[MrShed]

Never mind, found it. Got all excited there, but unfortunately its only at county court so doesnt set a precedent. Still good though.

It has raised an interesting question for me though. Section 21 notices are not valid unless the landlord complies with TDS. Does that mean that if a S21 is served in these circumstances, and the tenant goes on to leave, that the landlord is guilty of unlawful eviction??

[blitz]

I assume if you refused to leave after served with an S.21 and it was taken to a court for formal eviction proceedings it would get thrown out, otherwise are you not agreeing to leave the premises by vacating the premises on the expiration of the S.21.

[MrShed]

Unlawful eviction is somewhat more encompassing than that. Importantly, unlawful eviction is taken to have occurred even if the tenant is not in fact evicted - just the threat of eviction or harrassment to lead to eviction can be classed as unlawful eviction(e.g. cutting off utilities).