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TDS eligibility, implication of breach and legal questions answered


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Hi all,

 

Just thought I would create a sticky to clarify for people a few things to do with TDS. I am going to create three parts:

 

Eligibility for TDS

Breaches and effects of breaches by landlord of TDS legislation

Various legal questions and answers

 

I wont touch on enforcement, as I believe this has been adequately covered in other stickies. Also, it is a work in progress over next couple of days so bear with me, and if you think I have got anything wrong or missed something, please do PM me and I will get it changed! :)

 

 

 

 

Eligibility for TDS legislation

 

You are eligible for TDS protection if you meet the following two criteria only:

 

- You have an Assured Shorthold Tenancy (AST)

- You paid a deposit(of any kind) after 6th April 2007 OR

you have signed a new AST/fixed term agreement to renew an existing tenancy after this date, where there is a deposit held in respect to the tenancy

 

Key notes regarding eligibility point 1

 

It is important to note here that it is ONLY AST tenants who are eligible, and whether you are an AST tenant or not is dependant upon the actual tenancy, as opposed to what agreement is signed.

 

Realistically this does not affect many tenants, but it does explicitly remove two specific groups of people from eligibility:

 

- Lodgers (who are licensees)

- Anyone whos tenancy is worth more than £25000 a year in rent for the tenancy AS A WHOLE (i.e. not individual rent)

 

Key notes regarding eligibility point 2

 

There are two specific inclusions here.

 

The first is that you are a "new" tenant, who has paid their deposit on or after the 6th of April 2007 - the important thing here is that the date of commencement of tenancy is irrelevant - it is the date that you pay the deposit that is important.

 

The second is if you have renewed your tenancy after this date. This is valid if you have signed a new agreement only - so called "rolling tenancies" (statutory periodic tenancies) are not eligible for TDS rules.

 

In either case, it is wholly irrelevant what the landlord "calls" the deposit. There are some reports of landlords calling deposits something other than a damage deposit to attempt to circumvent TDS rules, but TDS specifies any tenancy deposit is covered. It is also worth noting that any such deposits MUST be "money".

Edited by MrShed
  • Haha 1

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Expertise in letting and rental law for 6 years

 

By trade - I'm an IT engineer working in the housing sector.

 

Please note that any posts made by myself are for information only and should not and must not be taken as correct or factual. If in doubt, consult with a solicitor or other person of equal legal standing.

 

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Breaches and effect of breaches by landlord of TDS legislation

 

In order to know what the landlord can breach, we need to know his obligations under the TDS rules.

 

The main overriding obligation is for any deposits which are eligible(see above) the landlord MUST place any deposit in an approved tenancy deposit scheme.

 

The two sub-obligations to this are:

 

- The tenant must receive notification of which TDS the deposit is held in within 14 days of paying the deposit, and...

- This information must be in the prescribed format as required by the TDS

 

Therefore, we can see there are effectively four possible breaches:

 

a) Landlord has not placed the deposit in a scheme

b) Landlord has supplied details, but not in the prescribed format

c) Landlord has placed the deposit in a scheme, but has not supplied this information to the tenant at all

d) Landlord has placed the deposit in a scheme, has supplied the information, but not within the required 14 day timescale

 

(NOTE: should the landlord have provided information, but you have not been able to confirm this information with the TDS scheme the deposit is held in, then it is to be taken that the landlord has NOT provided the information).

 

 

There are three possible consequences of tenancy breach:

 

1) Landlord being unable to evict a tenant via the Section 21 method

2) Landlord being forced to place a deposit into a scheme via a court order. (Alternatively, they could be forced to repay this to the tenant, especially in the case where the tenant has already ended their tenancy).

3) Landlord being forced to give the tenant three times the value of the deposit in compensation

 

We shall deal with each in turn.

 

Breach a), if still in place at the time of going to court, has NO OPTION but to lead to consequences 1, 2, AND 3. It is important to note here that, for all some people seem to think the HA 2004 is ambiguous, there is absolutely no leeway on this. The Housing Act quite clearly and unequivocally states that should the court not be satisified that the deposit is held in a scheme, the court MUST order the payment of the deposit to either a scheme or the tenant, AND that the tenant must receive 3x the value of the deposit in compensation from the landlord.

 

Breach b), is in fact exactly the same. The housing act is again very clear that failure to satisfy the court that the required prescribed information has been given, must result in all three consequences.

 

Breach c) is effectively the same as breach b) - as clearly if no information has been given, then the information has not been issued in a prescribed format.

 

Breach d) is the breach that is currently seen most frequently. Close reading of the HA 2004 shows us that, in fact, the Act does NOT allow for ANY of the consequences to be applied in this situation. As such, their is currently simply no enforcement of the 14 day timescale, other than this is the minimum time you must leave it prior to pursuing the landlord through court for enforcement of the other three breaches.

 

With this in mind, there is clear advice to give. Should at the time of you considering court action to enforce TDS rules, you have in fact already received notification in the prescribed form, then such a court action would be a complete waste of time.

Edited by MrShed

7 years in retail customer service

 

Expertise in letting and rental law for 6 years

 

By trade - I'm an IT engineer working in the housing sector.

 

Please note that any posts made by myself are for information only and should not and must not be taken as correct or factual. If in doubt, consult with a solicitor or other person of equal legal standing.

 

Please click the star if I have helped!!

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Reserved for:

 

Various legal questions and answers, and current case history

7 years in retail customer service

 

Expertise in letting and rental law for 6 years

 

By trade - I'm an IT engineer working in the housing sector.

 

Please note that any posts made by myself are for information only and should not and must not be taken as correct or factual. If in doubt, consult with a solicitor or other person of equal legal standing.

 

Please click the star if I have helped!!

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Kindly supplied by Just4Let :)

 

TDS section 213 prescribed information.

 

 

One of the less well known aspects of the Tenancy Deposit Scheme (TDS)legislation is that not only does it require the landlord to protect the tenant’s deposit under an approved scheme.

 

Landlords also need to provide certain prescribed information to the tenant explaining how the tenant's deposit has been protected.

 

This information has also to be given to any third party / interested party (i.e. someone who has paid the deposit on behalf of the tenant whether in whole or part). For example, a parent who pays the deposit on behalf of a student tenant.

 

What information do I need to provide?

 

The Government sets out within Statutory Instrument 797 of 2007 the information that the landlord is required to provide.

 

In summary of 213 prescribed information is as follows:

 

The details of the scheme administrator e.g. The Deposit Protection Service

Any information contained in a leaflet supplied by the scheme which explains how it operates

The procedures in relation to holding and repaying the deposit and the resolution of any dispute

Amount of deposit paid

The address of the property to which the tenancy relates

The landlords details

The tenants details

Third party details if appropriate

The circumstances when all or part of the deposit may be retained by the landlord, by reference to the terms of the tenancy

 

What happens if I don’t provide the prescribed information?

 

The answer is simple. If you fail to provide this information within 14 days of taking the deposit then the same legal penalties apply to you as if you had not protected the deposit itself. Failure to provide the prescribed information means that you are potentially liable as Landlord to a penalty of 3 times of the amount of deposit and in the meantime no valid section 21 notice to obtain possession can be served.

The message is clear. Just like ensuring that you need to use one of the approved schemes in taking tenants deposits you also need to provide your tenants with this prescribed information

:)

Edited by MrShed
Not req

7 years in retail customer service

 

Expertise in letting and rental law for 6 years

 

By trade - I'm an IT engineer working in the housing sector.

 

Please note that any posts made by myself are for information only and should not and must not be taken as correct or factual. If in doubt, consult with a solicitor or other person of equal legal standing.

 

Please click the star if I have helped!!

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  • 3 weeks later...

Thanks for your very good summary.

One question , though ,re:eligibility. My understanding was that if not specified, it was assumed for the agreement to be assured shorthold tenancy AST. But if the rental value is over 25000 /yr , than it is NOt an AST. Therefore , the tenacy deposit scheme does not apply. So who protects me ? we are in this situatiuon with our letting agent who is keeping a depositi of 3600 pounds unfairly !!!

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Thanks for your very good summary.

One question , though ,re:eligibility. My understanding was that if not specified, it was assumed for the agreement to be assured shorthold tenancy AST. But if the rental value is over 25000 /yr , than it is NOt an AST. Therefore , the tenacy deposit scheme does not apply. So who protects me ? we are in this situatiuon with our letting agent who is keeping a depositi of 3600 pounds unfairly !!!

 

You need to open a new thread an post in there. But the quick answer is, you have no legislative protection only protection through common law (i.e. going to court).

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.....It is also worth noting that any such deposits MUST be "money".

 

Housing Act 2004, S213 part 8 defines the deposit as "a transfer of property intended to be held (by the landlord or otherwise) as security...".

 

Doesn't this mean that a deposit could be goods and not necessarily money.

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No - you've missed the context :)

 

(7)No person may, in connection with a shorthold tenancy, require a deposit which consists of property other than money.

(8)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,

7 years in retail customer service

 

Expertise in letting and rental law for 6 years

 

By trade - I'm an IT engineer working in the housing sector.

 

Please note that any posts made by myself are for information only and should not and must not be taken as correct or factual. If in doubt, consult with a solicitor or other person of equal legal standing.

 

Please click the star if I have helped!!

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No worries :D

7 years in retail customer service

 

Expertise in letting and rental law for 6 years

 

By trade - I'm an IT engineer working in the housing sector.

 

Please note that any posts made by myself are for information only and should not and must not be taken as correct or factual. If in doubt, consult with a solicitor or other person of equal legal standing.

 

Please click the star if I have helped!!

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  • 8 months later...

"You are eligible for TDS protection if you meet the following two criteria only:

 

- You have an Assured Shorthold Tenancy (AST)"

 

what if I Had an AST and paid deposit after April 2007 but tenancy has now ended?

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I have a problem with my landlord & Letting Agent.

 

He didn't register my deposit, and after 3 months I asked them where it was. The next day they issued me with a Section 21. When I informed them their Section 21 was invalid without the deposit being protected they threatened me with solicitors. They then registered it with the DPS - 2 weeks after I complained and after the Section 21! The landlord started coming around shouting & banging on the door so I left anyway.

 

Now he' s applied to the DPS to keep the FULL deposit even though their inspection letter says the property was satifactory!

 

What do I do - how do I claim & how much does it cost. I'm a very very low income family struggling on 1 income & kids to feed! I can't afford to lose this deposit!

 

Thanks for any help. :-|

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  • 4 weeks later...
R

Therefore, we can see there are effectively four possible breaches:

 

a) Landlord has not placed the deposit in a scheme

 

What if the LL just returns an unprotected deposit to the tenant?

 

Then Judge cant rule 213(3)(a) protection or 213(3)(b) return of the deposit, so therefore cant enforce the 213(4) penalty clause, as follows:

 

"The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order."

 

Because it cant 'also' do something if it cant do the first...

 

Thoughts?

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What if the LL just returns an unprotected deposit to the tenant?

 

Then Judge cant rule 213(3)(a) protection or 213(3)(b) return of the deposit, so therefore cant enforce the 213(4) penalty clause, as follows:

 

"The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order."

 

Because it cant 'also' do something if it cant do the first...

 

Thoughts?

 

The tenant shouldt except it if legal action has already commenced.

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The tenant shouldt except it if legal action has already commenced.

 

I guess you mean "accept it"?

 

Why? Does not accepting the deposit mean you accept the money as full and final settlement?

 

Although my question was more around the interpretation of this....

 

Thanks...

Edited by DisgruntledTenant
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I guess you mean "accept it"?

 

Why? Does not accepting the deposit mean you accept the money as full and final settlement?

 

Although my question was more around the interpretation of this....

 

Thanks...

 

A LL may and try and argue in court that by accepting the deposit return you have accepted the matter closed in full and final settlement. To remove that argument, simply dont accept just the deposit once court action has commenced.

 

I think you might have meant 'Does accepting the deposit mean you accept the money as full and final settlement?'

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ive just renewed my contract of 6 months but want to move as the landlady has told me that there is going to be a rent increase. i cant afford anymore rent as we dont get any help either! as i only signed my new agreement 5 days ago, can i retracked it and give her 2 months notice. otherwise if i just give her 2 months notices, she said i still have to pay the 6 months rent. i definately can not afford to do that! HELP!!!!!!

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  • 3 weeks later...

I have a query is a little complicated:

My case, tenancy started 2005, renewed annually through 12 month AST contracts. The last fixed term contract for 2008 states the deposit would be secured in the TDS scheme. We moved to a periodic in early 2009, and now moved.

HOWEVER - I didnt notice the tenancy start date for the 2008 contract was dated 2007 - and prior to the legislation. The other dates in the contract, for rent increase, and creation date are all in 2008.

 

Is this case applicable to the 3x deposit?

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  • 2 months later...

Hi - I have a question about the 25k limit - if we signed an assured shorthold tenancy agreement (but our rent is over the 25k mark) which in itself states that the landlady is to pay the deposit in to a scheme within the 14 day period, surely this is legally binding irrespective of the fact that technically we shouldn't have signed that contract and not be eligable for the protection - as it is still an agreement between us and the landlady. What are your thoughts?

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My thoughts would be that the deposit should be protected (if the schemes will allow it) if it says so in the contract. However, if she doesnt do this, then the only thing you will be able to claim for would be your losses for breach of this term in the contract, which are £0.

 

You may be able to get a court order to 'force' the deposit to be protected, you think its worth it (and a scheme will accept it).

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Thanks Planner - that is what I suspected, I am going to take advice re. whether breaching that clause in the contract invalidates the contract as a whole - it is a very long story but basically our landlady is trying to retract a written agreement which superceded the original tenancy agreement and reinstate the said original tenancy agreement and as a result claim that we owe here a LOT of money.

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My LL has place the Deposit into a scheme 8 months after I paid it to him.

 

If I decide to sue, would it be possible for the DJ to make an order to have the Deposit repaid back to me (and 3 x Deposit) despite still being in the property?

 

LL also send a text message to me stating that My deposit was protected on the 20th Aug 2009. DPS state that the Deposit "Cleared" on the 25th August 2009 but was "Protected" on the 21st August 2009. Are there any issues with this as its quite clear the LL was not being truthful.

 

I am very confused as some say this and some say that and the bottom line is we don't even know what th Dj will say on the day.

 

Surely if the LL fails to comply with his Initial obligations then I have a right to sue on that basis. The award is a penalty for such and In most cases LL's are hoping that the Tenant os ignorant of the facts.

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