TDS - Unprotected deposit that landlords refuse to return in full

[carpetfluff]

Hi,

 

My girlfriend and I moved out of the flat we had been renting for 12 months in August this year, and we are now having trouble getting our deposit back.

 

We phoned the landlords a couple of weeks before we were due to leave, to ask when they would inspect the property, and when we would have our deposit returned. They didn’t realise that our tenancy was coming to an end, and thought we were renting for 6 months and leaving in September! Consequently, they would not be in the area when we left, and didn’t inspect the property until a week after the tenancy had ended.

 

We spoke to them on the phone after they had inspected the property. They said that everything was fine, and that they would not be making any deductions from our deposit. They then told us to contact the agency with regards to getting our deposit back.

 

When we phoned the agency, they told us that they would get confirmation from the landlords, and then post us each a cheque within 5 working days. No cheques came, so we called them back. They said that they’d made a mistake, and that our flat was an ‘introduction only’ property – meaning that our deposit had been paid to the landlords at the start of the tenancy.

 

On 8th August 2008 (the date we moved in) we paid the agency one month of rent in advance (£700), plus a deposit of £1050 (£1750 in total). The agency said that they then deducted from this fees that the landlords owed them, and then returned the remaining £970 to them by cheque in the post. However, this cheque was not sent to the landlords until the 1st of September.

 

The landlords claim that because the agency posted them the cheque with no accompanying letter, they didn't know that it was our deposit, less fees. They say that they thought it was the advance rent payment, and so paid it into their bank. They tell me that they believed that the agency had paid our deposit into a tenancy deposit scheme, and thought that it was protected throughout the duration of the tenancy. They say that they only discovered that this was not the case when they spoke to the agency at the end of the tenancy.

 

The landlords are now refusing to repay us the full £1050 deposit, saying that they will only pay us the £970 that was returned to them by the agency. They argue that the £80 difference accounts for agency fees that we should pay, which is entirely untrue (I have confirmed this with the agency). Furthermore, they say that they will not be able to pay us until the end of the month, and possibly in two instalments.

 

Was it the agency's responsibility to protect our deposit, since it was in their possession for the first 14 days, even though it was eventually paid to the landlord who did not protect it either?

 

Also, the landlords are husband and wife, however the wife is the only landlord named on the tenancy agreement. The husband seems to deal with all the finances, but should we be dealing directly with his wife as she is the official landlord?

 

I understand that we may be entitled to 3 times our deposit in compensation, because our deposit was not protected. I’m just unsure who is at fault, is it the agency or the landlords?

 

Any advice would be greatly appreciated.

[DevilWearsPrimark]

I am not sure who is at fault to be honest, though the general view is that the ultimate responsibility lies with the LL.

 

Your LL is the person named as such on the AST agreement - so in this case the wife.

 

However, I have recently won a TDS case plus 3x penalty against my former LA, even though he claimed to be acting on a let-only basis.

 

I would send a letter before action to both LL and LA stating your intention to bring court proceedings for full return of deposit plus 3x penalty unless it is returned within 14 days. If it isn't, then issue court claim with both LL and LA as defendants and let the judge decide who bears the responsibilty.

[Guest Old_andrew2018]

IMHO the landlord is at fault if they have not protected the deposit then they are at fault, and it is they who are liable for legal action.

Secondly if they have an argument with the agency then they should take it up with them, they risk having to pay compensation for their failure, there are experts who I expect will come along to offer advice.

 

andy

Edited September 15, 2009 by old_andrew2007

[carpetfluff]

DevilWearsPrimark & old_andrew2007, thank you both for your advice.

 

I was about to send a letter before action to the landlord, when I thought I should probably check that our deposit had not been protected by any of the tenancy deposit schemes.

 

I started by phoning The Dispute Service, who told me to my surprise that our deposit had been registered with them by the letting agency! They were able to confirm that we were listed as the tenants, that the tenancy period was correct, and that the full amount of £1050 was protected. Unfortunately they were unable to tell me exactly when the protection had started, so I do not know whether this was done within 14 days of payment.

 

TDS -Frequently asked questions

 

3.2. Does the agent have to hold the deposit as stakeholder?

 

Yes. The legislation effectively does away with the ability to hold the deposit as “Agent for the Landlord” and to deploy at the landlord’s discretion. It prohibits the holder of the deposit from disbursing the deposit without the agreement of the landlord and tenant. A disputed deposit can only be paid out following a decision by an adjudicator or the courts. Even if a landlord wishes to insist that the Agent holds the deposit as “Agent for the Landlord”, the agent would not be able to release any of the deposit to the landlord, at any point during the tenancy.

 

The agency seems to have broken their agreement with The Dispute Service, by releasing our deposit to the landlord (with fees deducted) on 1st September 2008 (at the start of the tenancy) without our agreement. Does this mean that our deposit is no longer protected?

 

I suspect that the agency tried to charge the landlord a fee for protecting the deposit, which she then refused to pay. The agency then released our deposit to the landlord without our consent, which she then took no further steps to protect (as far as I am aware). Should I contact the other tenancy deposit scheme companies, to check that the landlord has not gone on to protect the deposit herself since it was paid to her?

 

Additionally, the agency never sent us a certificate of registration, or any details of how to apply for the release of the deposit. Should I now ask the agency for the certificate of registration? The agency copied and pasted the text of the following leaflet to the bottom of a letter which we signed (beneath our signatures), agreeing to the conditions of the letting process.

 

What is the Tenancy Deposit Scheme – An explanatory leaflet for landlords and tenants

 

http://www.thedisputeservice.co.uk/resources/files/TDS%20E%20What%20is%20TDS%20A4.pdf

 

Nothing in the letter really stated that The Dispute Service would definitely be used to protect our deposit. Does any of this generic leaflet information count towards the information we were supposed to receive?

 

In another letter sent to us by the agency shortly after, it states:

 

Details of the proposed tenancy are as follows:

Deposit: £1050.00 – held by agent as ‘Stakeholder’

 

Is this sufficient information? I’m unsure how we would go about proving that we never received the relevant information, as it is hard to prove a negative.

 

Could someone also please explain to me what the ‘initial requirements of an authorised scheme’ are, as mentioned in section 213 and 214 of the Housing Act 2004? I have read somewhere that these should be in the tenancy agreement; however ours simply states that “If the landlord takes a refundable deposit it will be held in accordance with one of the tenancy deposit protection schemes, details of which will be notified to you separately.”

 

Do we have a case for 3 times the deposit in compensation, or should we just try to get our deposit back via The Dispute Service?

 

Thanks again (sorry for the long-winded post).

[carpetfluff]

I have just come across the following information in document TDS A – Rules of membership.

 

http://www.thedisputeservice.co.uk/resources/files/TDSA-Rules-of-Membership-Edition-4.pdf

 

8.1 The Housing Act 2004 (c. 34) Part 6 Chapter 4 paragraph 171 (3) states that:

 

Where a landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of 14 days beginning with the date on which it is received.

 

8.2 For TDS this means that within 14 days of the tenant paying over a deposit to a member, whether or not the funds have been cleared:

 

8.2.1 the tenant(s) must have received the information specified in paragraph 14.2.3 by its inclusion in the tenancy agreement; and

 

8.2.2 the information specified in paragraphs 14.3 must have been lodged on the TDS tenancy database.

 

Paragraph 8.2 comprises the initial requirements of the Tenancy Deposit Scheme (Housing Act 2004, Section 213 (4)).

 

I was unable to find paragraph 14.2.3. I think it might have been a typo, referring to paragraph 14.3.

 

14.3 The Dispute Service is obliged to collect and maintain appropriate data on each deposit that it protects. Members must record the following data and enter it directly on the TDS database within 14 days of the start of a tenancy:

 

a Names of all tenants party to the tenancy agreement;

b Contact details of tenant(s);

c Name and address of the deposit holder;

d Property address to which the deposit relates;

e Total value of the deposit;

f Date on which deposit is paid to the Member…

g …and date on which tenancy begins if different.

 

If they are unable to enter the data directly, Members may record it on form TDS 5 and submit it to the Scheme within 7 days of the start of the tenancy in order that details may be entered within the time specified. There will be an extra charge to cover transcription costs, fixed by the Board from time to time, which must be paid before the data can be entered.

 

I should mention that the landlords produced their own assured shorthold tenancy agreement, to save on agency fees. Has this resulted in the agency breaching the initial requirements of TDS, by not ensuring that the required information was included in our tenancy agreement?

Edited September 14, 2009 by carpetfluff