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Deposit paid to DPS 7 days prior to end of contract, can I still claim?

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In the last few weeks, both the landlord and agent have been threatening the return of our bonds unless we allowed them to paint 1 of the bedrooms and the living room, while we were still in the property, due to the fact they had not yet found new tenants for when we move out! This caused me to look into whether our deposit had been placed in a protection service or not.


On Friday 17th june, I phoned the 3 deposit protection agencies, and all 3 said there was no record of our deposit being paid to them. We asked the agent for our deposit ID and after 6 days of him fobbing us off saying he wasn't in the office, he finally gave us an ID. However we checked, and the deposit had only been paid into them today, which is about 358 days AFTER we paid it to them.


Due to the agency and the landlord's blatant disregard for the law(with regard to paying our deposit within 14 days of receiving it), and also our tenancy agreement (having viewings with 30 mins notice, landlord turning up out of the blue with painters etc) we would want to teach them they can't treat people like "£" signs, and to try to get them to respect the laws that are meant to protect tenants from this kind of thing.


My question is, is it worth putting in a claim now? Our tenancy expires on 30/06/2011, started on 01/07/2010, and was renewed on 01/02/2011. The deposit is £530. Will the fact that the agent has now placed the deposit into the DPS scheme affect our claim? And also the LBA (letter before action) will require us to wait 14 days before submitting to court, by which point our tenancy agreement has ended, so will that make a difference or will the LBA count as the start of the action, meaning we were still tenants when we started the claim?


Thanks for any help you can give

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Short answer is no. LL can protect up to the date of the hearing, not the date of the claim.


It also seems that due to a recent appeal (Gladehurst Properties) that once you moved out you could not submit a claim if the deposit had remained unprotected. And even if it were already submitted it is possible the appeal court ruling would mean that you would lose if you subsequently moved out before the hearing.


Some proposed amendments would close these loopholes if they are accepted.

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My comments apply only if the premises are entirely within England and Wales, and only if you were granted a shorthold tenancy (under which you - and your spouse/partner/children, if any - had exclusive use of a seperate dwelling, which was not shared with another tenant nor with the landlord), and only if 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 Scheme


(a) 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 give you the prescribed notice. And if the tenancy still exists when the hearing date arrives, a claim for the return of your original deposit would fail.


(b) If the tenancy has ended: you CAN sue for the return of your original deposit; but you CANNOT sue for the statutory penalty of three times the amount of the deposit - except, perhaps, if your claim is made under section 213(5) of the 2004 Act.


The outcome is uncertain. It is not entirely clear whether a claim under section 213(5) can succeed after the tenancy ends; nor is it certain whether or not a landlord can comply with section 213(5) more than 14 days after the deposit was paid; and it's likely that a landlord, faced with a claim for repayment of the original deposit, will allege disrepair by the tenant in order to try to persuade the court to let him keep it.



If you paid a deposit, read the FAQs about the tenancy deposit scheme, under which you might be entitled to sue for compensation, under the Housing Act 2004, if you were granted a shorthold tenancy:


Tenancy Deposit Scheme


Tenancy Deposit Protection - First High Court Decision


TDS eligibility, implication of breach and legal questions answered



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, or at any time before judgement (if later), the court will not be able to award the penalty of three times the amount of the deposit.


This was NOT affected by the High Court decision in Potts v Densley. In Tiensia the landlord had protected the deposit at a time when the tenancy still existed; in Potts, where the landlord protected it after the tenancy had terminated, 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 has decided, in Gladehurst Properties Ltd v Hashemi (19th May 2011), a case in which the tenancy deposit was never protected by the landlord, 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 said this can only be the case if the tenancy is still on-going; so the penalties for non-protection of the deposit are NOT available to the tenant after the tenancy has come to an end [see paragraph 37 and 42 in the Judgement]. The tenant therefore CANNOT succeed in a section 213(3) claim once the tenancy is over.


I quite realise that Gladehurst was wrongly decided. Where the tenancy still exists, the court has no jurisdiction to order the return of the deposit, the purpose of which is to meet any rent arrears or disrepair when the tenancy ends.


But the practical effect of Gladehurst is that the tenant must make any claim 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.



In Potts the tenant might have won if she had raised the related point that the landlord had failed to provide her with the prescribed information pursuant to section 213(5) [see paragraph 56 in the Judgement].


She failed to do so. She based her claim solely on section 213(3) [failure to protect the deposit], and so lost the case. If you mention section 213(5) in your claim, you might win!


If you sue DURING the tenancy, if the deposit hasn't been protected you need to claim a breach of section 213(3) [securing the deposit] and section 213(5) [provision of prescribed information]. If you claim only under section 213(3) you are likely to lose, just as the tenant lost in Potts. You need to claim under both.


If you sue AFTER the tenancy, if the deposit hasn't been protected you need to claim a breach of section 213(5) [provision of prescribed information]. If you claim under section 213(3) you are likely to lose, just as the tenant lost in Potts and in Gladehurst. You need to claim under section 213(5).



As a result of Gladehurst, it is clear that 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.


The High Court decided in Potts that the tenant can win a claim under section 213(5) if the landlord fails to provide the prescribed information, even if the deposit is actually protected; and in Gladehurst the Court of Appeal did not say that a section 213(5) claim could only be made during the tenancy.


If you sue, the crucial matter is probably whether the court hearing takes place BEFORE or AFTER the tenancy has ended, not whether the tenancy still existed at the time you began the court proceedings.



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, because that deposit is security for non-payment of the rent and for damage during the tenancy).



While the deposit is not protected, any 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 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.



I urge you to contact your MP on-line. Now that any application for failure to protect made after the tenancy ends will fail, the Government is highly likely, if pressured by MPs, to make major changes, which could be far worse for landlords than the situation as it had been before Gladehurst.



This is a self-help forum in which users share their experiences. Assistance is offered informally, without any assumption of liability. Use your own judgement; obtain advice from a qualified and insured professional if you have any doubts.


This posting gives general guidance only. It is not an authoritative statement of the law. Consult a Solicitor for specific advice before deciding on any course of action.



Further information:


Assured and Shorthold tenancies - A guide for tenants


Renting and Leasehold - Advice from Shelter



All posts are opinion only



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