What is the current position regarding an unprotected deposit?

[UpOverTheEyeballs]

Hello all, I haven't been on CAG for a while (previously related to credit and debt issues), however, I now wish to clarify the situation regarding unprotected deposits.

 

Briefly, we have an AST (commenced Apr '08) that is now continuing as a periodic and the deposit was never protected at it's commencement.

 

We are still tenants, and will be continuing as such for the immediate future, however, we wish to submit a claim for return of the deposit and, if appropriate, for 3x deposit plus any allowable costs and interest charges as well.

 

However, in reading up on here I am somewhat confused as the law which covers this issue appears to have been subject to various case law interpretations and revisions since it's origination. The sticky threads on here all appear to relate to 2008 but later posts seem to contradict some of those earlier comments.

 

There also appears to be issues between submitting a N208 or an N1 claim since one appears to be for purely return of a deposit and the other for a wider claim.

 

I've been reviewing various posts and it looks like whilst previously, being a continuing tenant did not preclude claiming for return of the deposit plus a penalty, now one can only claim for the penalty.

 

For example the following thread provides useful information but it appears out of date when compared to other comments elsewhere.

http://www.consumeractiongroup.co.uk/forum/showthread.php?126261-TDS-Court-Claims-Wording

 

If someone could perhaps point me in the direction of the relevant posts that can shed any light on this I would appreciate it.

 

Many thanks

 

UOTE

[mariner51]

The only Law now pertaining to ASTs started after Aor 07 is the Localism Act, which came into effect 6 Apr 2012. Pre-Apr 12 case law has now been superceded

Others may have time to detail rel changes or you can read the Act elsewhere.

Basically a LL can now be sued for non-protection of deposit, even if T has been vacated. The T levels are now 1-3x deposit, at Judge's discretion, depending on intent severity.

As yet there is little Case Law on Localism Act for precedents to have been created.

A T can still sue LL for return of deposit via SCC path. Even if deposit is returned, the ex-LL is still open to action for non protection via the expensive multi-track CC route.

A deposit cannot be reclaimed by T until T has been vacated.

Previous changes to TD, now incorporated into Localism Act, improved T's security, but the LA pot reduced the amount a T could claim for non-protection, ie no longer a fixed 3x deposit.

Interest is only payable on a deposit for the time taken to refund after the Order has been made by Court.

 

IANAL, just my interpretation.

[UpOverTheEyeballs]

So that's why I was becoming confused when reading 08 and 11/12 posts. Seems like 'the system' is pushing back against tenants (again).

 

Mindful that we are not tenants that have vacated the premises but ongoing tenants, that we cannot sue for the deposit to be returned, however we can commence an action for 1x - 3x that deposit as a penalty.

 

Weird.

 

Are there any links to any example wordings or posts that are specifically post 6 April to provide further guidance?

 

Thanks in advance

 

UOTE

[raydetinu]

suggest you read the localoism act itself.

or go on the lanlordzone site, which may have further explanations.

You can sue for deposit to be retuned and non-protection/notification, however this will throught the multi track CC and will be expensive, £1k plus in fees plus legal representation.

the compensation is purely at the judges discretion and may not in fact impose, if deposit is returned promptly and it is LL first offence, so no gurantees.

As far as I am aware nobody has actually gone this route yet, purely on the grounds that it will be very expensive if you loose and have to pick up defence costs as well.

We all thought the previous rules were ok but different judges interpreted it in different ways so this cannot be guranteed when barristers get involved etc.

Also if you start the legal route, once deposit protected nothing to stop LL issueing you with a section 21 notice for repossession!

[mariner51]

"Seems like 'the system' is pushing back against tenants (again)."

 

Not true IMO!. Unlike previously T cab mow sue for non-protection even if the T has ended, the LL cannot issue a valid s21 ubtil the deposit has been protected in an approve scheme AND the 'prescribed info' provided to T, both within 30 days of depsoit being paid. As a balance, a T cannot rely on compensation fixed at 3x.

There are still unscrupulous LLs & Ts still out there as well as those by virtue of necessity.

[UpOverTheEyeballs]

So, as existing tenants, it appears that we are f@#*ed in that the landlord can keep the deposit in his pocket (as they always did in the past) and unless I want to pour money down the tubes as legal fees there's no financial penalty that the courts can or will apply.

 

I appreciate the invalid S21 issue, however, that's not important, ATM at least.

 

Nice one Mr Government, glad to see you're thinking about surfs not (land)lords for a change!

 

(frustrated) UOTE!

Edited November 17, 2012 by UpOverTheEyeballs

[UpOverTheEyeballs]

Thanks for the heads up on this.

 

I have been reading up on the Localism Bill and it would appear that as an existing tenant, whilst I commence an action to obtain return of the deposit, I can do so in respect of a penalty for breaching the timescales ( by over 3 years) and that would be for x1 up to x3 dependant upon what the court felt was correct. It also appears that if the claim is valid a x1 penalty, plus any costs would be the minimum.

 

I'll continue to read up but if anyone else wants to jump in and pop a comment on here feel free.

 

Thanks all

 

UOTE

[UpOverTheEyeballs]

Just found this, para 6 is interesting and I've pasted it in here (hopefully that's not wrong)

http://www.rla.org.uk/landlord/newsletter/february2012/page2.shtml

 

When the new rules come into effect if you fail to protect the deposit/give the prescribed information within 30 days of receiving the deposit then the tenant (or a third party who pays towards the deposit) can claim a penalty. Former tenants are able to make a claim as well. There is a minimum penalty of once times the deposit with a maximum of three times the deposit. The Court is given a discretion and unlike under the old system where there was a mandatory three times the deposit penalty. The Court will take various factors into account such as why you failed to protect the deposit, how long it was before you protected it and so on. Orders for penalties can now be made independently of orders dealing with the deposit itself.

 

>>> This sentence is relevant to our situation >>>

If the tenancy is still continuing the Court must order the full deposit to be repaid to the tenant or paid over to the custodial scheme (DPS).

 

Where the tenancy has ended an order to repay must be made and if the landlord (or agent) still holds the deposit an order to repay it can be made in favour of the applicant. Such an order, once the tenancy has ended, can be an order to repay the deposit in all or in part. This leaves it open for the landlord to make a claim on the deposit eg. to claim for rent arrears.

 

 

And here's another post that scopes out from a 2011 view how the new law will go forwards as regards a tenant making a claim

 

= = =

 

By way of contrast, if the tenancy is continuing, the Court can order that the deposit be paid to the tenant or paid into a scheme within 14 days of making the order.

http://www.stephens-scown.co.uk/blog/2012/09/the-tenancy-deposit-scheme-a-further-update/

 

= = =

 

And another one here. This is the second time I have read that ongoing tenants could be entitled to obtain a refund of the deposit.

The sentence below appears in the following link, however, there are no para numbers so I've included it here for clarity.

 

http://www.landlordlawblog.co.uk/2011/04/18/tenants-legal-making-tenancy-deposit-claim/

 

= = =

 

A theme prevailing within the articles is that is is (clearly) more beneficial for a tenant to apply for the penalty but exclude the deposit, since an unreturned or unprotected deposit equals no S21 allowability.

 

I quote from here http://blog.painsmith.co.uk/2012/07/23/i-havent-protected-the-deposit-what-can-i-do/

 

"If a section 21 Notice cannot be served this would then mean that a landlord could not rely upon this mandatory no fault ground to bring possession proceedings. A tenant would then find themselves in the position of almost being akin to an assured tenant only able to be made the subject of a possession order if one of the grounds to Schedule 2 of the Housing Act 1988 had been made out. "

 

So perhaps my earlier distaste with how the new rules appeared to work needs to be acknowledged as incorrect.

 

= = =

 

So now it appears I have to get my head round how I prepare the penalty claim, which I see is to be made under Part 8 of the Civil Procedure Rules as before. The problem with this, however, is that it appears to be a much more costly route than before. Am I right on this, as some posts refer to costs around £1,500 rather than hundreds?

Edited November 18, 2012 by UpOverTheEyeballs
adding stuff

[raydetinu]

correct costs will be expensive to set up and even more costly if LL defends.

Note you cannot sue for any penalty; just the fact of non- protection or notification; the court/judge decides if any COMPENSATION is due and to what amount.

You will probably need a solicitor and possibly a barrister! to make the application.

As said before if you start the action, although case can still proceed, nothing to stop LL protecting deposit at that point and then issueing a section 21.

Why do want to start an action unless you are about to leave the property?