Judge declaring anything in advance as a DEPOSIT?

Judge declaring anything in advance as a DEPOSIT?

10:10 AM, 17th October 2022, About A year ago 26

Text Size

Has any Judge let Tenants on a Section 8 countersue by deciding money in advance is a DEPOSIT that should have been protected?

Even after Johnson vs Old 2013 He appears satisfied the contract says money isn’t a deposit for any damages etc but possibly still wants to set a ‘president’ that any money taken above one month’s rent is legally a deposit!

This is a specific example from our County Court ‘section 8 eviction’ hearing. We are the landlord.

As part of a Shorthold Tenancy, One month’s Rent for the FIRST MONTH of living in our property was taken IN ADVANCE and One month’s Rent for the LAST MONTH was taken.

Whilst the judge acknowledged that the contract states clearly it is not a deposit and is not security against any damage, he looked at one of his books and decided ‘any’ money in advance might be a Deposit and therefore needed to be secured via the Deposit Scheme and allow a tenant’s counterclaim into the many thousands. Flying in the face of the Johnson vs Old case on the matter.

May we ask please, is he correct?

By enlargement, we suppose that if he makes this ‘Legal President’ then if a tenant pays 6 months or a year’s rent on entering tenancy, all but the first month, may become a deposit?

Lesley


Share This Article


Comments

Nikki Palmer

11:55 AM, 17th October 2022, About A year ago

I think the term you are looking for is setting a precedent

Graham Bowcock

12:05 PM, 17th October 2022, About A year ago

Whether or not money taken in advance is (or should be) treated as a deposit will depend on the wording of the agreement.

There is no rule against a rent period that is not monthly (e.g. 6 monthly or annually); the issue is over poorly drafted agreements where the landlord, for example, refers to a monthly rent, then asks for 6 months up front. That's different than referencing a 6 monthly rent in the agreement. In the former case, there is a risk that a Court would treat the payment as a deposit.

What I don't get in your scenario (which does lack a bit of clarity) is why you wouldn't expect to pay for the first and last month. If you have been in a proeprty for 12 months (just for example), have you paid 12 months of rent? It's amazing how many tenants get confused by this and wonder what happened to their first month's rent in advance! Well, it covered the month's occupation.

David Houghton

12:23 PM, 17th October 2022, About A year ago

Sounds very like a deposit to me. Pay it to the deposit protection service before any hearing and you are covered, otherwise you may have to pay back 3 times the amount. The delay wont matter once it's paid in.

Luke P

12:52 PM, 17th October 2022, About A year ago

I was the original test case for this (Piggott v Slaven) and whilst at the time the Judge ruled that anything over and above the contractual rent due shall be deemed a deposit, I believe this was later determined to not be the case. These are only County Court Judges and so I don't think any of it is binding. From that that moment (2006/07) I have only ever taken the rent due and a home owning guarantor.

David

12:58 PM, 17th October 2022, About A year ago

I'm not sure why you're still asking this question when you've already received multiple replies on several other forums.

Graham Bowcock

13:40 PM, 17th October 2022, About A year ago

Reply to the comment left by David Houghton at 17/10/2022 - 12:23
But remember a deposit cannot exceed 5 weeks rent.
The essential thing is to read the tenancy agreement.

N Locksley

15:05 PM, 17th October 2022, About A year ago

Reply to the comment left by Graham Bowcock at 17/10/2022 - 13:40
Yes - I suspect we are about to see a wholesale change in renting criteria. Given the fact that s21 is likely to go at some point and eviction notice is being extended up to 6 months, then any landlord is going to require a guarantor who is a home owner with good equity - although it is more likey that some Landlords will require bank guarantors, not just for the initial term but ongoing and then tenants will find it more difficult to rent as the banks will want deposits too against the guarantees. When will government learn that landlords need certainty and the more they make it difficult to eviict problem tenants, the more costs they will add to tenants....and until they create a tenancy division in the County Court where things don't take 2 years to evict, ......

Lesley

15:37 PM, 17th October 2022, About A year ago

Reply to the comment left by David at 17/10/2022 - 12:58
Going through, replying to them now. When praying for a enlightenment, one casts a wide net 🙂 Thank you.

Lesley

15:51 PM, 17th October 2022, About A year ago

Reply to the comment left by David Houghton at 17/10/2022 - 12:23
Thank you. It may be too late to relent and pay money to Protection Service, as there has been two hearings already, one cancelled minutes before due to a flooded roof
and second in which Judge wouldn't hear proof and gave Tenants who arrived last minute, 6 weeks more in the property, in order to counter sue. One being REPAIRS needed after they refused access for over a year and the DEPOSIT issue.

Lesley

15:52 PM, 17th October 2022, About A year ago

Reply to the comment left by N Locksley at 17/10/2022 - 15:05
I will neveer be a Landlord again!

1 2 3

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now