Deposit protection for already protected deposit?

Deposit protection for already protected deposit?

13:29 PM, 10th June 2021, About 6 months ago 12

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I would like to seek the views and experiences of landlords on a particular deposit protection issue that I have come across. I have recently increased the rent on a property, which is on a rolling contract for couple of years now. The amount of increase was following conversation with and agreement from the tenant. Therefore, no issue with the rent increase.

Although the rent has been increased, the deposit remains the same as the original amount. The deposit was duly protected with one of the reputable companies at the time of original tenancy and all relevant documentations served, signed and recorded.

The question I have is whether there is a need for the deposit to be re-protected. I have conflicting views from NRLA and the company which protects the deposit. The latter is of the view that ‘the law is not clear on this matter; however, we view this as a material change in the tenancy and therefore there is need for the deposit to be re-protected; ……and this is our company’s policy’.

The reason for this query is two-fold: firstly, re-protecting the deposit involves costs and admin work for the landlord; secondly, what would be the rationale for re-protecting a deposit which is already protected and there has been no increase in the figure?

I am hoping that views and experiences of landlords would help us all in this matter.

Krish



Comments

by Simon Hall

10:01 AM, 11th June 2021, About 6 months ago

Hi Krish, based on my experience there is NO need to re protect the deposit if it was protected correctly in first instance despite you have increased your rent.

Compliance of intial deposit protection is crucial after deregulation bill 2015. I have had Court Case in 2016 which I won successfuly although integral issues of Court case were not in relation to your post but defendants barristers flagged this issue up. In particular they stated that, deposit should have been re protected following rent increase. Judge challenged to see evidence on what basis deposit should have had been re protected. Accordingly other side failed to produce evidence and Judge ignored their initial assertions.

So in summary, in my opinion you only need to "Re "Protect Deposit" if you failed to do so correctly in first instance.

by DSR

11:55 AM, 11th June 2021, About 6 months ago

I thought the whole point was to show a deposit was protected properly when it needed to be at the outset. As far as I can see there is no legal justification to 're-do' it if the situation has not changed.
Interestingly enough the same could be asked when a deposit is due to be topped up after a rent raise. As the deposit can be no more than max 5 weeks rent, for some of my tenants where there has been a raise I also ask the deposit be topped up to match the 5 weeks level. At the moment I am awaiting a top up deposit payment from the tenant where on I shall as the DPS (who I use) how to best do this. As long as I have from them written confirmation what I need to do then that covers my back. The original deposit had been protected and so legally that status has not changed even if it is added to.

Or does someone else know different???

by JTH

14:09 PM, 11th June 2021, About 6 months ago

Hi Krish, I have not heard of having to re-protect a deposit due to a rent increase, as long as you are increasing the rent as detailed under a term in the original Tenancy Agreement.

If you are issuing a new Tenancy Agreement at a new rent, then yes, you will require to re-protect the deposit and issue the prescribed information.

by Judith Wordsworth

15:24 PM, 11th June 2021, About 6 months ago

If you are happy to leave the amount of the deposit at the original amount then you need to do nothing. If you want to increase the deposit to 5 weeks worth then give the deposit people a quick ring and ask whether you can add this amount to the original ID or you have to have a separate ID for this smaller amount ie have 2 deposits on protection.
If you are redrafting the AST to show the increased rent then I think you have to get the deposit refunded and then re protect BUT you would have to make sure that you reserve al the necessary documents before signing the new agreement AND serve the Gas Safety certificate before the new tenancy starts.

Its all getting so stupid jump through hoops for landlords I'm getting out!

by PJB

18:06 PM, 11th June 2021, About 6 months ago

Hi Krish,
The tenancy deposit protects one and only one AST agreement. If the agreement permits a rent adjustment and, in your case, permit an adjustment to the deposit, then this should be, theoretically, OK. However, I do not think MyDeposits, for example, will allow the deposit amount to be altered.
In all other cases, including when an AST agreement "continues" on STATUTORY periodic terms, a new agreement exists requiring a new deposit protection.
Before I get lambasted, agreements that continue on contractual periodic terms are OK. While statutory periodic terms technically creates a new agreement, I believe this is largely overlooked by deposit protection providers, basically because they do not ask if the continuing periodic agreement is statutory or contractual.

by John Dace

20:15 PM, 11th June 2021, About 6 months ago

The stupidity on this and many other issues is becoming unbearable. You couldn't make it up! Debate about points like this - is there any common sense left in the world? The silence from our ‘supporting’ bodies is deafening!
The ‘spanner in the works’ method of driving landlords out of business by UKGov is incredibly unfair and equally stupid as tenants are now also suffering in droves. I cannot fathom why things have gotten this bad (and going to get worse) without the voice of reason being heard. Do we even have a voice?

by Judith Wordsworth

8:48 AM, 12th June 2021, About 6 months ago

Reply to the comment left by John Dace at 11/06/2021 - 20:15
The only voice we have is to not rent out our properties for AST's. This would give Local Authorities the headache of rehousing people they are responsible for; the Government seriously consider tax breaks ie CGT if we house those on benefits for a certain period of time. If our rental properties cannot meet EPC band C in a few years, and thousands of properties won't, we won't be able to rent these properties out anyway.

by David Judd

7:35 AM, 14th June 2021, About 6 months ago

If you have changed the terms of your contract, which you have, ie the rent increase, then you must re-protect the deposit. A rolling tenancy is only if the terms of the tenancy remain the same. As soon as you change something, it must be in writing and must in effect becomes a new tenancy agreement.

by Ian Narbeth

10:47 AM, 14th June 2021, About 6 months ago

Reply to the comment left by David Judd at 14/06/2021 - 07:35"If you have changed the terms of your contract, which you have, ie the rent increase, then you must re-protect the deposit."
David, this is incorrect. The deposit relates to the specific tenancy. That has not changed.
"As soon as you change something, it must be in writing and must in effect becomes a new tenancy agreement." Also incorrect. Making a change to a tenancy does not per se create a new tenancy. Contracts are varied all the time without them becoming new contracts. If this were not the case, it would be impossible to vary a contract because doing so would create a new one!

In the case of a rent increase, that is not even a variation of the tenancy in the way that, say, agreeing to allow pets or an additional occupier might be. This is because the tenancy contemplates either expressly or impliedly that the rent might be increased.

by JB

10:57 AM, 14th June 2021, About 6 months ago

What a waste of brain power. Its no wonder rents are going up

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