Do I need to re-protect my deposits?

Do I need to re-protect my deposits?

16:46 PM, 18th December 2012, About 9 years ago 20

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Do I need to re-protect my deposits?

I have been told that I need to issue another Deposit Protection Certificate when my fixed term Assured Shorthold Tenancy agreement “AST” reverts to a Statutory Periodic Tenancy “SPT”. Is this correct and if so, do I need to pay to re-protect the deposit with the insurance backed schemes such as My Deposits, The Dispute Service “TDS” and Deposit Guard?

I have also heard that the Deposit Protection Service “DPS” service need to be informed when a tenancy reverts to a Statutory Periodic.

I have looked at all of the deposit protection scheme websites to try to find the answer for myself and if anything I’m even more confused than when I first started looking into this.

Please put this question to you panel of experts at Property118 as I am very worried that if this is right, along with no doubt most other landlords I am breaking the law and potentially liable to pay 3 times the deposit back to all of my tenants whose tenancies have rolled over onto SPT’s since 5th April 2012. In my case this would amount to liabilities which would probably bankrupt me and given that the law is that all deposits needed to be protected within 30 days post 5th April 2012 there’s not a thing I can do about it.

I am a landlord in England so this question relates primarily to the laws in England and Wales. However, I am considering investing into Glasgow too so if anybody can tell me how it works up there in Scotland, given that they only have custodial deposit protection schemes, I would also be interested in that too.

Thank you for your help.

Gwen Jones

UPDATE ADDED BY MARK ALEXANDER – 13:54 on 19th December 2012

Tweets from DPS and MyDeposits below – HOWEVER – also see comments from TDS and others below this post.

Comments

by Mark Alexander

16:27 PM, 19th December 2012, About 9 years ago

@twitter-343420702:disqus please advise what percentage of your members extend the protection when AST become SPT's? My reason for asking this question and my concern is that most landlords and letting agents will not realise that this is a requirement of your scheme and the deposits will not be protected after the initial fix term. This is VERY worrying given that, for many, the 30 days will have expired, the consequences of which are the potential of being fined 3 X the deposit plus, having to return the deposit and no right to serve a Section 21 notice until the deposit has been returned, regardless of any damage that has been caused.

by Mark Alexander

17:29 PM, 19th December 2012, About 9 years ago

Hi Antony, that's what I thought until I read the response from TDS. I'm hoping that My Deposits don't operate the same way as that's who I use and I have not been informing them when AST's become SPT's, not have I been issuing new deposit protection certificates. I can see that Pandora's box may have been opened here because if the TDS rules are common amongst all insurance backed deposit protection providers I suspect that most landlords in England and Wales will be guilty of breach of deposit regulations. Will every landlord potentially have to stump up 4 X deposit or will the insurance backed deposit protection providers be held accountable for not making the rules of their schemes sufficiently clear to their customers. It's scary stuff isn't it?

by Mark Alexander

19:33 PM, 19th December 2012, About 9 years ago

@iamalandlord Hi, we do not need to be informed if a tenancy reverts to Statutory Periodic. This is the same for Enlgand & Wales & Scotland— The DPS (@The_DPS) December 19, 2012

by Mary Latham

20:38 PM, 19th December 2012, About 9 years ago

There are two issues here.

1. Is a Statutory Period Tenancy (which arises at the end of a Fixed Term Tenancy where NOTHING is changed from the original terms) an new tenancy

2. Does a deposit need to be re-protected and documents re-issued when a Fixed Term Tenancy rolls into a Statutory Periodic Tenancy

To complicate matters the Tenancy Deposit Protection legislation supports all the terms and conditions of the Protection Schemes (and these often differ from one to another) which can be changed from time to time. This means that there may be no changes to legislation but there may be changes to a schemes rules and these must be met by the landlords who are using that scheme.

The Golden Rule

Always keep up to date with any changes to the Deposit Scheme that you are using. If they offer an email update service - sign up for it. Check the rules on their web site regularly and make sure that you are compliant. Failure to comply with the scheme rules IS covered by Tenancy Deposit legislation and is not reliant on other legislation to support those rules

TDS has posted in accordance with the rules of that scheme that appear on their web site, these may differ from other schemes
Mark, I also use MyDeposits where my deposits are protected until the tenancy ends or there is a significant change to the Tenancy Terms, or a new Tenancy Agreement is put in place
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by Mark Alexander

22:41 PM, 19th December 2012, About 9 years ago

UPDATE

DPS have confirmed that deposits remain protected regardless until they are unprotected - this applies to England, Scotland and Wales.

It appears that legislation supports whatever the scheme rules are.

My concern, based on the response from The Dispute Service "TDS" , is whether their rules have been effectively communicated. I don't think they will pass the test of "clear fair and not unreasonable" if challenged in court. From what I can see they updated their website in January this year to effectively say that a deposit protected under their scheme becomes unprotected at the end of the fixed term unless they are notified. That could affect a lot of their scheme members in England and Wales if they are unaware, especially those who didn't advise them of AST reverting to SPT's within the prescribed 30 days.

I envisage blood on the streets when tenants hear of this and begin pursuing landlords who are TDS members for a refund of 4 X deposits.

If TDS procedures were to write to all members, say two weeks before the end of the fixed period, asking them if they wanted to extend cover, I think TDS would have a good defence against any class action from affected landlords. However, to my knowledge they do not follow such a procedure.

I have not had official confirmation from My Deposits on their policy, however, I understand from an unofficial source that their position mirrors that of DPS.

The above is just my personal unqualified opinion, it is not a legal opinion.

by

0:51 AM, 20th December 2012, About 9 years ago

Mark; just spoken to mydeposits and they have requested an email re this deposit situation.
They have stated I am CORRECT.
Could you email them at
info@mydeposits.co.uk; putting the queries that have been raised and they will respond definitively and then let us ALL know.
As regards the differences they say there may be different scheme conditions which are more to do with charges.
One may be in breach of scheme conditions but NOT the deposit law!

by

1:58 AM, 20th December 2012, About 9 years ago

With my|deposits a protection remains valid in the event that a fixed-term AST reverts to a SPT. The member does not need to formally confirm the SPT extension with us nor do they need to re-issue the DPC or PI.

by Mary Latham

5:18 AM, 20th December 2012, About 9 years ago

I have been asked if the rules of a Deposit scheme "supersedes" the HA 1988. The rules of the deposit schemes are covered by the Housing Act 2004 here http://www.legislation.gov.uk/ukpga/2004/34/schedule/10

Now that each scheme has clarified the rules that apply to the scheme the question that remains is

When a Fixed Term AST rolls into a Statutory Periodic does a new Tenancy begin? I am very interested in Industry Observers commments on this and if you are reading this let us please continue the discussion. I am sure that there are many landlords who are very grateful to you for making them aware that, if their deposit is covered by the TDS, they need to take action when the Fixed Term comes to an end. I do not use that scheme but I was totally unaware of this rule and I am guessing that I am not the only one?
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by Mark Alexander

23:14 PM, 23rd December 2012, About 9 years ago

Hi Mary

If a statutory periodic IS a new tenancy as Industry Observer believes, would that not mean a landlord isn't able to seek possession for a further six months?

Perhaps I'm missing something here but I'm quite certain that a landlord can not seek possession within six months of the start of a new tenancy. You know your way around the legislation far better than me so if you think I'm right on this point please can you tell me which piece of legislation I need to read to confirm this?

I have to admit that I am becoming very confused by this because, as suggested by Industry Observer, I have read section 5 of the Housing Act 1988 and it seems to support his point of view.

However, I am also pretty sure that hundreds of judges will have granted possession under section 21 well within 6 months of tenancies having reverted to SPT's, regardless of whether deposits have been re-protected, which of course is a requirement for all new tenancies.

by Mary Latham

14:45 PM, 24th December 2012, About 9 years ago

I am posting this on both threads because I have no idea which one it needs to be on now!
This is what the legislation says (Housing Act 2004 Section
213)

(1)Any
tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time when it is received,
be dealt with in accordance with an authorised scheme.

(3)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 30 days (amended
in April 2012 via Localism Act 2011)
beginning with the date on which it is received.

(4)For the purposes of this section “the initial requirements”
of an authorised scheme are such requirements imposed by the scheme as fall to
be complied with by a landlord on
receiving such a tenancy deposit.

----------------------------------------------

Unless someone can point me to other legislation my
understanding of this is

I must

·
The relevant date for
protection of the deposit is “as from the time when it is received” since
the deposit for a Statutory Periodic Tenancy was “received” at the start of the first Fixed Term Tenancy nothing
changes when the SPT begins. NOTE A new tenancy
that begins as a Periodic Tenancy
must be treated in the same way as a Fixed Term Tenancy.

·
I have 30 days from the
relevant date in which to protect the deposit in an authorised scheme of my
choice

·
I must comply with the “initial requirements” of the
scheme that I have chosen to use

·
I must give my tenants, and
any third party who has provided the deposit, The Deposit Protection Certificate
and Prescribed Information provided by the scheme” within the period of 30 days” of the relevant date.

I do not
need to

·
Protect my deposits again
after the initial protection is in place unless this is a, “initial requirement” of the scheme.

·
The scheme that I use is
MyDeposits and the scheme only requires me to put a new protection in place
when I issue a new AST (Fixed Term or
Periodic) or make a substantial change(s) to the original AST.

·
My deposits remain protected
until I unprotect them and at that point the scheme would notify my tenants and
therefore I don’t need to do anything more to meet legislation even when a
fixed term AST ends and the tenancy continues as a Statutory Periodic Tenancy.

·
It would seem that TDS changed
its “initial requirements” in
January 2012 and that they now need to be notified when a Fixed Term AST comes
to an end and continues as Statutory
Periodic Tenancy in addition to requiring a new protection to be put in place
when a new AST is issued. I understand that there is no charge for this but a
new Protection Certificate will be issued and this must be given to the tenant
along with the Prescribed Information again.TDS email the landlord/agent well before the end
date of the Fixed Term to remind them but if the record is not updated the
deposit protection will end on the end date of the Fixed Term.
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