Help! I didn’t protect the tenancy deposit

Reply to the comment left by Mr.A at 31/10/2022 - 13:41
In the old days you didn't have to know all the rules so much as today. If you are an amateur landlord and cant be bothered to spend several hours reading and understanding all the regulations you would be wise to use a good agent. By a good agent I mean ones that are on the ball with all the notices that have to be served on the tenant prior to the tenancy commencing. All the other electrical and gas checks and don't forget the EPC etc. etc.
Many times on this website people are advised to go down the DIY route to find a tenant. Most of the times things will be OK. However when things go wrong, rent arears, animals moved in, additional people moved in then you will realise that being wronged doesn't make you right and in fact cost you a lot of money if you have't jumped through all the hoops prior to and during the tenancy.

Reply to the comment left by David Houghton at 31/10/2022 - 14:50This is dangerous misinformation. The cases cited are no longer good law.
Section 184 of the Localism Act 2011 made changes to S213 and 214 of the Housing Act 2004 which effectively overruled them.
You cannot now avoid the prescribed penalty of between 1 and 3 times the amount of the deposit if it is not protected within 30 days (changed from 14 days by the same Act), whether or not you return it.

Reply to the comment left by David Houghton at 31/10/2022 - 14:53
She repaid the deposit by bank transfer so it will appear on her bank statement - what further evidence could possibly be required?

Are you suggesting that she should also issue the prescribed information to the tenant after paying her own money into a deposit scheme? Sorry to say it but the idea is ridiculous.

There are 2 separate issues here. The deposit protection failure has been put right by its return. The tenant has 6 years to bring a claim for the initial failure and May be awarded between 1 and 3 times the deposit. Legal aid isn’t available. If you get a “letter before action” don’t pay a lawyer, use the money to offer 1.5 times the deposit to settle the claim instead. Make sure you have in writing that it’s in full and final settlement of any claim if your offer is accepted. Try and agree that it will first be applied to bring any arrears down before any balance is paid.

The second issue is possession, provide the how to rent book now, and any epc that wasn’t provided before. If the property has gas then provide any gas cert not shown at the start. You will come unstuck if there wasn’t any gas safety cert in place at the start though. Courts have accepted late provision of a cert when there was one at the start. If you don’t go down s21 route and use s8 then legal aid will be available for a deposit claim as a counterclaim against arrears and you will risk costs if you lose a defended claim. If the deposit issue wasn’t settled by offering 1.5 of the payment you may have to go to offer the max 3 times deposit to settle this rather than paying legal costs for an issue you won’t win. I’d advise avoiding making any s8 claim until the arrears are more than 3 times the deposit amount. If using ground 8 wait until there are 2 months arrears + 3 times deposit amount if no settlement of the deposit issue. You don’t want to pay a court fee, risk legal costs of hers and not get possession at the end.

Reply to the comment left by Dis Belief at 01/11/2022 - 01:42
Not protecting the deposit is a continuous offence so the limitation act 1980 doesn't not apply . (6 year) rule. You can remedy it by protecting the deposit, same as gas certificate. It has to be done before tenant issues procedings and before s21

Reply to the comment left by Seething Landlord at 31/10/2022 - 23:00
The tenant can claim this is something else. The landlord can claim the "extra" deposit back once the tenant has ended.

The important thing is to tick all the boxes before serving s21 notice.

Further it is also worth (in this case) to talk to the the tenant so he knows when the s21 order comes through the council will be obligated to rehouse him. (which is what he wants) and his interests are best served by not opposing the order

Reply to the comment left by David Houghton at 01/11/2022 - 09:19
Failure to protect a deposit within 30-days of receipt is not a continuing offence but a one-off breach of statutory duty, which cannot be remedied by subsequent behaviour.

I really hope that nobody is acting on your flawed advice.

Reply to the comment left by Seething Landlord at 01/11/2022 - 09:40
Seething LL is correct.
30 days, thats it.
There is no way to remedy this. No get out of jail. It is cash machine fodder for NWNF solicitors.
and its not the penalty (1x rent or 1.5x etc) its the legal fees that are crippling.

put bluntly, if deposit not secured within 30 days then its free cash to your tenant as compensation and NWNF blank cheque. If they are being evicted anyway then their attitude would be "why not !"....

So sending it back actually made this a bit worse unless you have spare cash to lodge the same amount and wait to get it back again.

re: my first post, use open access to find a barrister to aid you to find the best exit. You need a settlement agreement and maybe a sweetener or you'll have years of this hanging over you.
3 hrs (poss 2) barrister costs if it goes smoothly, I would budget £3k and you'll have got away lightly. The one I used was brilliant but it prob breaches rules to post his details here.

So disappointing people have made comments without reading all of the original post! Come on chaps, Kate needs help!

Kate, the mistakes you have made are done, there is only so much you can do to undo it.

I would suggest, withdraw the S21 or just do nothing to progress it and let the time expire.

You've returned the deposit, but you need to get the tenant to sign a receipt to confirm that is what they received back from you. Word it as though the matter is closed, so you can use that against any future claim. You could tell them at the same time that you won't pursue that Section 21 notice. But get the receipt signed! You could even bung them a few quid as a "good will gesture"/apology/settlement which would stop any future claim.

Leave the tenant insitu, accept the 90% and wait for them to move of their own accord.

Get on top of the rest of it, gas certs, epc etc, then calm down and wait.

Make sure your buildings insurance is for rented property and it might be worth getting damage and contents added, just in case they trash the place.

The arrears that build up will always let you serve a Section 8 at a later date if required.

Obviously, without going into your financial situation, I've assumed you can afford to do this.

It is worth reading both Citizens Advice and Shelter websites as they detail how the tenant can act against you, so you know what you are up against.

Hi Kate,
Do not worry here
You have taken all the correct legal steps
You have returned the deposit
So all you need to do now is issue the tenant with the other compliance documents such as How to rent guide, EPC, EIcR and gas cert and then re-issue your s21

The councils default setting is to tell you the s21 is invalid and tell the tenant to stay put until you get bailiffs.

As for the CAB telling your tenant to take you to court… well this in my opinion is poor advice and as a former senior CAB adviser CAB should know better.

The tenant in this situation will not win much in this case as the deposit has been returned and you also kept that deposit safe although not protected.

I deal with No win No fee law firms everyday who are purposely targeting landlords for non-protection and trust me not 1 of my cases as got to court and 9/10 I have been able to prove the solicitor is incorrect.

Do not loan your tenant money you are not a bank and they are grown ups