Landlord power can and will get Deposit Protection rules clarified

Landlord power can and will get Deposit Protection rules clarified

7:38 AM, 19th June 2013, About 9 years ago 66

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Landlord power can and will get Deposit Protection rules clarifiedThe potential implications of the ruling that a Statutory Periodic Tenancy is a new tenancy, according to the Court of Appeal ruling in Superstrike Ltd vs Rodruigues, has reverberated around the industry at lightening speed. Every popular landlord forum, blog and Facebook group has carried articles and thousands have been motivated to express concern. Indeed, my own article had over 3,000 readers and 100 comments left within just one day.

My initial reaction was one of pure panic and terror for what the implications might be. However, with time I have come to realise that once the powers that be recognise the implications of not adding further clarity to the legislation, I suspect we will receive the clarity we need.

So what is the ideal outcome we should all be hoping for?

In my opinion it needs to be confirmed that once a deposit is protected, either in a custodial or by an insured scheme, than it remains protected until such time as it is unprotected. The roll-over to a new statutory periodic tenancy is deemed to be a create a new tenancy and is seamless in terms of paperwork. Therefore, the rollover of the deposit protection and the prescribed information needs to be equally seamless and to remain valid providing it was dealt with properly within 30 days of the original fixed term tenancy being created.

Anything else would be ludicrous in my opinion. For example, if the clarification is that it is necessary to re-serve prescribed information again when a new Statutory Periodic Tenancy is created then most landlords would have to re-serve notice monthly. This is because a statutory periodic term is the payment cycle of rent which is typically every month. Thus, a new statutory periodic tenancy is created with every payment.

There may be variations on my suggested theme but as I write this article I can not think of a more logical one.

One thing is for sure and that is WE NEED CLARITY.

The Deposit Protection Providers will, no doubt, be meeting with the law makers to explain the urgent need for this clarification. Remember, their business models are in jeopardy too if landlords and letting agents all decide to stop taking deposits and find alternatives. I suspect the Council of Mortgage lenders are worried too!

Landlords and letting agents must add pressure for clarity

We can’t just leave it to the Deposit Protection Schemes, we need to make our voices heard.

I thought about starting a petition but then I decided it would be better for the industry and the press to be able to read comments from landlords and letting agents about how strongly they feel about this.

This is YOUR opportunity to have YOUR say.

Please leave a comment below and encourage all other landlords and letting agents you know to do the same

 



Comments

by Mark Alexander

9:57 AM, 21st June 2013, About 9 years ago

@Bernard Adey - I certainly agree with the first part of your post, I too have decided that doing nothing for the time being is the safest option.

As for all landlords selling up, I'm sure the auction houses would love that idea, as would the House Price Crash forum contributors. I can't see that happening though in reality. For some landlords this may the the straw which breaks the camels back but I suspect very few. There are lots of landlords who simply can't afford to sell due to negative equity and CGT as a result of remortgaging in the last property boom.

I do this Anon has made a very interesting point and it is that pressure on the deposit protection companies business models which gives me confidence that high level talks will be going on behind closed doors to ensure the required clarification comes through quickly.

by

10:26 AM, 21st June 2013, About 9 years ago

I certainly agree - I find that many landlords are still confused about what they have to do with deposits, this confuses matters even further. My understanding when reading the judgment is also that the deposit would have to be re-protected every month on the granting of a new periodic tenancy - it is ludicrous to think that you would have to do this every month.

We do need clarity and urgently

by Puzzler

12:57 PM, 22nd June 2013, About 9 years ago

Thank you Mary, you put it much better than I did, but that is what I was trying to present.

If Robert M is correct about the end of the tenancy then my excellent agent must have it wrong.They just ask for a minimum of one month's notice (which is the period of the tenancy after the end of the initial AST) commending when the notice is given. Technically that would be the mutual agreement circumstance that Robert describes. The point is that it does not have to end at the end of the period. Conversely, my agent takes all the rents on the 1st of the month regardless of the date the tenancy starts, whereas some take it on the same date each month as the beginning of the tenancy.

It seems Robert's argument would only apply if nothing was said in the agreement regarding notice and a properly drafted agreement would surely not leave that out. Nice to know I could insist on it, although I would not see the point.

by Puzzler

12:58 PM, 22nd June 2013, About 9 years ago

that should be commencing when notice is given

by

13:55 PM, 22nd June 2013, About 9 years ago

"If Robert M is correct …"

There's any doubt :)? One thing I always try to do is ensure that I make it clear when I am exploring possibilities rather than stating circumstances that are more certain.
____________________________________________________________

"If Robert M is correct about the end of the tenancy then my excellent agent must have it wrong. They just ask for a minimum of one month’s notice (which is the period of the tenancy after the end of the initial AST) commending when the notice is given. Technically that would be the mutual agreement circumstance that Robert describes. The point is that it does not have to end at the end of the period. Conversely, my agent takes all the rents on the 1st of the month regardless of the date the tenancy starts, whereas some take it on the same date each month as the beginning of the tenancy."

I used to do this. Did my head in. Solution? All fixed terms in my tenancies last between six and seven months. They end of the last day on the month in which the fixed period would otherwise be six months long. The tenant pays a proportion of the rent due in the first month and then on the first of each month thereafter. I never allow a statutory periodic tenancy to start, but all my "periodic" tenancies run on calendar month basis.
Result? All rents after moving in due on 1st, all notice periods must be one full calendar month. Bliss. I can agree any notice period without having to look at the file, except sometimes to remind myself when the fixed period ends.
____________________________________________________________

"It seems Robert’s argument would only apply if nothing was said in the agreement regarding notice and a properly drafted agreement would surely not leave that out. Nice to know I could insist on it, although I would not see the point."

The case came about where tenants posted the keys back claiming that returning the keys was an act of surrendering the tenancy with immediate effect. The Court did not accept this – they are not actually anti-landlord, believe it of not.

Yes life's too short to always insist of your rights. However, a tenant who decides to give notice in mid November expecting to leave you with accommodation to rent from the middle of December can be annoying. Having said that, the Christmas break period (as a landlord I mean the Christmas relationship break-up period) is excellent for filling vacant small units in January.

by Gary Nock

17:22 PM, 24th June 2013, About 9 years ago

I have read the comments on the forum with great interest. And while "doing nothing" is an option, then "doing something different" is as well.

I have always used an insurance scheme (my deposits) for both my landlords and myself as I liked the flexibility that it gave in dealing with disputes. However, I have been using them for two years and how many disputes have I had in that time across about 40 tenancies..................thats right.none. For which I have paid anything between £18 and £30 a tenancy, plus the "joining fee".

Now- Mark has mentioned that there may be a difference between the custodial and the insurance backed schemes..whether there is or not is yet to be seen. However there are three main scenarios:

1. The legislators come to their senses and decide once a tenancy is protected its protected until such time as it ends;

2. The lunatics take over the asylum and decide:
We have to re-protect every time a tenancy goes periodic;

3. The lunatics (and Shelter) take over and we have to re-protect at the start of each rent period;

Now I know that reassuring noises have been made by a lot of the experienced posters on the forum, and Mary Latham in particular which we should all be grateful for. But.....we are in a very "fluid" and uncertain time at the moment and one thing strikes me:

If you have to re-protect multiple times in custodial it costs you nothing.
If you have to do it in insurance backed schemes it costs you- again, and again.

So for the time being I am protecting new deposits with DPS. I know it doesn't give me the flexibility ( or the 1.% interest on the money in my client holding account) , or protection against being fined on a statutory periodic tenancy but at least I am putting myself in a position where I am building in some resilience into the situation. After all- the DPS is the Government backed scheme and are hardly likely to put themselves in a position where they sue themselves......or will they?

by

17:41 PM, 24th June 2013, About 9 years ago

Excuse this red herring, but don't count on the government agencies not suing themselves. The Environment Agency has had to sue itself in the past for breaching its own laws. Also, agencies are staffed by human beings, a lot of whom will go to inordinate lengths to blame others and avoid admitting mistakes: but when the roof falls in, they [the Agency] los pay damages and fines - which we, the taxpayers, have to fund.

by

18:01 PM, 28th June 2013, About 9 years ago

This is ridiculous. Again the government and the law courts seem to be penalising landlords. Renting a property is meant to be a safe investment yet time after time it seems that the courts and the government keep knocking Landlords.
Something needs to be done quickly. Clarification of the ruling is just the start - I'm seriously thinking of pulling out of property and investing elsewhere where I won't be penalised for being intuitive.

by Paul Anderton

22:02 PM, 1st July 2013, About 9 years ago

i use the tds for my deposit protection and when it becomes periodic they issue a new certificate stating periodic at no extra cost so surely this covers it.

by Mark Alexander

22:08 PM, 1st July 2013, About 9 years ago

@Paul Anderton - do you issue fresh prescribed information to your tenants?


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