Late tenancy deposit protection fines

Late tenancy deposit protection fines

8:54 AM, 11th February 2014, About 9 years ago 72

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I spoke to someone on the NLA helpline this morning who told me that the law is unambiguous – landlords registering deposits later than one month after receipt are liable to be sued for three times the deposit amount.

Looking online, I am unable to find definitive reference to this, and, most importantly, how are courts tending to implement this?

Are landlords being being subjected to these levels of punitive damages?

Can anyone help me with this? Late tenancy deposit protection fines

I am interested to know primarily how this is working out in practice. I would imagine that if it were the case that tenants absolutely have the right to 3X the deposit amount in the case of late registration, there would surely be an epidemic of lawsuits going on right now?

Do you have any direct, recent experience of how this is being implemented or have no cases yet come to court under the new rules yet?

Thanks in advance.


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Industry Observer

10:48 AM, 11th February 2014, About 9 years ago

Romain 100% correct again!!

This is becoming a habit!!

Romain Garcin

11:12 AM, 11th February 2014, About 9 years ago

Reply to the comment left by "Industry Observer " at "11/02/2014 - 10:48":

Are you trying to seduce me Mr. Industry Observer?

Industry Observer

11:32 AM, 11th February 2014, About 9 years ago

Ha Ha

Well first I don't know if you are male or female as your profile, like mine, is annoyingly minimalist on detail!!

But as my neighbour is amazingly called Romain - now you're not stalking me are you?!! - and he has a beard and deep voice I am assuming you are male!!

Plus I am beginning to wonder if you are actually a solicitor and therefore coud sue me for harassment for free!!

In all seriousness I always give credit where it is due - and of course criticise strongly where it is not!!

Eric Kennedy

11:59 AM, 11th February 2014, About 9 years ago

Reply to the comment left by "Mark Alexander" at "11/02/2014 - 09:34":

No they are in the process of moving out. What happened was - I'm a first time landlord - three sets of deposit were paid and I was waiting for the fourth. I knew I needed to register the deposit - but I didn't realise the penalties for not doing so were so extreme. There's a chance that it all gets sorted out - albeit I will have this hanging over my head for the next six years - and we go our separate ways, and in any case it's a lesson which has certainly been learnt. One piece of advice which comes up again and again is that smaller landlords making an error like this might "only" have to pay a 1X penalty, but even that is pretty catastrophic. Well, maybe catastrophic is putting it too strongly. I only wish I had known how bad the outcome can be for not following the letter of the law. I even used a solicitor to get everything done properly - she did stress the deposit needed to be registered, but if it was me I would really have double underlined and put in bold the potential consequences of not doing so. I suppose we live and learn...

Mark Alexander - Founder of Property118 View Profile

12:02 PM, 11th February 2014, About 9 years ago

To gain an understanding of the scale of this problem just take a quick look at this Google search >>>

Mark Alexander - Founder of Property118 View Profile

12:13 PM, 11th February 2014, About 9 years ago

Reply to the comment left by "Eric Kerfoot" at "11/02/2014 - 11:59":

Hi Eric

I agree this is an expensive way to learn a lesson. There are several other potholes to fall into as well. Not getting a professional inventory, not having RGI and guarantors, not notifying utility companies of tenant changeovers, what to do if the tenant doesn't allow access for a gas safety check ......... and so the list goes on and on and on.

I can never understand why newbies choose the DIY route when they could have absolutely everything done for them by an ARLA bonded agent for £34.99 + VAT pcm. Please see >>>

Robert M

13:11 PM, 11th February 2014, About 9 years ago

Whilst the law may be quite clear at the basic level, it is not fit for purpose. For example, if you have a fixed term tenancy, which is renewed three months before the end date when do you "receive" the deposit for tenancy two?

I would protect immediately, but this then gets you into a debate with mydeposits who cannot understand why the value of deposits protected exceeds the amount in your client account.

As an aside, as far as I am aware protecting a deposit is not the same as categorically stating you have received the full amount. So with deposits paid in instalments I would protect in full amount within 30 days. Who is to say this is right or wrong?

To repeat, whilst the law may be quite clear at the basic level, it is not fit for purpose.

And as for the muppets who handle the dispute resolution service and decided that the tenants did not need to give one month's notice despite this being a clear requirement in the agreement .... but I digress.

Industry Observer

14:26 PM, 11th February 2014, About 9 years ago

Mark – at 12:02 the only reason there is a big flock of vultures is because Landlords and agents get it wrong. It’s the same as if we all drove at the correct speed limits all the time there’d be no profit in speed cameras. Get it right it is simple enough

@ Robert M later – the Law is perfectly fit for purpose the problem is users not understanding it or, more likely, railing on at it and not wanting to understand it. With respect the answers to your two questions are perfectly simple and obvious.

Let’s assume for ease it is a 6 month AST started 1.1.14 and now today only 6 weeks in for whatever reason a renewal is to be done – maybe a partner moved in, whatever. The 30 day clock starts ticking the day the existing tenancy ends. By all means you or anyone else can argue otherwise but if you take it as that and protect within 30 days you cannot go wrong.

Example two your staggered deposits. Lets assume a £1000 deposit from 4 intended tenants paying you £250 each.

Sam dates the tenancy starts 1.1.14 though that date is immaterial, what matters is Tenant A gives you their £250 on 22nd December, tenant B on 31st December, tenant C on 18th January careful now you are getting near the cliff edge. Tenant 4 you know at 18th January cannot give you their £250 until 24th January.

So you protect and issue PI on £750 deposit on 18.1.14 or at the very latest by 21st January.

When you get the other £250 you re-protect for the full £1000 within 30 days of receiving the last instalment – 23rd February. But you don’t unprotect the £750 until ready to do the £1000 in one hit and by 21st February.

There is no difference here to having a £50 rent increase and increasing the deposit by £50 same system

Industry Observer

14:28 PM, 11th February 2014, About 9 years ago

@Robert M

Sorry meant to add that it is not the Scheme Administrator's who say a tenant cannot be obliged to give a month's notice it is the OFT. They are just going by their position on it from several years ago.

Be interested though to learn a few more facts about that case, such as whose tenancy agreement was it, what was the source? Home made, NLA, RLA or an agent's own unless you are the agent?

Robert M

14:38 PM, 11th February 2014, About 9 years ago

The law may be clear, it is just not fit for purpose.

Nobody seems to be able to answer a very simple query. If you have a fixed term agreement that is renewed (say) three months before the end date with deposit to roll over when do you "receive" the new deposit?

On the basis that protecting a deposit is not confirming receipt of it, I would protect within 30 days of the new agreement. This just leads to having to explain to mydeposits why the value of your protected deposits is greater than the sum on the client account. They were a bit confused. I offered to adopt a different approach if they would explain it in writing and give an indemnity against any loss. That was twelve months ago, still waiting to hear.

On a different subject, the muppets who deal with disputes need some training, unless anyone can explain why notice is not required when a tenancy agreement clearly specifies it is.

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