Old Deposit?

by Readers Question

8:24 AM, 10th May 2016
About 2 years ago

Old Deposit?

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Old Deposit?

I was wondering where I stand on this. I have a long standing tenant who’s tenancy agreement started in October 2004 and was originally for 6 months and than after just reverted to periodic tenancy at the end of the 6 months. old

I have never protected the deposit.

What sort of issues could this cause me if any.

There is no issues with the tenant they are as good as gold, pay on time and I hardly hear from them but I am reading conflicting issues on the net about old tenancies and I wondering is this going to cause me a problem legally.

Many thanks

Steve



Comments

Neil Patterson

8:31 AM, 10th May 2016
About 2 years ago

Deposits taken before April 2007 which became periodic before that date:

Here you are not in breach of the law and you don’t have to protect the deposit now.

However the deposit must be protected or the money returned to the tenant (or the person who paid it) before any s21 notice can be served. Landlords will not be liable for any financial penalty for non protection.

Otherwise – the new rules will not help you if you have failed to protect a deposit taken after April 2007. They were passed just to deal with the problems associated with the Superstrike decision.

Please see >> http://www.property118.com/superstike-deposit-protection-rules-reminder/76014/

Kelly Joanna

10:59 AM, 10th May 2016
About 2 years ago

The law changed a year or maybe two years ago. You had to log regardless of whether the tenancy started before 2007. The consequences are the same - you cannot gain possession and can be fined for up to three times the deposit amount. Get it logged and protect yourself. Doing it late is better than not doing it at all.

Michael Barnes

23:07 PM, 10th May 2016
About 2 years ago

Reply to the comment left by "Kelly Joanna" at "10/05/2016 - 10:59":

Sorry, you are wrong, Neil is right.

Trendo

2:20 AM, 11th May 2016
About 2 years ago

How will this affect deposits paid for ASTs which start before 6 April 2007?

Due to recent court cases, the obligation to protect the deposit applies to tenancies that started before April 6th 2007 but the deposits are affected in different ways depending on when this tenancy went periodic.

If the tenancy started before April 6th 2007 and turned into a periodic tenancy before that date, then you should either return the deposit in full or protect it within one of the schemes before serving a Section 21. The penalty of 1 to 3 times the deposit for non-protection within 30 days of receipt does not apply.

If the tenancy started before April 6th 2007 and was either, expressly renewed with a new tenancy agreement or turned into a statutory periodic tenancy after the date, then the deposit should have been protected within 30 days of that happening. In these cases, the financial penalties do apply and to serve a Section 21 you should return the deposit to the tenant first.

Kelly Joanna

15:29 PM, 12th May 2016
About 2 years ago

I have double checked and I'm only wrong if he never wants his property back. The financial penalty doesn't apply though so I stand corrected.

Ian Simpson

10:48 AM, 14th May 2016
About 2 years ago

I have another similar case - I purchased an HMO in 2011 with about 12 current tenancies , from a variety of agents. These agents held on to the deposits until last year when I decided to self manage and they have thus unprotected all the deposits, paid them over to me, and I have now paid to protect them with My-Deposits. All well and good. The only problem is one particular tenant , who got his tenancy through an Agent called Ben Daniels. I believe he paid a deposit to this agent when he started the tenancy before I owned the property. Ben Daniels has now gone into liquidation, in around 2012 or 2013 , and I was not informed and only found out this a roundabout way (through a neighbouring estate agency) . There is now no way of contacting anyone to do with this now ex-agency. I thus believe the tenant's deposit has been swallowed up by this unscrupulus agent.

Question : when the tenant decides to give notice, will I be liable for his deposit ...? Even though I have never received it ...?

Puzzler

10:58 AM, 14th May 2016
About 2 years ago

As Kelly says, it must be protected if you want to issue a Section 21. Unless you are 110% certain that is never going to be the case, I would protect it now. Because at that time it might be more problematic, the fact that you want them to leave can cause breakdown in goodwill and you would have to return it to them without question before you could end the tenancy. The Deposit Protection Service has a good website which explains everything. I have not used them but a friend has and it is free.

Romain Garcin

11:02 AM, 14th May 2016
About 2 years ago

If there is not requirement to protect the deposit unless a s.21 is to be served then there is no advantage in protecting the deposit now.

You must simply remember to protect the deposit if you ever intends to serve notice.

Puzzler

11:54 AM, 14th May 2016
About 2 years ago

Romain, you can only issue the S21 by returning the deposit without deduction as the 30 days period has now long elapsed. Which you might not want to do if the tenant is in arrears. Or if the tenant agrees to deductions, which they might not. Or are suing the LL for 3x the deposit....

Technically, the OP should return the deposit now, have the tenant pay it again and protect it within the 30 days. While all are on good terms. See below. Protecting it at the last minute will not wash. Or they can just write it off. If it's not particularly large it may not matter.

http://www.landlordsguild.com/tenancy-deposits-and-serving-a-section-21-notice/

Romain Garcin

12:08 PM, 14th May 2016
About 2 years ago

Reply to the comment left by "Puzzler " at "14/05/2016 - 11:54":

Deposits related to tenancies which started before April 2007 do not require protection but must be protected before a valid s.21 notice may be served. See posts above and also: https://lettingmate.uk/blog/1-bye-bye-superstrike

Therefore there is no advantage in protecting the deposit until the landlord intends to serve notice.

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