Taking over the management from my agent

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4 years ago

Taking over the management from my agent

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Taking over the management from my agent

Taking over the management from my agentHello all, Ive recently taken over the management of some of my houses from a letting agent.

I’ve received monies which are the tenants deposits with instruction from agent to put in a Deposit protection scheme.

Can I use these deposits as “rent in advance”.

Would I need to have new shorthold tenancy agreements?

Thanks for any help and advice

Gary Lycett


Mark Alexander

4 years ago

O.M.G - I think you might have opened a can of worms and Pandora's box at the same time here Gary.

First off, I don't think the agent had any right to send the money to you as it belongs to the tenant. Was the tenants money ever protected in the first place and what proof you you have of that?

If I were you I'd either rip the cheque up or send the money back to the agent stating that you think he's sent money belonging to your tenant to you in error. Hopefully that will be proof enough that your agent has screwed up if the 5h1t hit's the fan here.

I'm not even going to go near to your question about rent in advance at this stage. That's an incredibly complex area and the best brains in the land are still arguing the toss over the first case to be brought to court on this matter very recently. My advice is scrap that idea.

This is what should have happened, as I see it anyway:-

1) both you and agent contact tenant to advise what is happening.
2) Agents send you copies of all files including AST, deposit protection certificate and prescribed information, inventory, EPC, Gas safety Certificate, referencing report and anything else held on the tenants file
3) You and your tenant look at the AST to establish whether it comes to an end on termination of the agents contract. You and tenant decide whether a new AST is required and/or wanted.
4) Either way, once 3 is decided, tenant pays a new deposit to you and agent releases tenants existing deposit back to tenant. You then have 30 days to protect the deposit.

Here's the potential problem though as I see it. If you have banked the deposit money and it was paid more than 30 days ago there may be a case for the tenant to say that his money is unprotected. as it's been more than 30 days since the tenant paid his deposit it could be argued that he now has a claim against you for 3 X the deposit plus the deposit. What's even worse is that if the deposit as deemed as being unprotected you can't even serve a section 21 notice!

Neil Patterson

4 years ago

Unfortunately for you Gary, I think Mark is correct. If your tenants understand their rights and want to make life difficult for you they may be able to do so.

The agents may be at fault, but my best advice would be to make sure that your tenants are happy and that you are on good terms so that their options to take you to task never occur to them.

You are liable in law for any mistakes the agents make on your behalf. You may be able to sue the agents but if they don't have any money that might be a pointless exercise.

Hopefully, making friends with your tenants will give you time to sort out the mess the agents have left.

Rebecca Brough

4 years ago

Dear Gary
You can not use the deposit as rent in advance - you need to protect it in a scheme straight away - you have 30 days from receipt of the deposit. When you have protected the deposit you also need to give the tenant the prescribed information which you will find on the deposit protection's website - failure to do this has serious consequences.

Regarding the AST - you do not need to give the tenant a new agreement, but you need to write to the tenant will the change of details for payment of the rent direct to you and also give your contact details so the tenant can contact you if there are any problems, together with your full address so the tenant can serve any formal notices on you.

We are a firm of Solicitors, we offer a free online property management programme for landlords who manage their own properties - if you are interested the link is http://www.fidler.co.uk/letlegal

Tessa Shepperson

4 years ago

The time for protection of a tenancy deposit (and also service of the prescribed information) is 30 days from the time it was paid either to the landlord or to his agent.

I suspect in this case the depsit would have been paid more than 30 days ago, so you will be out of time.

In which case you will be barred from using s21 unless and until you return the deposit money to the tenants.

If they owe you any money you can offset this but ONLY if they agree to this - and this agreement should be in writing as you may need to prove it later.

You will have no defence to any claim the tenants may make for the penalty for non compliance (or at least not for the minimum award).

However, if the tenants paid the deposit less than 30 days ago - protect it ASAP!

James Noble

4 years ago

What happens to a deposit that was given about 10 years ago, well before the deposit scheme came into being. I have two houses on a buy-to-let. One in the scheme, and the other (10 years ago) not. I had assumed the deposit scheme was for new tenants. Is this correct?

andrew townshend

4 years ago

i make a point of meeting all my tenants, even those managed through agents, they all have my direct contact details and are free to contact me direct at any time, i find this helps tenant/landlord communications.

Robert M

4 years ago

The original post seems to imply that the landlord has no wish to hold deposits. There could be several reasons for this. It could be because he trusts the tenants implicitly, a desire to avoid the perceived complexity of deposit protection, or a lack of understanding of the law.

Secondly, there is the question mark of whether the agent has correctly protected the deposit. There appears to be some assumption in some replies that the agent has not dealt with protection correctly to date, which seems a little presumptuous.

There is no doubt that the agent holds the money on behalf of the tenants. However, he only does so as agent for the landlord. Ultimately, the landlord is responsible for the deposit and if he has decided to take the management of the property himself the agent no longer has powers and so I believe that the deposits should be passed to the landlord. Therefore, I would no be seeking to send money back to a third party agent whose instructions I had terminated.

I concede there is the question of whether the handover has been correctly dealt with. Ideally the deposit should always be protected. However, if you read the rules of some of the schemes it is impossible to handover deposits between two parties (an agent and a landlord) without being in breach of the rules at some stage.

I would certainly check with the agents what their arrangements for protection of the deposit were.

For what it's worth, if I did not want to hold a deposit I would write to the tenants advising them of this and suggesting that the deposit is used towards the next payment(s) of rent and asking for them to confirm receipt of the email. I think this is the neatest way to address the matter without presenting the tenants with papers that may cause them to ask awkward questions.

Otherwise, if the landlord wishes to hold the deposits I agree that he should protect the deposits immediately.

However, instinct tells me that it could be argued whether the date of receipt that the landlord should use in the protection he arranges should be that date that he received the money from the agent or the date the money was originally received by the agent. In raising this point I have to say I do not know the answer as I have never taken a deposit over during a tenancy and needed to consider it. For this reason the answer may be quite clear or obvious to those who have gone through the process (or others who like to post knowledgeably on matters and then change their minds when challenged).

Whatever the answer is, I'll bet it is not clearly spelt out in the statute and regulations, which were clearly drafted by individuals who had never dealt with a tenant deposit themselves – perhaps advised by Shelter.

Gareth Thomas

4 years ago

To James Noble - IF the tenancy of 10 years is the same person on the same terms and you've NOT issued and had signed a NEW AST since the introduction of the Deposit Protection laws, then you're still okay.

HOWEVER the minute you issue a NEW AST then you'll need to register the deposit within 30 days and give prescribed information.

BIG TIP! Get them to sign for the prescribed information at the time they sign the deposit protection certificate.

James Noble

4 years ago

Thanks for the information, Garath, (and apologies for slipping away form the main subject.) I've had the same tenant for over 10 years,with the same details on the agreement - which I've sent out each year, for renewal. It's not a 'new' AST, but the same one, signed each year... No use,I suppose? Sounds like I need to sort out the deposit?

James Noble

4 years ago

Sorry - should have said 'Gareth'.'

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