“TDS” clarifies scheme rules on when to re-protect deposits

“TDS” clarifies scheme rules on when to re-protect deposits

12:17 PM, 4th January 2013, About 11 years ago 8

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TDS The Dispute ServiceWhen do you need to re-protect tenancy deposits? Clarification from TDS

Following an article on Property118 before Christmas some agents and landlords expressed concern as to whether they are approaching deposit protection at the end of the fixed term in the correct way.

We are happy to give some clarification on the matter, and to advise landlords that we will soon be making our processes more user friendly.

What do I need to do to ensure that I am complying with TDS rules?

Please note that these points only relate to members of the TDS Tenancy Deposit Scheme.

  • I am a letting agent member of TDS, and the fixed term tenancy is becoming statutory periodic: No action is required. You have an annual membership and your deposits remain protected until you remove them or until your membership ends. You do not need to re-issue a certificate or prescribed information.
  • I am a landlord and the fixed term tenancy is becoming statutory periodic Members of TDS for Landlords need to update the status of the tenancy to statutory periodic. You do not need to re-issue prescribed information. A revised certificate is generated in your online account but it isn’t mandatory to give this to the tenant.  You and your tenant will receive reminders that the fixed term is ending and that action is required so that protection of the deposit continues. At present, if you do not update the record to statutory periodic then protection will end.

TDS for Landlords is less than one year old and although we’ve had really positive feedback on how quick and easy it is to register deposits, we know this part of the process can be made easier for landlords. As such, we will soon be updating the system so that tenancies in TDS for Landlords will automatically become statutory periodic at the end of the fixed term and remain protected. We have been aware of this issue but it has been really useful to hear the views of landlords on Property118.

Even if your deposit protection is automatically renewed it is important to ask yourself – is my tenancy definitely statutory periodic?

A statutory periodic tenancy is created when the end date of a fixed term tenancy has been reached and allowed to continue on the same terms. You don’t need to issue new prescribed information when this happens.

However, if any material changes have been made to the original agreement, such as an increased deposit amount or a change in tenants, then under the scheme rules, you must re-protect the deposit.

A renewed agreement requires the deposit to be re-protected and prescribed information to be re-issued.

If you make changes to the agreement but don’t update your deposit protection you may be in breach of the Housing Act. You will have created a renewed agreement but left the deposit registered as though the original agreement was continuing on the same terms.

It is for the courts to decide if the law has been followed correctly. However, we don’t yet have any case law on deposit protection at the renewal of a tenancy. Therefore based on advice from DCLG and given the surprisingly strict penalty imposed by the Court of Appeal in Ayannuga v Swindells, at TDS we advise our members that it is better to provide too much paperwork than not enough.

Note from Property118

The above is an official press statement issued by TDS. Their communications officer Chris Kendall is subscribed to this thread in order that he may received notifications of any comments made and so that any questions you raise can be dealt with promptly.

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13:17 PM, 4th January 2013, About 11 years ago

Interesting to read their view but I have to say that I am very unconvinced TDS are the experts in term sof what the judge will decide in any court case. I have no problem with them confirming they don't need you to do anything under their scheme rules, but the law is outside their control and in my opinion, they are very dangerous in not clarifying what within their statement is their scheme rules and what is their interpretation of the law, but ultimately only the courts can decide. Try looking at the CLG guidance on the EPC, they start by saying this is our opinion about it but only the courts can decide (therefore you make your own decision and take your own risk. TDS opinion would be worth a lot more if they underwrote that if it was wrong they would pay all and any fines you received. If they won't do that (and i would not!) then their advice should be treated accordingly, not fact, simply another opinion.

Mark Alexander - Founder of Property118

13:28 PM, 4th January 2013, About 11 years ago

Welcome back to the UK David, I've been following your debate with Mary Latham on LinkedIn on the subject of Deposit Protection with interest. It's good to see you commenting here on Property118.

Industry Observer

14:44 PM, 4th January 2013, About 11 years ago

I couldn't agree more with David if I tried. It is the Law that matters, whether that be Statute or Instruments, Regulations or whatever flowing from them. And the opinion (clarification) from a Court of Record if there is any doubt or dispute.

No-one's opinion or any Organisation's opinion on any of these issues - TDP related, EPC or any of the other myriad of areas our industry has to cope with - matters more than anyone else's, only eventually what a Court says. As David says opinion from anywhere else is just that - even CLG who draft the Statute.

It is most certainly not for any of the TDP Schemes to say what is or is not the Law. Yes they can pronounce on their own Scheme Rules, though even then sometimes they seem to have difficulties being consistent even in interpreting those.

Members may think they can sue a Scheme (and here I do thinkl potentially TDS and Mydeposits are on dangerous ground) but they will have disclaimers in their REules you can guarantee saying that legal opinion should always be sought.

The most sensible comment in the statement is that there has not yet been a Court decision on whether or not PI needs to be re-served when a tenancy goes periodic WHICH at law is clearlyY A NEW TENANCY so the TDP provisions and requirements relating to a new tenancy come into play. The problem with periodics is because they are so passive and just seem to happen, even in Scheme terms, it is natural to assume you don't need to take any action.
That may be true in terms of the actual deposit itself, but on the PI side it could very well be a different matter. Why take the risk?
As TDS say in the one really useful piece of advice in their statement "....at TDS we advise our members that it is better to provide too much paperwork than not enough." In other words bet hedging, but wise words.
It's a bit like not bothering with a full electrical check and certificate if the Law says you don't need to. Have a tenant electrocuted in a property and will you wish you'd got one. Same with a periodic AST - be challenged by a tenant because you didn't re-serve the PI and you may just wish you had.

Mary Latham

15:26 PM, 4th January 2013, About 11 years ago

Thank you for clarifying these important points. I am really pleased that TDS will soon bring the system for landlords in line with MyDeposits and continue to protect the deposit until it is unprotected, unless a new tenancy agreement has been put in place or a significant change made to the original terms. I know that you do email landlords to remind them at the end of the fixed term but we have seen posts, on several fora, from landlords who say that they did not know. Obviously these deposits are now not protected and I am concerned for the landlords who have broken the law and do not realise. Could you please contact these landlords to make them aware of the situation, I assume that your system will know which deposits are now unprotected, and the seriousness of not having updated their records. I realise that some of the tenancies will have ended and some landlords may have protected the deposits with another scheme but there are certain to be some that have become SPT and are now unprotected.

This has been a good lesson to us all to keep an eye on our chosen Deposit Protection Scheme rules and make sure that we meet all the requirements to ensure that we do not break the law and face the very serious consequences that we saw in the Ayannuga v Swindells case.
Well done Property118 for raising this important issue and in particular for highlighting it to TDS who are now going to change their system so that this issue will not arise after the change has been made.
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Mark Alexander - Founder of Property118

10:15 AM, 5th January 2013, About 11 years ago

@ Mike and David - just a thought, if the tenancy is periodic from day one, i.e. no fixed term, how would that affect your cautionary advice?

Industry Observer

15:09 PM, 7th January 2013, About 11 years ago

Just one question for Chris Kendall, which is what makes TDS any better placed to comment on the Law (as opposed to their own Scheme Rules) than anyone else.

Can Chris please confirm what is the LEGAL authority for saying PI does not need to be re-served when a tenancy goes periodic?

Mark if a tenancy was periodic from day 1 (and that I believe could only be Contractual periodic) I fail to see how any issue arises. The PI would have been served along with the deposit protected, both of which would be needed.

By the way Mark

Рождеством !!!

Mark Alexander - Founder of Property118

15:50 PM, 7th January 2013, About 11 years ago


10:45 AM, 8th January 2013, About 11 years ago

As I said, there's no case law to go on when it comes to re-serving PI when a tenancy turns periodic.

It was CLG's opinion that it doesn't need to be re-served, for the reasons already outlined, and it's not in any schemes' rules to do so. Obviously it would be for a judge to decide if this is correct under the law so we - the schemes and CLG - can just use our best judgement until this happens.

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