Friday, January 02, 2009

Musings on the tenancy deposit protection scheme

Note - the Landlord Law Blog has now moved to

One of my landlord clients who has successfully defeated a nuisance claim brought by her tenants under the tenancy deposit protection legislation, has reported an interesting conversation she had with the Judge. Apparently the Judge said that the judiciary generally are unhappy with the legislation. The main reason being the automatic aspect, as they do not like having their decision power taken away from them.

That’s fair enough and I can understand their point of view. The trouble is, that if the Judges have a discretion whether to make the award or not, it makes it impossible for us advisors to give any meaningful advice. Inevitably different Judges will decide similar cases in different ways. This will result in injustice overall, as it is inequitable for a tenant’s right to an award to depend on the particular viewpoint of the Judge concerned (who may not be experienced in housing work). If the award is automatic then people know where they are.

It is important also to understand the reason for the legislation in the first place. It is to force landlords (many of whom are still in denial) to use the tenancy deposit protection scheme. A scheme set up to protect tenants from the injustice of landlords (not all of them by any means but a fair number) effectively stealing tenants money by unreasonably refusing to return deposits.

If landlords see a window of opportunity many of them will continue to refuse to protect deposits, rendering the new scheme useless. It will of course mostly be the ‘bad landlords’ who will do this – ‘good landlords’ are on the whole already compliant.

So automatic penalties are the best way of preventing avoidance. It is harsh justice on those who offend through ignorance, however this is not the only field where ignorance of the law is no defence – and there are many sources of free help and information. This legislation has been in force for over a year now - there is really no excuse for non compliance any more.

Incidentially, my client had protected her deposit and had the paperwork to prove it.

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Anonymous said...

I'm afraid I disagree with your stance on the automatic aspect of the DPS penalty because it is just too draconian. Automatic penalties are normally used for small stuff attracting small fines. In this case we are talking about substantial sums of money, hence the importance of allowing a judge to decide whether the penalty should apply or not.

You write: "The trouble is, that if the Judges have a discretion whether to make the award or not, it makes it impossible for us advisors to give any meaningful advice. Inevitably different Judges will decide similar cases in different ways. This will result in injustice overall..." But isn't that the way most of the law actually works? If what you say were true, then most judges' decisions would be 'inequitable.'

Suppose a landlord does not get around to protecting a deposit because, say, he suffers a stroke or is run over by a car, and is taken to hospital and kept in intensive care. Then the AUTOMATIC sanction still kicks in and the poor man (who, don't forget, is fighting for his life) is clobbered with a huge fine. Are you telling me THAT is equitable?? Of course it isn't, but the law as it stands now would criminalise the poor man nevertheless, which I think is utter madness.

Tessa said...

Yes, I take your point. However your hypthetical example is only going to happen very rarely, if at all. And few tenants would sue in such a situation. If they did I suspect the Judge would find some way around it (or the losses might be covered by the landlords insurance).

However most cases where the landlord fails to protect is because he does not want to. The tenants are then faced with unacceptable deductions from the deposit at the end of the tenancy, but because the deposit is not part of a scheme the tenants cannot use the free arbitration service to challenge them. They are forced to go to the small claims court to recover their deposit, which many people find intimidating and scary.

If landlords know that they are going to have a fine slapped on them, they will be more likley to protect in order to prevent this happening. Which is what Parliament intended.

NB Having the penalty fine awarded is not a criminal sanction, it is an award made to the tenant in civil law. It will not give the landlord a criminal record.

Landlord-Law members can read my article on the difference between civil and criminal law in the Legal info and articles section.

Anonymous said...

Why do people always say that if the deposit is not protected they will face deductions? Did everyone have deductions when deposits were protected? I think not..

Tenants hate the scheme as it is too long winded and doesn't really protect anyone in reality.

Anonymous said...

All I can say is that it is totally unfair to all good Landlords. My adjudicator came back saying that I had not submitted a quote for a broken window, I questioned this 3 times as I had blatantly sent a quote and all three times the question went unanswered. Now the DPS said they cannot help me any further. Where is the justice in that?

Anonymous said...

Ah ha, an interesting debate. Can I take you all back to the legislation itself. It is worth printing it off and taking it to bed to ponder for a few nights. If everyone who dealt with these issues actually understood the legislation there would be little debate as in fact the law says what it means, albeit it in a roundabout difficult to digest fashion....I see it as a series of sticks to beat the landlord with. In reality the landlord is offered a number of opportunities to comply even if he/she has missed the initial 14 days as this period is purposefully extracted from any penalty. The reason sensible Judges who understand the legislation do not have difficulty with knowing when to impose the 3x penalty is because they are led all the way in the construction of the legislation. That is, you have to be a very bad wicked landlord who has repeatedly failed even when asked to protect the deposit and even when court proceedings are in place before conditions to prompt the penalty become due.

Draconian is one word for it - harsh is another but what you have to realise is there are clever stages to it. The only thing I can see that the draughtsman did not properly allow for is this - how does one prove, in a court of law, exactly what prescribed information was actually given to the tenant unless CCTV cameras film the whole event. Sending by signed for mail only proves a document was sent, not its contents, hand delivering makes no difference....until the government make it a requirement for tenants to acknowledge receipt the legislation can be cleverly manipulated by a tenant who want to create a situation where their landlord is 'in breach' of some aspect of the initial requirements or prescribed info thus throwing doubt on a well-intended action. So my advice to landlords is to be ABSOLUTELY PARANOID. Photograph the contents of your envelope, include a copy of the photo in what you send and hand deliver and request an itemised written receipt. Even if you have not met the 14 day initial requirement, cover your tracks and be vigilant.

I know because I just won a case against tenants who set a sophisticated and unbelievable trap having realised for a variety of reasons that the deposit was deposited late...thing was we realsied too it had been mistakenly overlooked, nothing sinister - why would you want to be in breach of this little number-
they took action AFTER it was deposited and papers issued which they claimed they did not 'receive'. Our papertrail was tighter and the Judge sensible enough to see the spirit of the law was adhered to. We were many miles away from a penalty and the legislation wording, once you have your head round it, explains just that.
Some accountability from the tenant is what is needed. It is wrong wrong wrong to assume all landlords are bad and all tenants good.

Tessa Shepperson said...

To read my more recent posts on the tenancy deposit scheme click here.

Anonymous said...

Could I invite Tessa to comment on the last post on the article entitled - 'Musings on the tenancy deposit protection scheme' which starts - Ah ha, an interesting debate.

It would be interesting to hear a view on the tale told in this post.

Tessa Shepperson said...

Specifically on the service point, there are many situations where you have to prove service of a document to the court. There are a number of ways of doing this. Getting the tenant to sign a copy is one. Having an independent witness is another.

If there is a situation where one party says one thing and the other party says another, then the Judge has to do what his job says and 'judge' which one is telling the truth. They are pretty experienced at this sort of thing and usually get it right. But not always.

So it is best to get some proof of service if only to make it easier for the Judge to believe you.

As regards the working out of the tenancy deposit regulations, since I first wrote this post in January 2009 I have written up and commented on many more cases. You can find them all via the tenancy deposit tag or by clicking here.

Anonymous said...

A recent case dealt with a landlord who had failed to protect the tenant's deposit and at the end of the tenancy had refused to return the full deposit.

Instead they (a large landlord agency) tried to justify the withholding of the deposit with dubious inventory statements that has no valid VAT or registration numbers.

In this case the tenant's were two international students who did not know until after this dilemma that their deposit had to be protected. They had only realised this after doing research on legal measures to get back their deposit.

Now this went to court and the judge ruled in favour of the landlord because they "had not had the opportunity to make it right." Meaning the landlord was not given the 14 day opportunity to protect the deposit.

The landlord's defense was that they had not known about the deposit protection scheme, even though earlier admitting they were a large letting agency with many buildings.

The tenant's are seeking to appeal this judgment as it is, I think, unjust and unfair to allow that defense. The landlord had clearly manipulated the situation to their benefit.