Deposit Scheme for Rental

[robsartain]

Hi,

I have rented out several houses for years and years and always looked after the tenants deposit myself.

I have now found another tenant via an agency and of course this now needs to go into a deposit account. The agency is reputable (well as reputable as any of the agencies are) and they are putting the money into the deposit scheme.

Two questions:-
1... They are charging me £2 a month to keep the money in the deposit scheme...hmmm doesn`t sound quite right. I have dealt with agencies for many years and realise you have to read all the small print.

2... I read in the Evening Standard, that if the agency that put the money in the deposit scheme goes bust, the landlord is then responsible for the repayment of the deposit. At the end of the day surely that is why the deposit scheme was setup, to stop dodgy landlords and agencies going bust and tenants losing their deposit. I imagine this is just another badly written/ill informed article written by the press.

Any clarification/experiences welcome.

I imagine Wings is my man, as I believe he has a few rental under his belt and self manages them.

Thanks

[M400 NBL]

robsartain said:

Hi,

I have rented out several houses for years and years and always looked after the tenants deposit myself.

I have now found another tenant via an agency and of course this now needs to go into a deposit account. The agency is reputable (well as reputable as any of the agencies are) and they are putting the money into the deposit scheme.

Two questions:-
1... They are charging me £2 a month to keep the money in the deposit scheme...hmmm doesn`t sound quite right. I have dealt with agencies for many years and realise you have to read all the small print.

2... I read in the Evening Standard, that if the agency that put the money in the deposit scheme goes bust, the landlord is then responsible for the repayment of the deposit. At the end of the day surely that is why the deposit scheme was setup, to stop dodgy landlords and agencies going bust and tenants losing their deposit. I imagine this is just another badly written/ill informed article written by the press.

Any clarification/experiences welcome.

I imagine Wings is my man, as I believe he has a few rental under his belt and self manages them.

Thanks

I thought the deposit scheme was nothing to do with any individual LA's. as in once the deposit is held, it's up to the landlord and tenant to agree that the property is om, and the tenant should have his deposit returned.

And charging you £2/month for something that is done once a year doesn't seem right. IF the LA is holding the deposit, they're making interest on it anyway.

You could search the website taxationweb. I'm sure this topic has been mentioned plenty of times.

I actually have a tenant moving out soon who has his deposit with a holding company. And the LA we used went bust soon after. So i'll let you know if I find out first hand before anyone else has the answer.

[Wings]

In a recent Landmark High Court Judgment, the Court decided that where an agent held/took the Deposit on behalf of a Landlord, then the agent was responsible for the registering and refunding at the appropriate time of that same Deposit, even though the Act only stipulated Landlord/s.

There are various types of Deposit Protection Scheme, myself preferring http://www.mydeposits.co.uk/, since the same not only allows me to physically hold on to the Deposit/monies, but also allows me to first deduct any monies (rental arrears, damage etc. etc.) prior to returning the balance of any Deposit. There is a charge for this service £29.95, but for me it is worth paying, since I hold control of the situation, rather than relying on third parties to sort matters out etc. etc.

The above Judgment also found that where the Defendants were liable for a failure to lodge a Deposit it was found that their late lodging of that deposit with the DPS was not a breach of the Act or of the initial requirements of the DPS scheme and accordingly the appeal was allowed and the Judgment against the Defendants at the lower Court was set aside.

Therefore as things currently stand agents are liable for a failure to register the deposit, late registration does not automatically attract the penalties (3x rent) set out in section 214, and the DPS scheme has no initial requirement that the deposit be registered with it within 14 days of being received.
This is by no means the end of the matter though. This case is still capable of being taken to the Court of Appeal and there are at least two more cases which will see Judgments handed down from that Court within the next few months and they could have the effect of altering the position again.

Although, there are other decisions from more senior Courts in the pipeline, this is the first binding decision on the issue of Tenancy Deposit Protection.

[robsartain]

Quite intersesting that the first cases are being taken to court, and you wil have to post the outcome Wings.

As you stated going direct with the deposit scheme removes any 3rd parties, well worth a look into

Thanks