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Tenants should pay their own deposits in, says lawyer

24 November 2010
Written by rosalind renshaw

A top lawyer has criticised the law on tenancy deposit schemes as flawed and believes tenants should be able to take responsibility for paying their own deposits into the scheme.

Currently, only landlords or agents can pay deposits into the schemes.

John Stephenson, senior partner and head of residential property team at London city firm Bircham Dyson Bell, spoke out after a Court of Appeal ruling in the case of Tiensia v Vision Enterprises.

In the case – reported on by EAT – the court ruled that landlords need not be penalised for breaching the Housing Act requirements on tenancy deposit protection provided they had lodged the deposits and given the tenants the prescribed information by the time any case is brought.

The Housing Act had stipulated that deposits are lodged and the information given to the tenant within 14 days.

But Stephenson said: “The case has called into question the ability of the TDS to protect deposits as the landlord was able to retrospectively pay it into a scheme without any recourse for late payment prior to appearing in court, and forcing the tenant to incur the cost of bringing the action in the first place.

“On this occasion, I have to say that the judgement has seriously weakened the usefulness of the TDS. In most cases it would cost the tenant many more thousands of pounds to bring an action against a landlord, than the amount of the actual deposit itself.

“A tenant’s reassurance that the landlord will invest the deposit has been weakened and he/she can’t be certain their deposit is safe unless they bring an action to make certain that it is – and the cost of doing that is prohibitive in most cases: the loss is greater than the gain.

“Tenants shouldn’t have to get as far as court to force the landlord’s hand – this is not the best use of the law.”

Landlord bodies welcomed the Court of Appeal ruling, as they said it stopped landlords being penalised if they had merely overlooked their administration by mistake, but they nevertheless advise that landlords and agents still lodge the deposits and supply the information within 14 days. ARLA has repeated that advice.

Comments

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    I note with interest these comments about the DPS and their co-horts in the money holding business. Of course tenants will pay the money in themselves – like when the moon is blue or pigs fly.

    I had one tenant who clearly breached specific clauses in the agreement and was let off by the DPS and the arbitrator put it down to fair wear and tear! They clearly are a bunch of brainless sh**heads who have no idea about lettings.

    I have subsequently advised one client who managed himself to go to the small claims court. He won of course because courts are a little more clued up on everyday life and the low life they deal with.

    Any more juicy tales out there on this subject?

    • 02 December 2010 13:32 PM
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    If it were down to the tenants then should they pay the registration fee to mydeposits that the agent/landlord currently pays to register a deposit?
    Will the tenants be fined 3 months deposit for not registering in time?
    My assumption is that should the tenant have to register and hold the deposit then the same problems that the solcitor is refering to will apply but this time be taken advantage of by tenants. Also will the government be able to invest the money in educating every tenatn or would be tenant about their legal obligation to register a deposit.
    Any anomolies that currently occur with the present system will only get worse by having a tenant register the deposit!

    • 24 November 2010 17:42 PM
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    Couldn't agree with you more Ray. Here's a thought...
    I forgot to pay my credit card bill because I 'merely overlooked my administration' so please do not charge me a late fee penalty!

    • 24 November 2010 16:47 PM
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    The thorny issue of tenants deposits will continue. The Deposit Protection Service have helped alleviate the situation by writing to tenants once the deposit has been registered by either the landlord or the tenant. Until the actual legislation is amended to state what is actually intended, tenants will continue to take a pop by trying to claim 3 times their deposit as compensation - for what? A mere unintentional oversight by an agent or landlord!

    • 24 November 2010 13:01 PM
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    Sadly, those that actually drafted the legislation, no doubt at considerable cost to the tax payer, failed to literally reflect Parliaments clear legislative intent.
    In any event, rather than let the tenant 'police' the lodgement of the deposit, simply to make them responsible for undertaking the physical payment into a scheme, removes the prospect of them 'ambushing' incompetent landlords / agents.

    • 24 November 2010 13:00 PM
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    In this case the court has caused confusion.
    The law says, the person receiving the deposit must register it within 14 days.
    That's it!
    If not a penalty of 3 times the deposit.
    That is also it!
    What's the problem?

    • 24 November 2010 12:33 PM
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    Yes because you can trust tenants to pay cant you?? Are solictors that stupid?

    Should not be a deposit, just small claims when tenants leave in a bad state. Sue them!!!!

    • 24 November 2010 11:15 AM
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    Confirming what many have said for years - one custodial scheme assuming responsibility from the moment the tenant lodges the deposit, providing one ADR giving national consistency of dispute determinations.
    The concept of trade associations having 'their own' scheme for 'their own' members, was always profoundly flawed.

    • 24 November 2010 10:18 AM
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