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Court of Appeal - Superstrike Ltd v Rodrigues

Mon, 17 Jun 2013 15:00:34 +0100

A joint statement from the Tenancy Deposit Scheme, MyDeposits and The Deposit Protection Service

We have read with interest the latest judgment from the Court of Appeal on deposit protection. Whilst landlords and lettings agents need to take their own legal advice, we will be considering the implications of this judgment for deposit protection and the service of Prescribed information. We will also consult the DCLG on this and we will be issuing a further joint statement when we have fully considered the matter.

Deposit protection up along with deposit values

Mon, 20 May 2013 11:50:07 +0100

Data just released by the Government shows the continuing success of tenancy deposit protection in England and Wales with the three approved schemes showing an increase in deposits protected to a total of 2,659,301 at 31 March 2013: an increase of 284,916 from a year earlier. This seems to reflect both the continuing growth in the number of homes privately rented in England and Wales and also the increasing attention being paid by the media and interest groups on tenancy deposits and other lettings issues. In addition the amendments to the legislation in the 2012 Localism Act closed some loopholes in the legislation and also raised the profile of deposit protection. However there are continuing reports that a small minority of landlords and agents are not fully complying with the requirement to protect deposits within 30 days of their receipt.

In terms of deposits themselves there is evidence that in 2012-13 the average value of deposits (both custodial and insurance backed) taken in England and Wales has increased with the average deposit now worth £992 (with deposits held by the Tenancy Deposit Scheme slightly higher at £1,149). In Scotland (where custodial deposit protection was introduced in July 2012) average deposit values are lower at £671 and in the first month of the new Tenancy Deposit Scheme in Northern Ireland the deposits taken by the Scheme (both custodial and insurance backed) have averaged £558. This disparity in deposit values across the UK reflects the differential rent levels across the UK with deposits typically being between 4-6 weeks rent.

TDS will continue to publish deposits data on an on-going basis to show how these values change. The chart below shows that following a big fall in average deposit values in April 2010 deposit values have increased with a further increase over the last 12 months from £979 to £992 over 12 months. Deposit values are clearly linked to rent levels and as rent levels increase new deposits will reflect this with the average deposit value set to increase further over 2013-14.

It's all in the small print...

Mon, 20 May 2013 09:01:50 +0100

Every month, we take an example of a recent dispute and explain the reasons behind our adjudicator's decision, some on common disputes and others a little more unusual. In this month’s case study, we are looking at the pitfalls that can catch agents out with claims for check out fees.

In our first case, the agent claimed £90.00 from the tenants’ deposit for the check-out fee.

Amount in dispute: £90.00

Award to tenant: £90.00

Award to agent: £0.00

The tenancy agreement permitted deductions from the deposit for any unpaid money payable by the tenant under the tenancy agreement. One particular clause of the tenancy agreement required the tenant to pay the cost of a missed appointment for the check-out. However there was no other provision in the tenancy agreement for the payment of any check-in and check-out fees by the tenant.

The agent referred to other terms and conditions that they issued, which the tenants claimed never to have seen. These were in a separate printed document which was not signed or dated – it appeared to be a standard ‘leaflet’ referring to other charges payable by tenants, including a check out fee of £90.00.

The adjudicator took the view that they could make no award to the agent from the deposit for the check out fee. The tenancy agreement itself made no reference to the payment of check out fee, so it could not be said that there was an obligation on the tenant to pay it in the tenancy agreement. Neither did it incorporate any other charges payable by the tenant – for example a cross-reference to the charges document produced by the agent. Even had it done so, it was not clear when this document had been issued, or how it was that it formed part of the tenant’s contract with the landlord/agent.

In our second case, the tenancy agreement referred to the tenant being responsible for the payment of a check out fee, but did not specify its amount.

Amount in dispute: £250.00

Award to tenant: £100.00

Award to agent: £150.00

After the tenants left the property, the agents emailed them to confirm that the inventory clerk estimated the check out report fee would be in the region of £95.00 and £150.00. When the tenant pressed the agent for a more precise figure a second email confirmed the price "should not be more than £150.00". After the check out inspection, the agent produced an invoice for a check out fee of £250.00, which was disputed by the tenant.

The adjudicator noted that the amount claimed seemed high for a check out fee for the size of property involved. No explanation had been given for such a significant discrepancy between the invoice and the amount mentioned in the emails. In the absence of evidence to demonstrate why the cost has escalated to such a degree the adjudicator limited the award to the agent to £150.00, the amount specified in their second email.

So what are the key points here?

Make sure that charges payable by tenants are included in the tenant’s obligations in the tenancy agreement itself.
Check that the deposit clause in the tenancy agreement allows the deposit to be used to pay for the costs claimed.
Ideally, the tenancy agreement should specify the amount of the check fee, or give a formula for how it will be calculated. This is so that it is clear to all parties what the obligation to pay it, and how much it will be for. Where this is not the case the adjudicator may reduce the amount of the award if they feel it is proportionate to the size of the property.

You can find our library of Adjudication Digests and Case Studies here on our website: https://www.tds.gb.com/case-studies.html

Why TDS supports SAFEagent awareness week

Wed, 15 May 2013 15:15:41 +0100

The Tenancy Deposit Scheme is a proud supporter of the SAFEagent scheme.

Tenancy deposit protection was an important step forward in consumer protection when it became law in 2007, and since then tenants have been able to rest assured that they will be able to receive their fair share of deposit money.

Of course, if an agent goes bust deposit protection only exists to protect tenants’ deposit money. Requirements for letting agents to protect other client money such as their landlords’ rent are still sadly lacking. We support the SAFEagent scheme because it gives landlords and tenants the reassurance that should the worst happen they can still reclaim their money though their agent’s client money protection insurance.

Professional standards and consumer protection are important issues in an industry which remains unregulated. At TDS we give strong preference to letting agents who have voluntarily committed to regulation through professional body membership - ARLA, NAEA, NALS, Law Society, RICS, or UKALA - not only because of the client money protection they provide, but for the training, accreditation and standards which professional body membership brings. The lower risk which comes with higher standards is reflected in the significantly lower rates we offer them.

Most consumers would no longer use a travel agent without an ABTA badge. We hope that SAFE will reach the same level of brand awareness whereby landlords and tenants only consider letting agents who display the SAFE agent badge; and we fully support SAFE in that challenge.

Now you see me, now you don't...

Tue, 30 Apr 2013 15:24:07 +0100

Each month we publish an Adjudication Digest with an example of a recent adjudicator's decision and the reasons behind it. A library of adjudication digests can be found here on our website.

Amount of deposit in dispute: £ 650.00

Award made:

Tenant £ 0.00

Landlord £ 650.00

The landlord was claiming £650.00 for rent in lieu of notice. A rent statement was provided. The tenants entered into a six-month fixed term Assured Shorthold Tenancy agreement, and carried on living in the property when the fixed term came to an end. Although the landlord was happy for the tenants to remain at first, the landlord subsequently decided to seek possession of the property when the relationship with the tenants soured. The tenants were served a Section 21 notice on 21st January 2013 advising them that the landlord required possession of the property on 11th April 2013.

On 8th March 2013, the tenants wrote to the landlord advising him that they had left the property and that no further rent was to be paid. The tenants argued that they had left the property early as this was what the landlord wanted. They say that they spoke to the landlord and he agreed that they could leave the property as soon as possible. They did not agree that they should be liable for any further rent. Although they didn’t have anything in writing from the landlord, they asked that the adjudicator speak to them so that they could argue their case further.

The adjudicator considered that although the tenants vacated the property before the end of the tenancy, they did not serve adequate notice of when they intended to leave. The tenants were obliged to give one month’s notice to end the tenancy which was to be given in writing on a rent payment date. Therefore they remained liable for the payment of rent until such time as their notice period expired or the end of the tenancy – in this case, the end of the tenancy as this occurred first.

So what are the key points here?

The notice period for a tenant under this type of tenancy agreement is one month and is to be served in writing and on a rent payment date.
The tenancy agreement, and other documentation produced by the landlord, gave little information about how notice periods work.
This dispute may have been avoided had the landlord given the tenants a better explanation about how they in turn needed to give notice if they wanted to leave before April 2013. Given the argument between the parties, it could be perhaps understood how the tenants thought they were expected to leave by 11th April, and not on that date.
The importance of putting things in writing cannot be understated – although the tenants were adamant that the landlord had agreed to them leaving sooner, without written evidence of this, the adjudicator could not find this to be the case. Adjudicators are only able to make a decision based on the merits of the evidence presented to them. Unlike a Court, the adjudicator cannot cross-examine witnesses.

Rent in advance not a deposit: Court of Appeal

Wed, 24 Apr 2013 08:34:25 +0100

The Court of Appeal in their latest judgement has confirmed that rent paid in advance is not a deposit.

This was the case of Johnson vs Old which was decided in the Court of Appeal on 7 March 2013 with the decision published on 23 April 2013 (see [2013] EWCA Civ 415). The Court of Appeal was dealing with an appeal on an order made by the Brighton County Court where a tenant claimed that the fact she had paid 6 months’ rent in advance as required by the tenancy agreement meant that this should be treated as a tenancy deposit. The importance here was that had this been accepted by the Court of Appeal then the s21 notice to end the tenancy would have been invalidated as the deposit would not have been protected.

In an initial hearing the Deputy District Judge had accepted the tenant’s view that when rent payments were made six monthly in advance that at the point that those payments were made five months was actually a security deposit. As such it should have been protected and as it had not been then the s21 notice was declared invalid.

On appeal the County Court Judge took a different view and considered that rent in advance could not be construed as a deposit. In fact it had been paid to comply with a primary obligation of the tenancy to pay the rent. As such he overturned the decision of the Deputy District Judge.

On appeal to the Court of Appeal the tenant, Anne Old, attempted to argue that the judge was wrong in three areas:

In holding that the tenancy agreement required the payment of 6 months’ rent in advance;

In concluding that the payment of six months’ rent was not a payment of five months as “security”

In concluding that the five months’ rent was not a tenancy deposit.

In this case the tenant had also paid a security deposit and this had been properly protected with DPS.

The Court of Appeal concluded that the tenancy agreement did indeed require that the first six months’ rent should be paid in advance and this appeal on the first ground was dismissed. In relation to the second ground the Court of Appeal made a distinction between money paid to discharge an existing obligation of the tenancy (such as to pay the rent) and money paid with the intention that it be held as security for the performance of some other obligation or as security for the discharge of some other liability. The Court said that “money paid in order to discharge a current liability is not paid with the intention that it be held as a security for the discharge of that liability”.

In this case the Court did not consider that the rent paid in advance was somehow being paid with the intention that it be held as security for the discharge of a liability.

So in conclusion the Court of Appeal decided that the rent paid in advance could not be construed as a tenancy deposit and therefore the s21 notice was valid.

Conclusion

This is a very helpful clarification of an issue which has been concerning landlords and lettings agents. The judgment in this Court of Appeal case should assist those landlords and lettings agents who want to ask for rent in advance and who can be reassured that this is not a tenancy deposit that needs protecting under the Housing Act 2004.

Steve Harriott

Chief Executive of the Tenancy Deposit Scheme

A full transcript of the case and the TDS response can be downloaded here:

Greater industry regulation draws closer in Wales

Thu, 18 Apr 2013 13:31:18 +0100

In an earlier blog in May 2012 ('The foundations are laid for regulation of the PRS in Wales') I outlined plans for the reform of housing law in Wales. A Housing Bill 2013 is currently being drafted, which, among other things, will introduce a compulsory licensing scheme for all private rented sector landlords and letting/management agents in Wales - something bodies in England like ARLA and RICS have long sought.

But the Welsh Government has also announced that it intends to introduce fundamental reform to the law underpinning the residential landlord-tenant relationship - building on recommendations made by the Law Commission for England and Wales way back in 2006.

The first step in this process has now been taken: the Law Commission has just published Renting Homes in Wales. It is downloadable at http://lawcommission.justice.gov.uk/publications/renting_homes_in_wales.htm

This new (and mercifully short) report revisits the recommendations it made in its original 2006 report Renting Homes, in order to assist the Welsh Government as it develops its plans for a new Renting Homes Bill. A White Paper is expected to be published in early summer.

The main focus of the new Law Commission report is on how the underlying law has changed in the 7 years since the original report was published. The main development has been in the impact of human rights legislation - which principally affects public rather than private landlords. The Law Commission was also anxious to test whether its proposals fitted with the known priorities of the Welsh Government, particularly in regard to dealing with anti-social behaviour.

Its broad conclusion was that the original recommendations had stood the test of time and would provide a sensible legal framework against which housing policy relating to the rented sector as a whole (public as well as private) could be taken forward.

I will return to this subject when the White Paper is published.

Down in the weeds...

Tue, 09 Apr 2013 09:40:47 +0100

The Adjudication Digest takes a recent decision by a TDS Adjudicator and sets out the reasoning behind the decision. This month we take a look at a dispute about gardening.

Amount of deposit in dispute:
£ 200.00

Award made
Tenant: £ 50.00
Landlord: £ 150.00

The landlord claimed £200.00 for gardening because the gardens were overgrown at the end of the tenancy. The tenants argued that they maintained the gardens to a reasonable standard.

The tenants argued that they were not obliged to trim the high hedges and ivy on the basis it would have required hiring specialist gardening equipment which they were not contractually obliged to do.

The landlord said that his claim did not include the high level conifers/ trees or ivy at the property, and only related to the general maintenance of the gardens including the grass, borders, rockery, gravel path, small bushes and hedges. He produced a garden maintenance invoice dated three weeks after the tenancy ended, which did not include trimming any high level hedges or ivy.

The check-out report stated that both the gardens needed work at the end of the tenancy; however the check-in report did not show their condition or include a general statement to the effect that the property was in a good condition unless otherwise stated.

The landlord had however produced dated photographs for the start of the tenancy, and two weeks after it ended in the summer, which were not objected to by the tenant. A comparison of these showed that the condition of the gardens was worse at tenancy end.

The adjudicator was satisfied that the tenancy agreement required the tenants to maintain the gardens during the tenancy. The evidence presented showed that additional gardening was needed to the gardens to return them to their condition at check-in.
However the adjudicator did not consider that the landlord was entitled to the full amount claimed. The work involved was undertaken three weeks after the end of the tenancy, during which time further growth to the garden would have occurred. In order to reach a reasonable compromise and to allow for the additional growth that could not be attributed to the tenant, the adjudicator awarded £150.00.

So what are the key points here?

In this case, the landlord had sufficient photographic evidence to confirm the condition of the property at the start of the tenancy. Without it, his claim might have failed. Make sure that check in and check out reports detail clearly the condition of the property. It can also be helpful to include a general statement that the property is in a particular condition unless otherwise stated.
Part of this dispute related to confusion about what the landlord’s claim was for, and what the tenants in turn were responsible for. A clearer dialogue between the parties before the case was referred to TDS may have helped matters. One of the tenant’s principal arguments in their favour did not in fact relate to a claim that was actually being made by the landlord.
It can be difficult for adjudicators to gauge the condition of gardens from words alone – photographs showing an overview of a garden at check in and check out can be very useful.
As with all evidence of condition, make sure that the evidence you produce is timely. The evidence needs to capture the condition of the property at the time the tenant took on, and gave up, the property – not some weeks later.

The Adjudication Digest takes a recent decision by a TDS Adjudicator and sets out the reasoning behind the decision. The aim of these Digest reports is to help tenants, landlords and agents better understand how we make our adjudication decisions. The names of the landlords and tenants involved have been removed and this is only a brief summary of the dispute.

You can visit out online library of adjudication digests by clicking here.

Relaxing the rules at TDS

Tue, 02 Apr 2013 11:34:33 +0100

Members of TDS will be aware that as of 1st April, the rules for how TDS operates have changed.

Don’t worry – it doesn’t mean big changes to the way you protect deposits, just make things easier! We had to make a couple of alterations to reflect our new government contract, so we thought this would be an ideal opportunity to include changes which members have suggested to us. We are trying to make the scheme more user friendly, more flexible, and let us take a more pragmatic approach to people’s individual circumstances – not just following rules for rules’ sake.

Here are the main changes which members should be aware of.

• Firstly, the clauses which we previously required for inclusion in tenancy agreements and terms of business have now become ‘suggested clauses’. Previously we could only adjudicate in a dispute if you included these in your documentation, but now we will consider each agreement on its own merits to decide if it is appropriate for use to handle the dispute.
If you are happy with the TDS clauses as they are, you don’t need to change anything at all. However if you choose to change the TDS clauses, make sure the agreements cover what the deposit can be used for and how it is going to be repaid.

• The 10 day time limit for telling a tenant if deductions are going to be made has been removed. We ask that you deal with end of tenancy matters as soon as is practicable and tell tenants promptly if deductions are being made. If it hasn’t been done within 10 days we will consider each case on its own merits to decide if the member has acted fairly rather than applying a fixed time limit.

• Letting agents who use the ‘Let Only’ option and for users of the Tenancy Deposit Scheme for Landlords no longer need to manually renew tenancies at the end of the fixed term. We will assume it is continuing on a statutory periodic basis and renew it automatically. This does not incur any extra charges. But remember! If there are any changes to the agreement it will be considered a new tenancy and as before, must be re-protected.

• As part of our new contract we are required by the government to use our best endeavours to notify tenants when deposit protection ends. Please be sure to include as many contact details for your tenants as possible, including an email address.

• For us to adjudicate in a dispute we must have consent from the tenant and if there are multiple tenants we need consent from at least one. If one of the tenants refuses consent for adjudication we cannot adjudicate.

• A small number of tenancies had still been allowed 6 months to raise a dispute. All disputes must now be raised within 3 months of the end of the tenancy.

On our website all of the rules, plus a summary of the changes are available. Please contact us on 0845 226 7837 if you have any questions.

TDS Rules of Membership for Letting Agents and Corporate Landlords

Rules of Membership for the Tenancy Deposit Scheme for Landlords
Rules for the Independent Adjudication of Tenancy Deposit Disputes
Summary of TDS Rule Changes
Prescribed Information and Suggested Clauses for Tenancy Agreements and Terms of Business

A difference of opinion

Tue, 26 Feb 2013 16:14:59 +0000

In this month’s digest we look at a recent case where the parties had very different views about who was right and wrong – and who was ultimately responsible.

Award made:
Tenant £ 100.00
Landlord £ 100.00

£100.00 was claimed for damage to a light fitting in the hallway. Although the agents state that the damage was caused by the tenants over-tightening the fitting when replacing a bulb, the check out report stated “Light fitting to ceiling cracked (FWT – Caused by external works to building.)” Whilst the agents were clear in their own minds what the cause was, no evidence had been produced to show that the inventory clerk was mistaken in their opinion. The adjudicator made no award for this item. If the landlord or agent had remaining concerns about the conclusions reached by the inventory clerk, this was something they would need to raise directly with the clerk.

A further £100.00 was claimed for damage to the living room carpet. The parties appeared to agree that this was caused by the cleaners employed by the tenants who applied a stain remover which they failed to remove in a timely manner. The agents have provided a photograph which confirms the marking. The tenants claimed that it is unfair that they should be charged for a mistake made by cleaners recommended to them by the agents. In this case, the adjudicator took the view that, ultimately, the tenants were responsible for fulfilling their obligations under the tenancy agreement – and would have to take up any concerns which they may have with the cleaners themselves. The adjudicator felt that the amount claimed was reasonable for the damage noted.

So what are the key points here?

Check in and check out reports are the principal evidence that an adjudicator will consider to assess changes in property condition. Where a landlord or agent considers that an inventory clerk has reached an incorrect conclusion, they will need to produce compelling evidence of this before the adjudicator makes their decision. If they can’t, their claim is unlikely to succeed.

Agents should take care when ‘recommending’ cleaners – and make clear to tenants that although they can provide details of local contractors, they cannot be held responsible for their work. The tenant will still be responsible for returning the property to the required standard. If they can’t’, as in this case, because of a fault in the cleaning carried out, the tenants will be liable to their landlord, and will need to raise their grievances with their cleaners themselves.

A message from Tessa Shepperson

Thu, 21 Feb 2013 10:59:42 +0000

The Tenancy Deposit Scheme is proud to be the lead sponsor of the very first Landlord Law Conference, hosted by Tessa Shepperson of Landlord Law. Here is a message from Tessa.

Do you worry about getting the law right for your lettings?

For example:

    - Are you using the right tenancy agreement?
    - Is your property an HMO and if so what does this mean for you?
    - You have been told you need to apply the Residential Property Tribunal - how do you do this?
    - What is the best way to prepare for your tenancy deposit adjudication?
    - You need to evict your tenant - how can you prevent it all going wrong?

If you can get to Bury St Edmunds in Suffolk on 15 March then you can listen to experts explain these matters in the Landlord Law Conference .

This is a new conference organised by me, Tessa Shepperson of Landlord Law , and the conference content is just about the law. All the legal topics covered are those which are especially important for landlords, and most of our speakers are specialist landlord and tenant solicitors.

Problems with letting agents
For example lots of landlords experience problems with letting agents - indeed recently the Office of Fair Trading have published a report citing the huge number of complaints they receive.

At the conference, Solicitor Simon Parrott of Sharman Law in Bedford will be explaining the little known area of agency law - giving you valuable information about your rights!

Problems with HMO law
Another area which is not well known is that of HMO law and practice. If you let to three or more unrelated people you will almost certainly be running a House in Multiple Occupation (HMO) - what does this mean for you?

Specialist HMO solicitor David Smith of Anthony Gold Solicitors will be explaining what an HMO is, and two important legal consequences of running one - the management regulations (which apply to ALL HMOs) and the vexed question of licensing. Essential knowledge not only if you run a traditional HMO but also if you rent to any non family sharers.

Problems with tenancy deposit disputes
Then there are tenancy deposit adjudications. So many landlords come away bemused and frustrated, feeling that their tenants have ‘got away with it’.

Former tenancy deposit adjudicator Tom Derrett will be explaining what you need to do to ensure success. Plus of course TDS will be there, as lead sponsor, to talk with you about your deposit problems and offer advice and help.

These are just three of the areas of law covered. Other topics include tenancy agreements, harassment and eviction.

The Landlord Law Conference website
If you think this all sounds interesting, then why not take a look at the conference website. There are full details of the program, sponsors, speakers, and a booking form you can use to book your place.

It promises to be a very useful and interesting event. It is not often that so many landlord and tenant legal experts will be together in one place - ready to answer your questions! Can you afford to miss it?

For more information about the conference click here.

You’ve missed the deadline for deposit protection? That’s a fixed penalty of three times the deposit please!

Fri, 08 Feb 2013 09:27:39 +0000

Imagine the scene.

A local council official turns up at your office and tells you that you have failed to protect a deposit within the deadline set out by the legislation. You acknowledge that somehow this was overlooked and then look aghast as the official issues you with a fixed penalty notice for three times the value of the deposit. In addition you are warned that if you don’t pay the penalty notice you will face a prosecution in the Magistrates Court with a potential fine of up to £20,000!

Far-fetched? Well not from 1st April in Northern Ireland. Under the new Tenancy Deposit Regulations as from 1 April all new tenancy deposits have to be protected in an approved tenancy deposit scheme (either custodial or insurance backed) within 14 days of receipt and the prescribed information supplied to the tenant(s) within 28 days (the Northern Ireland deadlines are shorter than those in England and Wales). A failure to meet either of them puts the landlord or agent in breach of the regulations and in an interesting change to what happens elsewhere in the UK local district councils have been given the power to take action on breaches by issuing fixed penalty notices.

TDS Northern Ireland (a wholly owned subsidiary of The Dispute Service which runs the Tenancy Deposit Scheme in England and Wales) has been running Roadshows over the last few weeks for landlords and lettings agents in Northern Ireland. At almost every session these powers to issue fixed penalty notices have been raised, particularly as cash strapped district councils are allowed to keep the money themselves.

Of course it is early days and it remains to be seen how district councils go about using their new powers. Hopefully a pragmatic approach will be adopted where genuine errors are made by landlords and agents. But for persistent offenders it is likely that the fixed penalty notice could be a regular feature in the future.

What about Scotland, England and Wales? At the moment there are no plans to adopt the same practice as far as we know, but given the relatively few cases that end up in the Courts for breaches of the tenancy deposit protection regulations I am sure that civil servants in London and Edinburgh will be watching with interest what happens in Northern Ireland in the coming year.

TDS Northern Ireland will be operating an insurance and custodial scheme in Northern Ireland after 1 April 2013. In the run up to the launch of the Scheme we are running Roadshows across Northern Ireland. For more information log on to www.tdsnorthernireland.com or email us at info@tdsnorthernireland.com.

Steve Harriott
Chief Executive of the Tenancy Deposit Scheme/TDS Northern Ireland

Taking your eye off the ball...make sure the right people sign the right things

Thu, 24 Jan 2013 15:49:19 +0000

Amount of deposit in dispute: £ 2,000.00

Award made:
Tenant £ 2,000.00
Landlord £ 0.00

In this month’s case a landlord claimed the deposit in full for unpaid rent. The landlord provided copies of two tenancy agreements.

'Tenancy Agreement 1' was stated to be a term of 1st March 2012 to 31st August 2012.

'Tenancy Agreement 2' was stated to be a term of 1st September 2012 to 28th February 2013, and dated in August.

Two (but not all) of the tenants who signed Tenancy Agreement 1 also signed Tenancy Agreement 2.

The tenants moved out of the property on 31 August 2012. The first tenancy therefore came to an end on that date. No periodic tenancy arose because the tenants moved out when the fixed term of the tenancy ended. The tenants therefore had no liability for rent under Tenancy Agreement 1 for any period after 31 August 2012.

The two tenants who signed Tenancy Agreement 2 claimed that their signatures were obtained by deception. They did not submit any evidence to substantiate this assertion, so the adjudicator reached no conclusion in this respect. However the adjudicator did consider that two more tenants were intended to sign the agreement, as there was space on the agreement for two further names to be added. The adjudicator took the view therefore that Tenancy Agreement 2 had not been concluded.

The landlord provided a copy email from one of tenants stating that the tenants were not going to stay in the property and that the tenants would like the landlord to keep their deposit. However the evidence showed that this was not the tenants’ last word on the matter, nor was it a statement made by all of them. The adjudicator did not consider that this email constituted a legally binding agreement by all tenants to the retention of their deposit.
The deposit from Tenancy Agreement 1 could be used as stated in Tenancy Agreement 1. However, the landlord did not provide evidence to satisfy the adjudicator that there was a breach of that particular tenancy. Neither was there enough evidence to show that all the tenants from Tenancy Agreement 1 agreed that the deposit could be carried forward to Tenancy Agreement 2. Furthermore, the adjudicator was not persuaded that Tenancy Agreement 2 became unconditionally binding.

In those circumstances the adjudicator was unable to make an award from the deposit relating to Tenancy Agreement 1 for alleged breaches of Tenancy Agreement 2. Any claim that the landlord believed he had against the two tenants who signed Tenancy Agreement 2 would have to be pursued by other means.

So what are the key points here?

Agreements from joint tenants for a landlord to keep a deposit need to be given in writing by all joint tenants. In this case the email was from one joint tenant only.
Contractual documents – such as tenancy agreements – need to be correctly entered into. In this case the second tenancy agreement did not appear to be signed by all the intended tenants.

You can view our library of Adjudication Digests here on our website.

Failing to provide Prescribed Information: avoiding a costly penalty

Wed, 23 Jan 2013 09:58:13 +0000

Our November 2012 blog reported on the case of Ayannuga v Swindells where the Court of Appeal passed judgement on a landlord’s failure to correctly serve prescribed information on their tenant. The landlord was given the penalty of three times the value of the deposit (N.B. this was the pre-Localism Act requirement. The penalty can now vary up to three times the deposit) and was required to return the deposit to the tenant in full. At the time the transcript of the judgement was not available and we said that we would reflect more on the issue once we had seen it.

The case was an appeal in relation to a case heard in the Woolwich Crown Court, part of which related to Prescribed Information in relation to tenancy deposits. In the original case it was clear that a deposit of £950 had been paid to the landlord. The landlord had been forced to let out the family home and the tenancy agreement made it clear that the deposit would be lodged with the custodial scheme (DPS). The Court was advised that the deposit had indeed been lodged with the DPS.

However the tenant had not been served with the required Prescribed Information nor the Scheme leaflet. Just before the Deputy District Judge gave his judgment the landlord provided more information about the deposit in a document entitled the “Additional Information Document”. The Deputy District Judge concluded that although the landlord had not complied fully with the precise requirements of the Prescribed Information Order the landlord had done enough to meet them in substance.

However the Court of Appeal took a different view. Lawyers for the landlord sought to argue that the failure to provide the Prescribed Information and scheme leaflet were “essentially…procedural points” which had left the appellant in “no serious or disadvantaged position”. The Court of Appeal noted that the landlord had been unrepresented in the original hearing and that it was “not a case of a wealthy landlord seeking to exploit an impecunious tenant”. However Lord Justice Etherton concluded that the Deputy District Judge had “reached a conclusion in relation to the deposit which was outside a proper exercise of judicial judgement and evaluation”.

The Court of Appeal considered that the landlord had not done enough to meet the following requirements of the Prescribed Information Order:

setting out the procedures that apply under the Scheme by which an amount in respect of a deposit may be paid or repaid to a tenant at the end of the shorthold tenancy;
detailing the procedures that apply under the Scheme where either the landlord or the tenant is not contactable at the end of the tenancy;
explaining the procedures that apply under the Scheme where the landlord and the tenant dispute the amount to be paid or repaid to the tenant in respect of the deposit;
describing the facilities available under the Scheme for enabling a dispute to be resolved without recourse to litigation.

Although the tenancy agreement and the additional information which the landlord had provided did provide some information about the process to be adopted at the end of the tenancy, it did not meet the requirements of the Prescribed Information Order. Even worse, the tenancy agreement and the additional information provided said that the deposit was being held by an agent in an insurance scheme when in fact it was taken by the landlord and transferred to the DPS custodial scheme.
The Court referred to the case of Ravenseft Properties Limited v Hall (2001) in which the Court found that substantial compliance with the legal requirements of a Notice ( in this case a s20 Notice) was based on fact and degree. In the current case the Appeal Court found that the information provided to the tenant in respect of the deposit was not substantially compliant with the Prescribed Information Order. Reference was also made to Suurpere v Nice (2011) where the Court said that “Parliament regards the landlord’s obligation to provide the prescribed information as being of equal importance to his duty to safeguard the tenant’s deposit”.

As a result the Court of Appeal allowed the tenant’s appeal and required the landlord to pay the deposit of £950 to the tenant and to pay an additional £2,850 to the tenant, being three times the deposit.

It is important to note that this case was based on the law applicable prior to the amendments made in the Localism Act 2011. If this case had been heard under the present law then the penalty for non-compliance with the Order would have been to repay the deposit and a penalty of up to three times the deposit.

So the key points here are to make sure that you:

serve the Prescribed Information to the tenant within 30 days of receiving the deposit;
provide all of the information in the Prescribed Information Order (TDS provides a template for members to do this effectively);
set out clearly in your tenancy agreement who is holding the deposit and where it is protected.

Details of the prescribed information for TDS members can be found here:
Prescribed Information and Suggested Clauses for Inclusion in Tenancy Agreements and Terms of Business

You can download the leaflet which you must give to your tenants here:
What is the Tenancy Deposit Scheme?

Renewing deposit protection and issuing Prescribed Information

Fri, 21 Dec 2012 15:06:04 +0000

A few questions have been raised on the Property 118 forum concerning how deposit protection comes to an end. Some comments on the site have caused some TDS members to become unnecessarily concerned that deposits may become unprotected without them knowing - we seek to clarify some of those comments.

Registering deposits and renewing protection

Members of the Tenancy Deposit Scheme for Landlords: This section of the scheme is pay as you go, and the fee paid per tenancy deposit is for the lifetime of the tenancy agreement. It also includes continuing protection where a tenancy agreement continues on a same terms statutory periodic tenancy, providing member landlords update the TDS Tenancy Database to reflect this. Where this doesn’t happen, protection ends and both the landlord and tenants are notified. Happily, we have plenty of email reminders before this to make sure this doesn’t get missed! Both the landlord and tenant receive reminders 2 months in advance, and if no action is taken, emails are sent again 1 month in advance, 2 weeks in advance, and on the day the fixed term tenancy ends. N.B. This is only for landlords who are members of TDS - if you use a letting agent who is a member, protection should be done by them and you don't usually need to do anything or have any contact with us unless a dispute is raised.

Letting Agents: This section of the scheme is an annual membership subscription and deposits are protected for as long as they are registered on the TDS tenancy database. Members can help themselves best by ensuring that they keep registered tenancies up to date to reflect changes to the tenancy agreement.

Agents who have registered a deposit to be part of the Let Only Scheme must ensure that they keep registered tenancies as per the tenancy agreement as this section of the scheme works on a pay as you go basis.

Should prescribed information be served on renewal?

The requirements to protect the deposit and provide the Prescribed Information apply as from the time the deposit is received. Therefore the Department for Communities and Local Government advise us that in their view, unless the landlord returns the original deposit and receives a new one, a landlord will not incur a penalty for failing to provide the Prescribed Information whenever the tenancy is renewed (provided no terms change except the end date on the renewed tenancy. Where other terms, the rent or the tenants change on a renewal then the position will of course be different). In any event avoiding the penalty is simple as no penalty applies where the landlord has already complied with the requirements of an authorised TDP scheme and provided the Prescribed Information to the tenant and any relevant person.

Members can choose to take a cautious approach and serve Prescribed Information with each tenancy renewal. It is up to members as to whether they do this, there is no penalty for serving it too many times!

TDS Academy - Interview with Property Tribes

Fri, 14 Dec 2012 09:36:51 +0000

This week we held the last TDS Academy of 2012 and we were delighted to be joined by Vanessa Warwick and Nick Tadd from Property Tribes. Mike Morgan, Head of Adjudication, gave Vanessa a few pieces of key advice which landlords should keep in mind from the start of the tenancy to avoid problems at the end. Click here to see upcoming dates of TDS Academy courses.

Getting the notice right

Fri, 07 Dec 2012 19:03:06 +0000

Mike Morgan, TDS Head of Adjudication

Every month, TDS brings you an example of a recent dispute and explains the reasons behind the adjudicator's decision. In this month’s case the landlord claimed a month’s unpaid rent because the tenant failed to give adequate notice to terminate the tenancy agreement.

"Don't worry, no-one will notice......."

Awards made - Landlord: £655 Tenant: £0

The agent explained that they received written notice from the tenant to terminate the tenancy on 5 September 2012, and that the tenancy period ran from the 1st to the 30th/31st of a month because the monthly rent was payable on the 1st. The agent claims that notice to terminate the tenancy must therefore expire at the end of a calendar month, meaning that the earliest the tenant’s notice could expire was 31 October 2012. The agent says that the property was re-let on 1 November 2012.

The tenant says that he gave one month’s notice in accordance with the tenancy agreement to expire on 4 October 2012. The tenant accepted that he is liable for four days rent to over the period 1 to 4 October, but would pay no more.

The tenancy agreement was signed for a fixed period ending on 30 September 2012. The evidence showed that the tenant gave one month’s written notice on 5 September 2012 to end the tenancy agreement on 4 October 2012, four days after the tenancy’s expiry.

The tenancy agreement set out that in the event the tenant wishes to leave after the end of a fixed term, the tenant is obliged to “give one months written notice of the intention to vacate the premises expiring at the end of a complete rental month. Payments are made calendar monthly hence a rental month equals a calendar month. (e.g. giving notice during January for the 28th Feb, giving notice during Feb for the 31st March, giving notice during November for the 31st Dec etc.) sic.” The rent statement provided showed that rent was paid on the 1st of each month in accordance with the provisions of the tenancy agreement.

The adjudicator took the view that the tenancy agreement set out that notice served to terminate the tenancy after the end of the fixed term on 30 September 2012, should expire at the end of a calendar month. In this case, the tenant’s notice of 5 September 2012 could therefore not expire any earlier than 31 October 2012. The adjudicator was satisfied on this basis that the tenant remained liable for the full rent due for the month of October 2012.

So what are the key points here?

Make sure notice clauses in tenancy agreements are clearly worded – what seems logical or obvious to the writer may not be to a tenant.
Disputes of this nature could be avoided by writing to tenants before the fixed term tenancy expires, in order to remind them of the notice requirements and to avoid any misunderstandings.

You can find previous editions of the Adjudication Digest here on our website: https://www.tds.gb.com/adjudication-digest.html

TDS 'highly commended' for customer service

Thu, 29 Nov 2012 10:39:38 +0000

The Landlord and Lettings Awards were held last night and TDS were highly commended for Customer Service.

Many thanks to the organisers for a great evening (we look forward to seeing the photos!) and for recognising the hard work of TDS staff over the last couple of years to make TDS stand out as the best provider of deposit protection. An extra 'well done' also goes to our friends at the Residential Landlord Association who won the award for Best Landlord Association. Deserving winners - well done!

You can see details of the other winners here on the Landlord and Lettings Show website.

This is the third time we have received an official recognition of our service this year. To show that our outstanding service is here to stay, as part of our award from the Government Standard for Customer Service Excellence we are being continually assessed over the next three years to make sure we continue to match their high standards and that we are working on areas for improvement. We have a committee of staff dedicated to reviewing our performance against the Customer Service Excellence requirements. Your feedback on our service is always welcome so if you have comments or suggestions on what we're doing right and what we could do better, please let us know.

Landlord and Lettings Awards 2012 - And the winner is. . .

Wed, 28 Nov 2012 14:52:20 +0000

Today and tomorrow we are exhibiting at the Landlord and Lettings Show in Coventry. We attend a lot of events but today is extra special, as we are delighted to be nominated as a finalist in the Landlord and Lettings Show Customer Service Award! We’ve got stiff competition, including the Residential Landlords Association with whom we work closely, so whoever wins the award just to make the shortlist is a proud achievement.

Many of you will know we have a busy programme out on the road attending events across the country and meeting people affected by what we do; this is one of the reasons we have won two other awards this year - the Government Standard for Customer Service Excellence, andPROPERTYdrum’s Tenancy Deposit Services of the Year. In November alone we have spoken at three ARLA regional meetings, hosted four TDS Academy training courses, exhibited at student housing events at universities in Newcastle, Sheffield, and Hertfordshire, and visited six members to give bespoke training in protecting deposits and handling disputes.

As well as raising awareness of deposit protection, speaking to landlords, agents, and tenants face to face is a really important way for TDS to find out what the people at the coalface think. It helps us respond and adapt to the concerns of the industry, making us stand out as the award winning provider of tenancy deposit protection.

Update: We are delighted to have been Highly Commended for excellent customer service at the awards - and many congratulations to our friends at the Residential Landlords Association who won Best Landlord Association.

Striking Oil - Oil tanks and faulty gauges

Tue, 20 Nov 2012 10:11:05 +0000

In this month’s Adjudication Digest we looked at two recent cases concerning heating oil tanks and claims for refilling them at tenancy end.

In one case, a check in inventory stated that the oil tank was full. The tenants amended the report to indicate that the tank was only half full at the start of the tenancy, and that the gauge was not working. No evidence was produced to counter this claim. The check out report indicated that the tank was one third full at the end of the tenancy. The agents claimed the difference in cost between one half and one third of the tank (a little over £100.00). The tenants agreed that the tank was not full to the correct level when they left the property, but disputed the claim on the basis that there was no means of definitely ascertaining the amount of oil in the tank and the figure reached had therefore been calculated on the basis of unreliable estimates.

The adjudicator took the view that whilst the estimates about the tank’s contents may not be completely accurate, there was sufficient evidence that the oil level at the end of the tenancy was lower than the level at its start. As it was not possible to take definitive readings the adjudicator was unable to award the landlord the full amount claimed but accepted that the landlord was entitled to something. In the absence of further evidence and in order to reach a reasonable compromise the adjudicator awarded £50.00 by way of a contribution towards the cost of refilling the tank.

In our second case, a landlord wished to claim £199.92 for the cost of topping up the oil tank to the level agreed with the tenant at the end of the tenancy. The landlord explained that the tenant agreed to fill the tank to a level of 365 mm that was agreed and marked on the outside of the tank and the tenant had £500.00 litres delivered at the end of the tenancy to do this. However the landlord claimed that the tank was underfilled at tenancy end by 348 litres which would cost £199.92 to buy at the rate of 57.45 pence per litre. The tenant disputes the claim on the ground that the gauge was faulty. The tenant has explained
that the gauge was showing 1850 litres at the start of the tenancy. He ordered 500 litres to top up the tank at the start of the tenancy but the gauge remained at 1850 litres indicating that it was not working. The tenant says that he then used a dipstick and a reading of 1850 was shown which meant that the true level of the tank at the start of the tenancy was 1350 litres. The tenant says that the level of the tank was 1200 litres at the end of the tenancy and he topped it up by 500 litres to 1700 litres and as such he has over filled by 350 litres.

The adjudicator was satisfied in this case that there was an agreement to leave the oil tank at the same level upon vacation as on occupancy. However the landlord had not provided evidence of the oil level reading at the start of the tenancy or an explanation of how the 365mm level converts into litres. A reading of the oil level is vital in allowing the adjudicator to identify if there is has been an under fill at the end of the tenancy. Whilst the landlord states that the tenant agreed to fill the tank to 365 mm at the end of the tenancy without proof that the oil level was at 365 mm at the start of the tenancy and how many litres this level constitutes, the adjudicator was unable to ascertain with any accuracy the oil level at the end of the tenancy. Unlike the first case discussed above, there appeared to be no common
ground between the parties, and the adjudicator awarded nothing.

So what are the key points here?

Check in and check out reports need to identify oil levels using a measure that can be compared for start and end of the tenancy
Make sure that oil gauges are checked and tested regularly
Estimates/invoices should show the amount of oil in litres, together with the unit price and cost calculation

And finally, if you're ever worried that your oil tank is an unsightly feature on your property, you could take some artistic inspiration from across the Atlantic...