Disputes over tenants' deposits have always been a thorny issue especially at the end of a tenancy. Disputes frequently arise when a tenant disagrees with a landlord or agent about the amount of the deposit withheld by the landlord. In the landlord's opinion there may be damage to the property far in excess of fair wear and tear. The tenant may and more often than not, disagrees.
To help resolve issues between tenants and landlords and their agents, three schemes have been introduced and these are as follows:
1. DEPOSIT PROTECTION SERVICE (DPS)
This service is a government backed scheme, free to use by landlords and agents and is the scheme used by most letting agents.
All relevant information is registered online, inc. name and email addresses of tenants and the money forwarded to the DPS. The DPS on receipt of these monies forward an email to the tenant confirming their Deposit registration, and Repayment ID No. Tenants along with agents/landlords can log onto website and check details. The agent/landlord are required to issue to the tenant a copy of prescribed information and terms and conditions.
2. TENANCY DEPOSIT SCHEME. (TDS)
This scheme is often used by high street agents who pay to belong to this scheme. They retain the money in a client account, and should have client money protection insurance.
Unfortunately, not all agents have this insurance and some well known high street names have disappeared with deposit monies. So if your agent is using this scheme make sure he has insurance. Again, they must issue you a certificate with terms and conditions fully explained.
3. Mydeposits. This is an insurance based scheme used by individual landlords or agents. The money is kept by the landlord/agent who has to pay a fee to register the deposit. The money is retained by the landlord/agent and must be held in a client account. You must be issued with certificate with terms and conditions fully explained.
For all of the three schemes, the agent/landlord has a maximum of 14 days from receipt of deposit to notify and issue the relevant certificate to the tenant. In all scenarios the tenant must have a certificate, terms and conditions of scheme, and have been made aware of how to retrieve the deposit at the end of the tenancy, or what to do in event of a dispute. There are penalties to the landlord for not complying. They cannot issue a Section 21 notice for repossession, if they have not protected the deposit, and can also be fined up to 3 times the deposit for not complying with scheme rules.
At the end of the tenancy deposit monies must be returned within 14 days, or in event of monies being withheld, tenants must be notified of the disputed amount within that time frame. Whatever scheme is in force, appropriate redress is available to the tenant as per the terms and conditions provided.
Facts
DPS said only 19.1% of disputes over tenants' deposits had gone wholly in favour of landlord/agent.
41.5% in wholly in favour of tenant. 39.4% in split awards.
Since 2007 DPS Protected a total of ￡1.1bn worth of deposits, which number two million, and had 8,929 adjudications.
Mydeposits and Tenancy Deposit Scheme found that most adjudications were in favour of tenants.
DPS is the popular choice for landlords, handling more deposits than Mydeposits. DPS has dealt with 250,000 landlords plus 20,000 agents acting on behalf of landlords.
TDS has 4,000 agents on its' books.
A recent article from Residential Property Investor May/June 2011 highlights the necessity to comply with all schemes' rules and particularly at the end of the tenancy when the tenant is claiming their monies back. There are important time scales to adhere to and many disputes are automatically awarded to the tenant if the agent/landlord has simply failed to respond within the timeframe. Once a tenant or landlord disagree on the deposit payout and agree to use the Alternative Dispute Resolution process, landlords have two weeks to make their case for withholding all or part of the monies. Kevin Firth, director of The Deposit Protection Service says "Agents are the worst offenders. Once it has been agreed to use alternative dispute resolution, it is astonishing how many go on holiday or simply ignore the timescale. As we say, time and time again, the deposit is the tenant's money. It is therefore for the landlord or agent to have to prove their case. If they don't then we simply pay out'.
A summary of the landlord's claim is sent to the tenant who has two weeks to dispute it. The tenants counter-case goes back to the landlord who has seven days to dispute this. Finally, the adjudicator investigates and makes the decision, based on the evidence. The adjudicator's evidence hinges on the inventory.
Having an understanding of how disagreements relating to the release of the deposit is handled, highlights the necessity of having correct paperwork in place, correct tenancy agreement, signed and dated, and a comprehensive inventory, also signed and dated by both tenant and agent. Ideally the inventory should be professionally produced and well laid out to enable an adjudicator to read and understand clearly the layout, condition and contents of that property, as they will rely on that document to make a decision. Photographs and videos are now often included as part of the inventory. These must be clearly labelled and identifiable and also verified by the tenant, or could be dismissed as evidence.
Clare Price is an experienced landlord and letting agent and works in the Guildford and Woking area. She owns a letting agency called Prime surrey Lets, visit her website at http://www.primesurreylets.co.uk
Clare is a member of the UK Association of Letting Agents and a member of the National Landlords Association and the Residential Landlords Association.
As a letting agent, my aim is to create good working relationships between tenants and landlords. I do this by offering a professional, cost effective and fair deal for both landlords and tenants.
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