How do I claim against my tenant's deposit when they won't respond?

PROPERTY CLINIC: How do I claim against my tenant’s deposit when they won’t respond to my lettings agent?

  • The Tenant Fees Act 2019 put a cap on how much of a deposit can be collected
  • Landlord says tenant has caused £9,000 of damage versus a deposit of £2,300 
  • The protection schemes have a free alternative dispute resolution scheme

It turns out that my letting agents found a violent alcoholic to rent my apartment.

Besides a fondness for hard liquor, the tenant also had a weakness for domestic abuse, drugs, prostitutes, all-night parties, and Ferraris. 

My neighbours documented all this and more; I was even called during a live incident where a woman was screaming that he had a knife and was going to kill her.

My lettings agent, which was supposedly managing the property, effectively did nothing except ask me to wait until I could give notice at 12 months.

The tenancy deposit protection schemes have a free alternative dispute resolution scheme

It failed to issue notice to the tenant when I asked, now leaving unpaid rent.

Finally, after a year and a bit, the tenant has finally moved out leaving a trail of destruction costing more than £9,000 – versus a deposit of £2,300 – and relations with our neighbours seriously impaired.

The lettings agents has refused to send my deposit claim to the Tenancy Deposit Scheme on the basis that the tenant has not responded to its telephone calls or emails.

It says that the TDS will simply send the claim back. It, therefore, suggests I sign an indemnity waiver to get the full deposit back subject to exposing me should the tenant ever dispute the deposit.

Should I accept the indemnity approach? AW

MailOnline Property expert Myra Butterworth replies: I am sorry to hear that your experience of being a landlord has not be a good one.

It is important that responsible landlords are kept in the market. If they disappear, the supply of attractive rental properties will diminish, and this may push up rents for responsible tenants.

We speak to a legal expert about your case, what your options are, and what the best course of action is going forward.

Stephen Gold, ex-judge and author, explains: It’s not uncommon for tenants to trash properties they rent.

That’s the primary reason for a landlord to collect a deposit before the tenancy starts although there is now a legal cap under the Tenant Fees Act 2019 on how much can be collected. Generally, it is the equivalent of five weeks’ rent.

In the case of our questioner, the deposit was £2,307.69 and a cool one year’s rent of £24,000 was additionally paid in advance.

Agents increasingly advise landlords to collect as much as possible by way of advance rent so at to overcome that cap and obviate default in monthly payments.

The deposit – even including the 69 pence – had to be protected by law with one of the three Government approved deposit schemes.

Here, the agents dealt with protection through the Tenancy Deposit Scheme (TDS) and used the option of paying TDS to insure the deposit and themselves retaining it as stakeholders, which was legitimate.

The alternative would have been to use the custodian system, involving the deposit being handed over to TDS.

The Tenant Fees Act 2019 imposed a cap on how much of a tenant’s deposit can be collected

According to the account of events related by our questioner, he is entitled to have the deposit paid to him because of a series of breaches of the tenancy agreement that have caused him loss. In fact, loss far in excess of the deposit held.

The protection schemes have a free alternative dispute resolution scheme where there is disagreement between the landlord and tenant about what should happen to the deposit after the tenancy has ended and TDS is no exception.

Under its scheme, there will usually be what it calls adjudication, which is similar to the more commonly known arbitration.

Our questioner appears to have been given conflicting advice by the agents about whether TDS adjudication could go ahead in the absence of the tenant agreeing to it.

TDS rules allow for it where, as here, the tenant fails to confirm whether or not they agree to it.

As it happens, it is now too late for this as the process should have been started off within three months of the tenant leaving. This time limit can be extended by TDS in extenuating circumstances such as serious illness. They do not exist here. There is no time limit under the custodian scheme.

Adjudication v County Court claim

Adjudication is an alternative to a county court claim in this situation and the adjudicator’s decision would be binding on both sides.

Generally, what are the advantages? It is faster and there is no court fee. And for those who have an abhorrence of entering a courtroom or would prefer to spend the day at the races, no personal attendances involved because the adjudicator reaches their decision on paper.

Stephen Gold is a former-judge and author

The disadvantages? The adjudicator can only decide what should happen to the deposit and cannot deal with compensation over and above. 

There is also the loss of the opportunity to orally address the judge – for a claim not exceeding £10,000 the case would almost certainly be dealt with as a small claim – and to cross-examine the tenant and any witnesses they may be relying on should there be some material factual dispute; and greater scope to challenge a judge’s decision as against an adjudicator’s decision when they may have gone wrong.

One caveat. Under an objectionable pilot scheme that started on June 1, 2022, some small claims proceeding in county court hearing centres at Bedford, Luton, Guildford, Staines, Cardiff and Manchester will be decided by the judge on paper – and without a hearing even though one side, or both sides, oppose.

However, that will not happen if the judge feels that an oral presentation or cross-examination are needed.

You can try and keep your case away from these centres to avoid being stuck with a paper determination that you would not want.

My advice to our questioner would have been to prefer a county court claim to a TDS adjudication if that had now been available.

The court could order the agents to pay over the deposit in part satisfaction of any judgment it gives in his favour.

The agents would have to be joined as a party to the proceedings. In this situation, agents tend to sit back without taking any active part in the case and abide by the court’s decision.

In this case, the landlord says the tenant has caused £9,000 of damage versus a deposit of £2,300

The agents have made a suggestion. They say they will pay the deposit over to our questioner (or so much of it as he claims) provided that ‘if the tenant makes a claim for the deposit, you accept full responsibility including any associated costs.’

The wording could be clearer.

However, I anticipate that the agents are after a full indemnity and want to be assured that, should the tenant subsequently claim against them for allegedly releasing the deposit without his consent and they be put to expense as a result, our questioner will pay over to them whatever they may have to pay back to the tenant and their costs.

The agent’s stance in this respect is not unreasonable.

If our questioner is prepared to limit his claim to the amount of the deposit, he may think it is worth taking the calculated risk of giving the indemnity sought once the precise wording of it is clarified and receiving the deposit from the agents.

That is what I would do although I am a betting man (without going to the races).

Giving the tenant details of his loss, over and above the deposit, ought to deter them from kicking up a fuss about the deposit release. Otherwise, he can sue for his total loss and seek a judgment against the tenant and an order that the agent releases the deposit to him to go towards that judgment.

In that event, he should first send the tenant a letter of claim that particularises what he is claiming and why and gives him, say, 28 days to pay up and threatens county court proceedings for what he is claiming with interest at the rate of 8 per cent as from the end of the tenancy and costs.

I would not recommend suing anyone unless you can be pretty sure that they will have the financial ability to settle the judgment sought during your lifetime. Our questioner’s tenant seems to have that ability. A court bailiff would certainly find to be very tasty the Ferrari he is driving around in. Let’s hope it is not on HP.

Stephen Gold is an ex-judge and author of ‘The Return of Breaking Law’ published by Bath Publishing. For more information, go to breakinglaw.co.uk

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