Issuing the Prescribed Information

As you may know – as well as protecting the deposit the legislation also requires landlords to provide tenants with specific information about the deposit protection, called the Prescribed Information.

If you’re a London-based landlord and read the Evening Standard’s Accidental Landlord column then you will have seen the last instalment (Weds 15^th January) about deposit protection, which featured advice on this very subject.

We’ve received calls from some my|deposits landlord members who read the article and were confused as to what exactly constitutes the Prescribed Information and, importantly, what landlords are required to do to comply with the law.

A few key points

We felt that some clarification was needed in light of this but before we continue, there are a few key points to bear in mind with regards to the Prescribed Information and complying with the law:

1. The Prescribed Information is comprised of a number of different ‘requirements’ as set out in legislation.
2. Landlords should be aware that they need to satisfy all of the requirements when protecting a deposit.
3. However, exactly how you do this can differ depending on which deposit scheme you use.

What my|deposits members need to do

The good news is my|deposists members meet almost all of the requirements of the Prescribed Information through issuing, to the tenant, the Deposit Protection Certificate (DPC) (produced when a deposit has been successfully protected with us) and the my|deposits Information for Tenants leaflet.

However, it’s important you’re aware that there are a few other requirements that my|deposits are unable to assist you with:

• Outlining any reasons as to why the deposit may be withheld at the end of the tenancy, with reference to the terms of your tenancy agreement (requirement g.vi). This may change from tenancy to tenancy and should be set out in your tenancy agreement.
• Signing the DPC to confirm the details are correct and ensuring you give your tenant the opportunity to sign it (requirement g.vii).

What’s the key message?

As mentioned, there are a number of Prescribed Information requirements you must meet so it’s advisable that you read all of them here. If you’re in doubt, then contact your deposit scheme who will be able to help.

Tidy little sums

Have you ever ended up with deductions to your deposit at the end of the tenancy? If so, then have you ever thought: ‘I probably could have avoided that?’ Or perhaps: ‘Yep my bad, I should’ve scrubbed the mould off the bathroom tiles before I left?’…

If you could have avoided a deduction then whether it was knowingly or otherwise (we won’t judge) the chances are you broke the terms of your tenancy agreement or you neglected something that was your responsibility.

What are my responsibilities?
Most of the time it should be clear what your responsibilities are by reading the tenancy agreement and any inventory that was carried out at the start of the tenancy. If you ‘don’t have time’ to read the agreement, don’t pay attention or just ignore the terms, then you leave yourself at risk of incurring a deposit deduction. But what if there was no inventory? Or if the tenancy agreement wasn’t clear? Would you know where to start and how you should leave the property before you move out?

Why landlords and agents take a deposit
Nowadays very few landlords or letting agents let a property without taking a deposit. It provides a guarantee that they can be compensated for financial loss should you break the terms of the tenancy agreement or, worse, damage the property. Fair’s fair.

The reality is your landlord or letting agent may need to make a deduction to the deposit if you don’t return the property in the same condition it was in at the start of the tenancy – of course, they will need to allow for fair wear and tear and should only make a deduction that is reasonable. But remember, the deposit money belongs to you and isn’t it a great feeling when you get it all back from your landlord or agent unblemished at the end of the tenancy?

So what should I do before I move out?
Well, as mentioned, usually your tenancy agreement and inventory should make clear what your responsibilities are. You’re usually required to return the property in the same condition it was in when you move d in, but you may have other responsibilities too, e.g. you might be required to keep the garden tidy, or you may need to have the house professionally cleaned before you leave. You might even need to sweep the chimney…well, it’s unlikely but you never know.

The tenancy agreement should document your responsibilities and the inventory should detail the state of the property when you moved in, and thus give you a clear comparison for how it should be returned. It should also define the terms used to report the condition or cleanliness of items in the property. However, it might not always be that clear and in some in cases it might be absent completely.

What then?
Don’t fret. mydeposits has produced a comprehensive guide to help. The ins and outs of inventories aims to help you maximise the chance of having your deposit returned in full and to ensure you’re not faced with a deposit deduction for something that you could have otherwise avoided. It outlines some of the important things to consider when moving out and features tips from industry experts.

So, remember, before you move out: check your tenancy agreement and inventory to familiarise yourself with your responsibilities. And check out the guide here, too.

You never know, it might just save you a tidy little sum.

Prepare for an emergency before setting off

Have you ever returned from holiday or a nice relaxing break away to a voicemail or email from your tenant demanding that urgent repairs be undertaken? Or perhaps you returned to find that your tenant had actually carried out repair works without your consent, and is now proposing to withhold it from their rent?

Your repairing obligations
There could always be times when your tenants may not be able to contact you but the fact of the matter is, as a landlord, you have an obligation to maintain your properties in a habitable condition – which means carrying out any necessary repair works regardless of where you may be. If you fail to attend to required repairs within a ‘reasonable’ time after your tenant has reported them, then you may be in breach of your repairing obligations.

What is a ‘reasonable time’?
Well, this will depend on the issue in question and how urgently action is required e.g. heating and hot water in the middle of winter, electrical wiring, blocked pipes…

As best practice, many landlords provide tenants (or their agent if they use one) with an alternative or emergency contact if they’ll be out of touch for a prolonged period of time. But it is important to know that your tenants may have a ‘common law’ right to carry out repairs themselves.

The rules of ‘Set Off’
It’s called ‘setting off’ and it is limited to specific circumstances and situations where the tenant has informed you, or your agent, what they intend to do. However, the process involves making sure that you, as the landlord, are fully aware of the situation and it can only be actioned if you’ve delayed or refused to have repair works completed.

Your tenant’s obligations
Legally, your tenant cannot simply withhold rent in the belief that they’re entitled to do so as a result of possible breaches to your repairing obligations. Should your tenant decide not to use their right to Set Off, they must still pay the rent and then deal with the contractual breaches separately.

Your tenant can make a claim for damages against you as a result of breaches to your repairing obligations but only a county court judge can decide such matters – the dispute resolution service offered by the deposit scheme will not accept a dispute on these grounds.

Prepare in advance
Remember, always make sure you’ve carried out any necessary checks (boiler/ gas safety, electrical etc) and provide your tenants – or your agent if you use one – with an emergency contact number so any urgent repairs can be fixed as soon as possible.

Oh, and read our full guidance on ‘Set Off’ before you plan your next holiday.

Update on Superstrike vs Rodrigues

You’ll no doubt be aware by now about the recent appellate ruling in the case of Superstrike Ltd vs Marino Rodrigues and specifically the uncertainty this has caused for many landlords.

The case

Before we start it is important to note that this ruling only considered a specific set of circumstances and in fact only directly relates to the validity of a s21 notice which had been served by the landlord on the tenant.

The ruling from this case found that that deposits taken before TDP law was in place (6 April 2007) and which either renewed or continued as a statutory periodic tenancies ( STP) thereafter should have been be protected and the prescribed information served. In this specific case the landlord did not protect the deposit which was taken before TDP law was introduced but which was renewed thereafter. Subsequently the s21 proceedings were denied.

However, the ruling does have implications on TDP and in particular the serving of the Prescribed Information (PI) as it also confirmed that a statutory period tenancy (STP) is deemed a ‘new’ tenancy.

Why the uncertainty?

This creates uncertainty because the findings from this ruling constitute changes to the way that the TDP law was previously understood. Many landlords who had taken a deposit before 2007 had unsurprisingly assumed it did not fall within the TDP law, regardless of whether the tenancy had been renewed or extended on a statutory periodic basis thereafter.

Furthermore landlords who have otherwise rightly adhered to their TDP scheme’s rules by protecting deposits from April 2007 onwards, but did not re-serve the PI on tenancies that either renewed or extended as SPTs might now have cause for concern.

Where does this leave you?

If you have deposits that match the circumstances of this ruling then you should have protected the deposit and served the prescribed information. As such you are strongly recommended to do so or you otherwise risk not being able to serve a valid s21 notice for accelerated possession. You could also face a penalty for non-compliance if your tenant brings a case against you – even though you were none the wiser.

Further implications

As discussed this ruling did not specifically consider the PI but because the ruling asserts that a STP is in fact a new tenancy, it may have further implications about when the PI should be served when protecting deposits.

Following consultation with the Department for Communities and Local Government, joint guidance from the deposit protection schemes is now available.

• Downloaded here.

In summary, where you renewed a tenancy or where it extended to a statutory periodic tenancy and you did not re-serve Prescribed Information, you have the following options:

• Re-serve PI now
• Re-serve PI when you come to issue a section 21 notice
• Take no action at all.

However, you should be aware that taking the above action will not entirely remove the possibility of a financial penalty being awarded against you.

We hope that this information will offer some degree of clarity following the speculation which has occurred in recent weeks. While it may present you with a clearer understanding of the case and its implications on you, it is important to note that none of the schemes are able to offer legal advice and any information provided is not intended to be taken as such. For more detailed information on how the case impacts your individual circumstance you should seek independent legal advice.

What next?

Such is the significance of this ruling that leading industry bodies have also produced a separate joint briefing note that considers the wider implications and looks further at the possible exposure you may face in the wake of this decision.

• Download here.

More so, leading industry bodies are now applying pressure on Government to act quickly and legislate in order to make sure that law abiding landlords will be protected in the future and do not fall prey to the likes no no-win-no-fee claims companies who will no doubt be monitoring the situation closely.

Looking for a Letting Agent? Choose carefully

As a landlord, when looking to let your property it can be difficult to decide which letting agent to use. Estate agents by law have to abide by a strict set of rules set by The Property Ombudsman (TPO) and Ombudsman Services. However the same rules do not apply to letting agents. What this means is that through offering incorrect advice and poor standards of customer service, some letting agents can cause their customers unnecessary stress and loss of money. However, there are independent trade bodies that are specifically there to monitor letting agents and to make sure they following a strict code of practice. As this is still voluntary it is important to know whether that the letting agent you use is a member of one of these independent trade bodies.

 What are independent trade bodies?

Independent trade bodies such as the Association of Residential Letting Agents (ARLA), The UK Association of Letting Agents (UKALA), and the National Approved Lettings Scheme (NALS), are professional, self-regulating bodies of letting agents. These independent trade bodies are voluntary which means that it is not compulsory for letting agents to sign up. Letting agents that are members have to follow a strict code of practice, which is there to safeguard the interests of both landlords and tenants.

What is the risk?

With letting agents that are not signed up to an independent trade body, you might not be able to  guarantee a good level of service, or that you are not paying more money than you need to be. There are a significant number of UK households that are in the private-rented sector, approximately 4.7 million. In areas of high demand, such as London, fees and charges that have to be paid by renters and landlords are on the increase. What is worrying is that this allows many ‘rogue’ letting agents to get away with unscrupulous practices.  Some agents have double-charged landlords and tenants for payments for credit checks, inventories and ‘administration’. With no independent body keeping check on letting agents, there is no guarantee that you will receive good customer service, that your tenant’s deposit will be safe, and that good business practises will be maintained.

What are the benefits of using an independently regulated letting agent?

Firstly, agents registered with an independent trade body are likely to be covered by a client money protection (CMP) scheme. What this means is that if you were to suffer financial loss due to the bankruptcy or dishonesty of the member and/or their firm, procedures are in place for you to be compensated.

All members will also be required to have professional indemnity insurance, which means that you will be covered financially for successful claims relating to members’ negligence, bad advice or mishandling of data.

You can also be safe in the knowledge that you are consulting with an agent that is qualified and trained, that is competent and can give you up-to-date advice and guidance. Many members, on top of their initial professional qualifications will be required to partake in Continuous Professional Development programmes each year.

You can also be sure that the agent you are working with follows the code of practice and rules of conduct as laid down by their professional trade body – as regulating bodies set a strict code of conduct which is compulsory for their members to abide by. Importantly, this means that if something were to go wrong while you were letting out your property, you have a route to redress, giving you peace of mind.

So remember, before choosing a letting agent, check whether they’re a member of a voluntary professional body.

This blog has been provider by Romans – www.romans.co.uk

The adjudicator’s glossary #3: weighting

Welcome to the third installment in our ‘adjudicator’s glossary’ blog series. If you had time to read the previous installments about ‘balance of probabilities’ and ‘burden of proof’ I hope you found them useful. If you haven’t read them yet, then you can do so here.

For the benefit of those who haven’t read previous blogs; the purpose is to clarify some of the key legal terms commonly used by an adjudicator when they make a deposit dispute decision.

It’s advisable to start at the beginning but it certainly won’t do you any harm to start here. So if you want to know about how an adjudicator considers the ‘weighting’ of evidence in a deposit dispute then read on.

To quickly refresh, here are the commonly used terms that we’re attempting to unravel…

1. Balance of probabilities (we’ve covered this already)
2. Burden of proof (we’ve covered this already)
3. Weighting
4. Fair wear and tear and betterment
5. Mitigating losses
6. Proportionate
7. Reasonableness
8. Unfair contract terms

…but what do they actually mean and how are they used in terms of a dispute?

After all, if this helps you to prepare dispute evidence or even avoid an adjudication in the first place, then it’s worth familiarising yourself with the jargon.

Weighting of evidence

We know that the decision in any deposit dispute is determined by the evidence provided by the landlord/ agent and tenant. In the absence of clear evidence that irrefutably proves the fact or issue that is being contested the evidence will need to be ‘weighted ‘in order to measure how credible it is.

In reality this involves the adjudicator deciding whether or not to apportion any weight to the evidence submitted and often this may even come down to simply how believable or persuasive the evidence  is.

For example, a criminal defendant’s testimony that they had never been at the scene of a crime would be given little weight if their fingerprints were found there. Now, while this may be useful as a broader comparison, we know that adjudicators don’t deal with criminal court cases so, as always, we’ll use a deposit dispute  example to help clarify the issue and add some relevant context.

In this case the landlord and the tenant were in dispute over the replacement cost for an oven . Here are the facts:

• At the end of the tenancy the landlord claimed that the property’s oven was left in such a poor condition that cleaning would not be sufficient and a replacement oven was needed.
• The tenant accepted both that they had left the oven dirty and that they would accept a deduction for cleaning. However, they disputed the fact that the appliance required replacing and asserted that the oven was old and well used at the start of the tenancy.
• A formal dispute was raised.
• The landlord asserted that the oven was only two years old but they did not provide any evidence to prove the age of the oven, such as a purchase invoice or contractor’s invoice for installation.
• The landlord did provide check-in and check-out reports as evidence, however, both were of a poor quality and neither contained sufficient information as to the state or age of the oven at the start or end of the tenancy.
• The landlord also provided an undated photograph of the oven which they alleged to be from the end of the tenancy.

So what happened?

Ideally check-in and check-out reports would provide sufficient detail to allow an adjudicator to establish the condition of the property’s fixtures and appliances. In this example the documents were poorly completed and there was no other conclusive evidence to suggest the age or condition of the oven as the photo was undated. This meant that the adjudicator was required  to ‘weigh’ up the parties’ statements and assertions.

The adjudicator concluded that it was more likely that the oven was more than two years old and that the cost to replace it was not the responsibility of the tenant. Therefore the adjudicator decided that the tenant’s evidence carried more weight and thus their assertion was more credible than the landlord’s. The adjudicator only awarded the landlord the cost for having the oven cleaned but not replaced.

What if the tables were turned?

Interestingly, if the adjudicator had given more weight to the landlord’s evidence and decided the tenant should be liable for the oven’s replacement it would not be a straightforward task to decide how much to award to the landlord. To find out why, you’ll need to read our next blog in the series about ‘fair wear and tear’ and ‘betterment’, which will examine this scenario in more detail. So look out for that in the near future.

In the meantime, don’t forget that we have a range of landlord and letting agent case studies featuring real life deposit disputes, so you can see first-hand the kinds and types of disputes that arise.

You might also want to check the full glossary and start familiarising yourselves with the terms, too.

Disclaimer – all advice and examples contained in this blog are for guidance only. Each dispute is decided on the individual circumstances and evidence provided.

It’s SAFEagent awareness week

Are you a landlord or tenant using a letting agency for some or all of your letting needs and requirements?

If the answer is yes, then you should be conscious of whether or not the money you provide to them is secured through a Client Money Protection (CMP) Insurance Scheme.

SAFEagent Awareness Week, which aims to raise awareness of this form of consumer protection insurance, kicked off on Monday and my|deposits is supporting it.

If you’re not entirely clear what it’s all about then this should prove useful reading.

Safe Agent Awareness week is about consumer protection for landlords and tenants using letting agents. It is dedicated to highlighting the risks to consumers of using agents who are not part of CMP insurance schemes.

CMP ensures that money you pay to your letting agent – such as deposits, rents, service charges, arbitration fees etc – is safely protected.

In reality, it’s quite straightforward; letting agents that are signed up to CMP insurance schemes maintain and operate a client account where your money is held separately from the company’s operating funds. Crucially it means that, if necessary, you can make a claim in the unlikely event that money paid to your letting agent is mishandled. The most common example is that your agency goes bust, but of course there are other less frequent reasons which could lead to you waving goodbye to you money unless it’s protected, such as misappropriation and even death of a sole practitioner!

Keeping your costs to a minimum is important, but with a huge choice of letting agencies available for landlords and tenants, the effective management of clients’ money above all provides you with the peace of mind that your money is protected – while delivering a level of confidence and raising standards in the sector.

So look out for the SAFEagent logo – it is one of the quality marks that indicates whether a particular letting agent protects your money through a CMP insurance scheme.

my|deposits threw its weight behind the SAFEagent campaign from an early stage because we believe in raising sector standards. We want to support letting agents who go further to protect their tenant and landlord client’s money so we offer agents with CMP heavily reduced fees.

If the letting agent you are using is not able to deliver you the assurance of knowing they are covered by a CMP insurance scheme, the question you need to ask is, why not?

You should contact your agent for full details of the scheme they are registered with, as each scheme will vary.

For further information see the SafeAgents and my|deposits websites.

Smoking tenants? Deposit deductions need not be a drag…

My first cigarette was a pretty standard affair; shamefully stolen from my mum’s handbag and admired throughout the school day by my mates. Finally at the end of the day round the back of the library we lit it. We each took a drag, proceeded to cough our lungs out and, for me, that was it, never again! Now I’m not 13 anymore I know a bit more about the health hazards, but it’s not just that; it’s the stinky part that really gets my goat as a landlord.

I do my best to ensure my properties are of a high standard; well kitted out, a fresh lick of paint between tenancies…you know the drill. After taking all this care I want to let to good tenants who will take care of my investment and at the end of the tenancy I don’t want to be left with the smell of smoke or cigarette burns in the carpet to deal with. Most smokers seem immune to the smell and don’t seem to realise how it clings to almost everything and for hours after the cigarette was stubbed out. As a non smoker living in a non smoking household I can sniff out a cigarette a mile away which has made for a few interesting encounters with my tenants.

If you’re worried about damage caused by smoking and you don’t want your tenants to smoke in your property you can always make sure:

• Within your marketing it clearly states “non smoking tenants only”
• When conducting your own viewings you use your sense of smell to sniff out tenants with a habit and make it clear the property is available only to non smoking tenants
• The smoking question is included within your referencing process
• It is clearly stated within your tenancy agreement that tenants are not to smoke inside the property

However, even with the above precautions it’s very difficult to stop your tenants smoking in your property if they want to. Should you find your tenants smoking on a maintenance visit or spy an overflowing ash tray the best thing to do is politely remind them that they are not to smoke in the property.

But if your tenant continues to smoke you can use your inventory as evidence to detail why you might need to make a deduction to the deposit at the end of the tenancy. For example to professionally clean the property or claim for part of the cost to replace badly burned carpets.

Condition issues like cigarette burns in carpets and soft furnishings should be clearly noted alongside those tell-tale signs like discoloured walls in the inventory and should be backed up by photographic evidence that show any discolorations etc. Using a third-party such as an inventory company or even odour specialists to assess the extent of damage from smoke will provide valuable evidence that you can submit to support your deposit deduction claims.

However, without a good, well detailed inventory of a professional standard, claiming for costs to alleviate damage that smoking causes to the property will prove very difficult. If you end up with a case of your word against the tenant’s word, then you won’t fair well if it goes to a dispute, so make sure you’re prepared from the start.

Written by Sarah Male,  Urban Sales and Lettings  Online Estate Agents

Latest changes to our scheme rules

my|deposits happily entered into our 7^th year as the England & Wales’ leading Tenancy Deposit Protection scheme (TDP) this April, bringing about improvement in our latest Scheme Rules.

As always, we aim to provide all of our members with the best possible service and ensure that you can easily comply with the law. Indeed there have been new challenges as the scheme develops and these are reflected in some key changes of our 7^th Edition Scheme Rules.

Let’s have a look….

New section for agents

We’re going to dive straight into a New Section which has been introduced for  letting agents. This new section (Section C6) provides information and new rules for letting agents who secure their deposits on our annual model pricing plan – so take a look if that affects you.  Of course , normal rules still apply, like renewal of my|deposits membership and providing the tenant(s) with important information of any changes to their deposit protection.

Deposit rules to protect members

In section D we’ve updated the reasons why we may reject a deposit dispute and we’ve introduced a rule to protect members whose tenant(s) refuse our ADR service in the event of a dispute, but don’t initiate court proceedings. It means that if this happens we’ll return the deposit to the member if the tenant doesn’t start formal court proceedings within six months.

Complaints

The next significant changes are in Section G: Complaints Procedures. Hopefully this isn’t a trending issue, and we hope that you’re satisfied with our service.  So what’s new? Well we’ve modified the time frame for complaints, so if you did wish to complain we are committed to providing a response within 24 hours. However, if we are unable to resolve your matter with the 24 hours, we’ve committed provide a substantive response within 5 working days.  Oh and one last thing change to be aware of; our Complaints Procedure cannot be used to appeal against an Adjudication decision; this is binding once you and your tenant have agreed to use the ADR service.

So that’s a brief overview of the key changes to my|deposits ‘Scheme Rules. You can take a more detailed look at the 7the Edition here.

 

Common sense prevails

We’ve taken a break from the sunshine to inform you about an important Court of Appeal decision which will be of interest to any landlords or letting agents who accept rent in advance from tenants who fail to pass referencing.

It was the decision in the case of Johnson vs Old which was decided this week.

Background

The tenant (Mrs Old) had come to the end of a third consecutive 6-month tenancy agreement with the landlord. The tenant had failed referencing checks so the landlord (Mr Johnson) had agreed to take 6 months’ rent in advance for each of the three tenancy agreements to date.

At the end of the third agreement the tenant fell into arrears, prompting the landlord to serve a s21 notice to regain vacant possession.

However, the tenant claimed that the s21 notice served by the landlord was invalid; her argument being that the three 6-month rent payments which she had paid in advance of the tenancy were security deposits which should have been protected under Tenancy Deposit Protection (TDP) law.

This has taken a while to conclude, so here’s a quick breakdown of what’s happened to date:

1. Jan 2012 – a District Judge at Brighton County Court ruled that the successive payments of rent up front by the tenant were in reality deposits and as the landlord had failed to protect them, he was in breach of TDP legislation and thus unable to serve a valid s21 notice.
2. July 2012 – The decision went to HHJ Simpkiss on appeal, where it was overturned. The ruling made clear that the payments were rent and thus not a security deposit which needed protecting.
3. April 2013 – the Court of Appeal upholds the decision of HHJ Simpkiss and ruled in favour of the landlord.

It seems like common sense has prevailed and it may come as a relief for many who have been keeping a close eye on developments.

If the ruling had been in favour of the tenant it would have had far reaching consequences as it is common practice to take payments up front when a tenant fails referencing. The worry was that this would set the precedent that any payments previously taken upfront would be captured by TDP legislation, leaving landlords across the UK in chaos scurrying to protect them.

Lessons learned?

It is important to note that whilst advanced rent can provide security to landlords or agents whose tenants fail referencing, it should not be used as a way of circumnavigating deposit protection legislation and it cannot be used in any circumstance  to cover any other breach of the tenancy agreement.

This was not the case in Johnson vs Old, but it does demonstrate the importance of including clauses that relate to deposits in the tenancy agreement. It seems that  if more care had been taken the situation could have been avoided, so the lesson is to make sure your tenancy agreement is thoroughly drafted and clear from the outset.

Final thought

This decision relates to advance rent and not holding deposits generally. If you are in doubt as to whether a holding deposit is a tenancy deposit or not then read our blog on that issue here. A cautious approach will safeguard you against any claim made by the tenant so our guidance is that you should protect the full deposit amount that you take and provide the prescribed information to the tenant.