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Joshua, Lawyer
Category: UK Property Law
Satisfied Customers: 25358
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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My tenants paid their deposit spread over 10 months period,

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My tenants paid their deposit spread over 10 months period, which meant I didn't secure it in the deposit scheme. Now the tenants have left with rent arrears, and I plan to sue them. I am happy to credit their deposit against the debt, but does the fact that I didn't register the deposit affect my claim?

Thank you for your question and welcome to Just Answer. My name is XXXXX XXXXX I will try to help with this.

In order to give you an answer tailored to your circumstances, I will just need to ask you some preliminary questions so that I can consider your position from all angles.

What type of contract did they have?
Customer: replied 3 years ago.
Thanks. I'm due in court right now so I'll pass this onto somebody else for you.
Thanks for your question. Please kindly RATE my answer when you are satisfied

My colleague has asked me to look at this for you. May I ask when the tenancy finished and roughly when was its start date please?
Customer: replied 3 years ago.

Tenancy finished last week. It lasted for 2 years.

Thanks. I very much regret that this is potentially going to cause you difficulty. Unfortunately the fact that the deposit was paid installments does nothing to relieve the legal requirements on you as landlord to protect the deposit. The law requires any money held from time to time as a deposit to be protected. In fact accepting a deposit on installment creates much more burden for you as landlord than usual because the law requires you to protect each installment as it is received within 14 days of receiving it. This creates an administrative headache for you and landlords should as a rule never accept deposits paid as installments because the landlord is almost bound to fall foul of the deposit protection regulations unless they are extremely organised and the administration is not worth it in any event.

In terms of where this leaves you; the deposit regulations became all but unenforceable as a result of a series of court decisions however as a result the government took action under the Localism Act and now the regulations are very much enforceable and if a landlord fails to protect a deposit within 14 days of receipt, by installment or otherwise a court can order up to 3 time the amount in compensation. Here the aggregate of the deposit instalments would be taken as the baseline.

Accordingly if you issue proceedings against the tenants for rent arrears you run the risk that the tenants may counterclaim for compensation for failure to protect the deposit. They may not of course but this is the risk. If the rent owed is more that the potential compensation then the risk is more manageable but if it is less one outcome could be that you end up having to pay more than you stand to potentially gain.

The tenants may of course not know of the above compensation but it is surprising how many do.

Is there anything above I can clarify for you?
Joshua, Lawyer
Category: UK Property Law
Satisfied Customers: 25358
Experience: LL.B (Hons), Higher Prof. Dip. Law & Practice
Joshua and 2 other UK Property Law Specialists are ready to help you

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