Deposit Protection - have I missed something?

[catlover99]

Currently two of my properties have long term tenants who are now on statutory periodic tenancies following expiration of the initial AST (in England). Both tenants are happy with this as it gives them flexibility if they purchase or move and also saves renewal fees which gives me extra brownie points with them. I use an agent for tenant find, setting up of AST and deposit and inventory but day to day management is undertaken by myself. Part of what I pay the agent for is deposit protection and the serving of the prescribed notices as part of the initial set up.

I have been contacted by one of the tenants who was very alarmed to receive a notice from DPS that their deposit was now unprotected (I think they thought I was evicting them because their rent was late this month for the first time ever- I usually allow a few days leeway before contacting them and the rent came in only a couple of days late so I wasn't bothered at all about it). So after calming them down I told them I would sort it and not to worry. My understanding is that having protected the deposit and served the correct notices within the prescribed timescale, that the tenancy going periodic does not mean the deposit needs to be re-protected and the superstrike case and change to the law following this means I am fully compliant.

Before I go and shout at the agent tomorrow for potentially dropping me in it and alarming my tenant at the same time, and without contacting either of us to find out if the tenancy has gone periodic, can any landlords who sort out deposit protection themselves or are legally minded bods tell me if I have missed something before I get a bit shouty about it?

[modellingman]

I presume that you are using the DPS' insured scheme rather than the custodial scheme.

In the custodial scheme, the deposit stays protected when an AST becomes periodic. However, in the insured scheme there is a requirement on the landlord to notify the DPS if a tenancy is to continue beyond its fixed term.

The relevant part of the insured scheme's Terms and Conditions is in Clause 16.

Crucially, from your point of view, if the DPS receives no notification from the landlord then the DPS closes the account and then informs the tenants that the deposit is no longer protected.

Whether you will be justified in shouting at the agent will to some extent depend on precisely what contractual arrangements exist between you. However, either you or the agent appears to be holding an unprotected deposit and that puts you in a vulnerable position. In your shoes, I would be returning the deposit or protecting it ASAP. If protecting it you should also issue the Prescribed Information notice. If you want more info PM me.

If the agent has protected the deposit then unless the agent has registered your interest with the DPS it is likely that the DPS will have sent their pre-end-of-tenancy reminder notice to the agent rather than you. As the agent is not involved in the management of the properties s/he may well have ignored it.

In this instance, your tenant, for unrelated reasons, has brought the matter to your attention. You may want to find out if you are sitting on unprotected deposits with any of your other tenancies. You can check that here.

If you are relying on the agent to do your start-of-tenancy admin (such as deposit protection) for you then you may want to check whether s/he is issuing all the other stuff that is required (EPC, gas safety record, how to rent booklet). Without these you cannot issue a Section 21 (no fault eviction) notice should the need for this arise.

[catlover99]

Sorry - should have made it clear that it is the custodial scheme and the nature of the contract with the agent is that they do everything on my behalf for start and end of tenancy, but I am very much arms length with deposits, they receive the deposit and hold the logins. I am pretty obsessive about everything being done properly and insist on copies of everything sent to the tenants, contract, guarantor deed (if needed), the prescribed notices including deposit protection - the lot and I always check that things have been done correctly. This is the third agent I have used, the previous two were terminated by me for not doing things properly when fully managed and causing me difficulty - and in both cases rather a lot of cash. I decided that it was better all round for the day to day stuff to fall to me. I have been a landlord for many years and understand my obligations.

No gas supply at the property, all electric, but I am very particular about electrical/fire safety and quickly sorting out problems. Generally I have good tenants and want to keep them and work with them if they have problems. I have never yet had to evict a tenant although I have had a couple of nightmare ones. At end of tenancy a third party does the check out inventory and only once I have received the report - and then afterwards check the property myself, do I decide if any deductions are necessary, I find inventory clerks can be a bit overzealous in mentioning things that are fair wear and tear and dressing them up as 'damage', hence the personal check after they have been in. I then instruct the agent on any deductions and why and authorise release of the deposit. Previous tenants have always commented on what a good landlord I am - reputation is everything as my day job is as a regulated professional. I am actually quite angry that the tenant has had this upset.

I will get shouty and make them re-protect the deposit while I am there. If they did receive something from DPS they should have contacted me. Thanks for the heads up on the insurance scheme as others will find the information useful.

[modellingman]

I strongly suspect your agent is using the insured scheme. There is no mechanism in the custodial scheme for a deposit to become unprotected. It is either never protected (because it was never transferred to the DPS) or it is protected. It only leaves the scheme by mutual agreement between landlord and tenant or on the decision of the administrator of the ADR procedure or on the decision of a court.

Nice to hear you are one of the good guys, contrary to popular belief there are quite a lot of us around.

[catlover99]

Well we try Landlording is a business and you have to keep the customers happy (within reason). Mystery solved. The agent decided to change protection schemes and failed to tell either the landlords or the tenants about it. I have made it clear that I am not happy about the lack of communication, nor do I expect to be charged for this and I will be speaking to the finance person responsible for this on Monday, the person in the office today phoned their finance person on their day off while I was there for an explanation. I am assured the deposits are protected but will ask for written confirmation as at the end of the day if they are not it will be me ultimately responsible in the eyes of the law!

I have just contacted all my tenants asking them to check their emails and confirm with me they have received the prescribed information from the new scheme. If they haven't then more words will be had...

[Arborbridge]

I am pretty obsessive about everything being done properly

Which is a good reason to do it yourself! Protecting the deposit is free and dead easy.

The only time I didn't do this was on the latest deposit when I was in a hurry to go away on holiday. Letting the agent do it seems to have resulted in bad blood between tenant and agent since they want to charge some absurd amount to re-protect the deposit when the AST goes SPT in May - a wrinkle which would never happen if doing it myself and one I need to sort out. I'm not having tenants ripped off if it can be helped.

Arb.