Returning tenant's deposit

[Rimmer]

Hello

Newbie here. This is my situation.

I took on a tenant mid February and he signed a six month AST and gave a deposit of one month's rent.

He was made redundant in late March (partly I gather through his own making) and told me he wanted to leave asap. The tenancy states that after three months we can agree that he can get in a new tenant to take over the tenancy. It was only six weeks, but I didn't want any voids so agreed that he can try and get someone new in. At no point did I say that he has escaped the liabilities in his lease After a few days, I realised that I could do a better job of finding someone and have now found someone to move in in a week's time, provided a good reference comes through.

I stupidly did not put the deposit in a protection scheme, and am considering doing it right now in case this becomes an issue.

The tenancy states that I can withhold reasonable compensation for breach of contract.

What of the original tenant's deposit is it reasonable to withhold? I am out of pocket for the money and time I put in chasing around trying to find a new tenant and the whole thing has caused me lots of stress. He has clearly breached the contract massively.

Thanks

[Grampa]

Any material loss such as advertising. But if you up-set him he may take you to court for not protecting the deposit. If it hasnt cost too much I would return the deposit in full and move on. He could still take you to court for x3 the deposit but there may be less chance if you return it in full.

[Rimmer]

I understand from case law that he cannot recover three times the amount if he is a current tenant (which he still is), and if I set up the deposit scheme now, he will be in no position to make that kind of claim.

[Richlist]

But you have a specific time limit in which to protect the deposit and issue the prescribed notice.....you will have failed to meet these requirements leaving yourself open to action.

[Rimmer]

Thanks. I'm reading up on the case law on this. It appeared as though it was a good defense for a landlord to make sure the deposit was protected up to the day of the hearing, but that appears to be less so now since reforms last May. This is a bit worrying...

Does anyone know of recent cases regarding this within the last year?

[Grampa]

You are out of date the law plus case law has changed since the Localism Act 2011.

The effects of the changes are, in summary, that:



The deposit must be protected and the Prescribed Information provided within 30 days. For TDS members this will mean that the tenant must have received the Prescribed Information (including the explanatory leaflet What is the Tenancy Deposit Scheme?) and the TDS deposit protection certificate, and the deposit must have been registered on the TDS tenancy database.



This is an absolute time limit and a tenant will be able to make a claim from 31 days after deposit payment if the requirements relating to protection have not been met. The claim will be for the return of the full sum of the deposit along with a penalty of between one and three times the sum of the deposit, to be awarded at the discretion of the Court.



The claim can still be made even if the deposit has been protected after 30 days, although the courts will then take the fact that protection has occurred into account when deciding what level of penalty to impose.



If a landlord fails to meet the initial requirement to register the deposit on the TDS tenancy database, no Section 21 Notice can be served until either the landlord returns the deposit to the tenant in full or with such deductions as the tenant agrees; or if the tenant has taken proceedings against the landlord for non-protection and those proceedings have been concluded, withdrawn or settled (for example, by the court awarding damages being the return of the deposit or a fine not more than three times the value of the deposit).



If a landlord fails to serve Prescribed Information, (s)he cannot serve a Section 21 Notice until the Prescribed Information has been served - but this can be more than 30 days after receiving the deposit.



Tenants can make an application to a county court for a penalty award even where the tenancy has

[Rimmer]

Yes, I alluded to that in my post when I said it "was" a good defense.

[Carryon Regardless]

Being an AST I'm assuming this to be an exclusive tenancy.

You are permitted to charge 2 rents for the same period, here it seems you will have tenancies back to back so I don't see losses.

I would refund the deposit in full in exchange for a letter of surrender and discreetly worded disclaimer for claims.

[Rimmer]

Thanks to everyone for advice. I'm a new landlord and the other co-owner was supposed to have sorted out the deposit security, so you live and learn. Luckily I'm not out of pocket by more than advertising costs. The tenant has got back to me refusing to negotiate. I will not make this mistake again.

[Mortitia]

To bring a case against you the tenant would have to fund it himself and the county court does not usually take these cases so it could be financially unviable for him to do so as he would need extensive legal help.

I'd refund the deposit and take it as a lesson learnt.

[Grampa]

Shelter used to have a idiots guide to claiming x3 from the landlord on their website but not sure if its been updated (or still there) since the localism act and the requirement not to used the small claims route.