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All very frustrating, but what are the options?!

Painsmith has recently encountered the Kafkaesque world of the tenancy deposit protection schemes, specifically the DPS and its new rules relating to the release of the deposit following a court hearing.

DPS is currently refusing to release deposits where the courts have not specifically ordered it and they have changed their rules to reflect the same. Under rule 29 (a) DPS will only release the Deposit if the Court Order specifically refers to the Deposit and how much to be paid out to the tenant.

Several of our landlord clients have obtained a possession order on the grounds of rental arrears and are finding it impossible (or very nearly impossible….or just very expensive) to get the deposit released, even where the contract specifically allows for the deposit to be applied against rental arrears.

Of course it is always open for the tenant to agree the release of the deposit to the landlord, but once possession is obtained many tenants lose interest in co-operating with their former landlord.

In the absence of an agreement from the former tenant the landlord is left to apply to the scheme to ask for the release of the deposit. We believe this should simply be a matter of drawing the scheme’s attention to the court order for possession and rent arrears and the clause in the contract, which allows the deposit to be used against rental arrears, where applicable.

However on more than one occasion recently a landlord’s application to the DPS for the release of the deposit has been refused and the applicant referred to clause 29 of the terms and condition ( see above) and informed that if they want DPS to release the deposit to them they must either arrange for the Court Order to be amended or a Third Party Debt Order to be obtained.

Concurrently, courts are refusing to make orders that would satisfy the DPS rules with many judges refusing to address the issue of the deposit on the grounds that it is a matter for the scheme and they do not want to usurp the jurisdiction of the Adjudicator.

You will recall that part of the point of these schemes was to take the matter of deposit handling away from the courts and instead use an alternative dispute resolution, that is the Adjudicator. However landlords find themselves facing courts that refuse to deal with the deposit because it is a matter for the scheme, and the scheme refusing to release the deposit without a court order so the whole thing becomes farcical.

Painsmith has historically been involved in deposit protection reform and we would suggest that between the schemes and the courts there needs to be some clarification.

15 thoughts on “All very frustrating, but what are the options?!”

  1. ontological_shock

    I agree that the DPS refusing to accept a court order as sufficient evidence that the money is owed to the landlord is farcical. However, I concur with the court refusing to comply with the DPS’s requirements if it chooses to; why should the court bow down to a private party’s administrative rules?

    But this is just one aspect of a wider problem; that of the three schemes’ administrative rules and how they relate (or don’t) to the purpose and principle of the statutory requirement for deposit protection. For example, MyDeposits (a.k.a. Tenancy Deposit Solutions Ltd) will ‘unprotect’ a deposit if a landlord goes bankrupt, or if he fails to ‘reprotect’ if the fixed term is renewed (but not, without any apparent logic, if it is replaced by a statutory periodic tenancy).

    A deposit, once accepted by a scheme as protected, should remain protected, regardless of any subsequent shenanigans by the landlord etc. It should not be the case that the landlord must (sometimes repeatedly) negotiate a minefield of administrative rules in order to ensure that it remains protected.

    I presume (hope) that there must be some requirements that the schemes are legally obliged to adhere to; but whatever they are, I suspect they haven’t been thought through very clearly (rather like the Chapter 4 HA2004).

  2. The DPS clearly need to amend Rule 29(a). We have a client (landlord) with an Order for Possession and a cost award of £23,000 against a defaulting tenant and the DPS are refusing to release the deposit on the strength of the Order. They are expecting the landlord to incur further costs and wasted time in trying to have the Court alter the judgement in order to satisfy Rule 29 (a) and it is unlikly the Court will oblige.

  3. In response to the last comment, unfortunately If landlords live outside the UK they have to use DPS.

    So far as DPS’s terms and conditions are concerned, their latest version (December 2011) is version number 18. When a new version is issued they do not inform landlords or tenants. Thus as terms and conditions may change during a tenancy, which version applies – the one which was current when the deposit was protected (and which formed part of Prescribed Information given to the tenant) or any later versions?

    1. It is not true that overseas landlords can only use DPS, one of the other schemes does take overseas landlords.

      DPS has a clause which allows them to change their terms which are them applicable when issued no matter when the deposit was registered.

  4. This article fails to take into account the responsibilities of the scheme administrators (ie The DPS or either of the other two). Schedule 10 of the Housing Act 2004, specifically, paragraph 4 Custodial schemes: termination of tenancies, sub-paragraphs 4 and 5.

    The scheme must be “satisifed” that the “relevant amount” (the deposit) is payable to one or the other party. Simply presenting a possession order whether on the basis of rent arrears or not is clearly not sufficient? It remains that unless it is clear from a court order that the court has consider the issue of the deposit, it cannot be assumed that the tenant has not paid / is paying any rent arrears, or has a separate agreement for repayment.

    The schemes are there to protect both parties.

    1. I disagree. If the landlord has a court order which states that x amount is owed and that is presented to the scheme asking for the deposit to be offset then the scheme can adjudicate and contact the tenant to ask whether the amount has been paid and explain that the deposit will be offset if it is not. What the scheme is doing here is sitting on its hands and failing to take a proactive approach to the matter. Which while protecting the deposit fails to resolve the issue which is the whole point of the schemes.

  5. i have just had a judge award all the deposit back to the tenant at a defended possession hearing – and he then gave her a further 6 weeks in the property. How can he make an order for 6 weeks hence, without knowing if any further damage or arrears are going to accrue. I decided to challenge this and asked for it to be set aside…. DPS have, in spite of being told that i have a legal challenge under way, have repaid the deposit to the tenant who is still in situ….. you could not make this up.

    Landlords seem to be screwed by some tenants, letting agents, councils, Deposit schemes and now judges…..

  6. All this only goes to prove the fundamental error with this legislation – the deposit should be registered with and paid to the scheme by the tenant, not the landlord.

    The LL would legally have to accept a deposit certificate of the correct value if offered. To get the deposit back or switched to another property, the tenant would have to get the LL’s signed agreement. LL could claim for arrears or property damages.

    No penalties, no court actions, faster, simpler – too simple for politicians and lawyers, of course.

  7. I tried to post this once already but it was not added so trying again!
    in reply to my initial post and to hopefully help readers with the confusion
    It would be appropriate to refer to The DPS T&Cs clauses 20 – 22 and the Housing (Tenancy Deposit Schemes) Order 2007 no 796. Where a court order is obtained, use the Single Claims process attaching the Order as evidence! A tenant’s failure to reply will enable the scheme to pay you in full, and otherwise will lead to the referral of the matter to the ADR service where such a court order can be submitted as evidence.

    Proper reading of the schemes’ rules would show that they are far from sitting on their hands!

  8. Hard up ex tenant

    It’s not just landlords who have problems reclaiming a deposit from the DPS. I am a tenant who vacated a property in 2009 and have been trying to recover my deposit for over 3 years.
    The landlord has never produced any evidence to justify his attempt to claim all £900 of my deposit. The property was left in better condition than I found it and he failed to keep the moving out check appointment we had agreed. The ex-landlord refused to use the DPS arbitration scheme, but gave no reason. On 1 August 2012 I obtained a judgement by default against the ex-landlord from the Northampton on line claims court. I have proof that the landlord signed for the further particulars of claim I signed him and so had no reason not to have responded to the court in time. Because the landlord rang the DPS and talked of appealing my judgement they decided to allow time to see if he did appeal. When I ring the DPS they tell me I cannot speak to the Dispute Resolution section who are supposedly reviewing my judgement. I have now been forced to spend another £100 which I cannot afford applying for a Third Party Debt Order. It is now a month since I obtained the judgement which the DPS apparently continues
    to ignore. I am a 67 year old widow, with no capital and find the behaviour of a scheme which is supposed to protect the
    tenant’s deposit as you say, more than Kafkaesque. I have already complained to the DPS and received a response from the head of the Dispute Resolution Team! Not exactly the impartial review promised in the DPS complaints procedure.
    I would be grateful for any views and comments from readers.

  9. In response to MM on 26th June above, that is precisely what I have done (as a landlord) without success. I thought the Single Claim Process with a court order in my favour would be enough, but they have twice refused to release the deposit back to me without a specific directive on the order.
    The court originally got the arrears amount wrong on the order – when I contacted them to amend it, it took them 4 months and they still got the amount wrong and also left out the directive to release the deposit back to me. As a result, I am in limbo waiting for a deposit that is legally mine (and only a portion of the debt owed to me) and have no idea what to do next, save for contacting the court (yet) again.
    Plus the (non-contactable) tenant has stopped paying anything towards their debt. Ho hum. The law seems so fair to decent landlords (and we do exist!)…

  10. @hard up ex tenant. That’s exactly the same situation as myself – except that I now live in Scotland and the tenancy was in England – I haven’t paid any court fees because even to notarise a single claim will cost over £100 here – I believe it can be done for much less if I could walk into a public notary office in England. But there is no point – I’ve attempted to use the dispute resolution process but landlord refuses to use it, doesn’t respond to email or telephone. Were I to attempt the single claim process he would simply reject that so then I’d have to go to small claims court which would incur travelling costs etc – would the court award me costs? Maybe but I’m sure he’d ignore that leaving me out of pocket even if I got repaid by the DPS. Why is he able to just ignore everything? If there was some fixed time period for him to respond maybe we could get it settled but he’s happy to just leave it in the hope that eventually I will give up and he will be able to claim the funds. The system is not fit for purpose and I don’t see how I can challenge the DPS position of just waiting for the landlord indefinitely.

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