The Tenancy Deposit Scheme has confirmed that it has not changed its rules for letting agents – despite persistent claims on the internet which triggered anxiety among agents that they could be inadvertently breaking the law.
One article, written in December and which reappeared in a forum last week, claims that the TDS changed its rules in January, requiring landlords and agents to update the deposit record when a tenancy becomes a statutory periodic tenancy.
The article warns: “If the record is not updated the deposit protection will come to an end with this scheme on the last day of the fixed term … This change is very significant because if the landlord or agent has not updated the record, the deposit is not protected and the law has been broken.
“If the landlord or agent has updated the record but has failed to give the tenant the updated information the law has been broken.”
However, the TDS has said that this is not so. Rules that apply only to its newer scheme for landlords do not apply to agents.
A spokesman told Letting Agent Today: “Last year inaccurate posts were made online implying that changes had been made to TDS rules without informing members and that members were being put at risk of breaking the law as a result.
“This was absolutely not the case. No changes had been made to agents’ rules of membership.
“The authors did not take into account that the Tenancy Deposit Scheme for Landlords was a new and different membership to that of letting agents.
“They did not seek any clarification or advice from us before posting information publicly on how our scheme works, and we received a large number of calls from worried agents and landlords wrongly thinking that their tenants’ deposit protection had ended without them knowing. We provided them with the correct information to reassure their anxieties.”
In January last year, the TDS launched a new membership option for landlords to protect their tenants’ deposits directly and not via a letting agent, called ‘Tenancy Deposit Scheme for Landlords’ (or ‘DepositGuard’ for members who join via the Residential Landlords Association).
The TDS spokesman said: “With this new membership, if the fixed term tenancy agreement ends and continues on a statutory periodic basis, members should update the TDS database to reflect this and for protection to continue.
“This is a very simple online ‘tick box’ procedure and the landlord receives up to four notifications from two months in advance of the end of the fixed term that they should do this. If deposit protection ends, both the landlord and tenant are notified.
“Although we have received consistently positive feedback on the usability of the Tenancy Deposit Scheme for Landlords (backed up by survey data), and have no evidence to suggest landlord members are failing to update tenancy information correctly, from April we are simplifying the IT system so that fixed term tenancies will automatically become statutory periodic on our database when they end.
“This is to reduce the administration for landlords and to remove any risk of them forgetting to update the database.
“As with any updates to the scheme which affect our members, all members of the Tenancy Deposit Scheme for Landlords will be duly informed once the updated procedure is finalised.”
Separately, the TDS has produced new logos, which are with this story.
Comments
@Hawkeye
Says who?
I am just stating what is a possibility, and actually a probability based on the Law whether that Law and its requirements are well thought through and drafted or not.
What are your opinions based on - more hope and faith I'd suggest.
Fine do it your way and my clients will do it mine. Better to increase workload slightly and not get fined than not do what almost certainly is needed but either ay even if it is not means no such risks.
As I say do it your weay if you wish makes absolutely no difference to me. I just await the eventual inevitable Court case hopefuly in a Court of Record that will finally clarify this either way.
With luck another grey area, rent in advance or deposit, will be settled when Johnson v Old goes to the CoA on March 6/7 but I wouldn't bet on it.
Oh dear IO there you go again spouting drivel which will lead to masses of work for no pay. Quickest way to go out of business is increase workload and not get paid.
If the deposit is protected why reiterate. It only affects the agreement when it goes periodic and not the deposit.
Go back to sleep it dont affect you EA's.
@Dave
Apols I thought that something arising was obviously "new" especially when the old agreement has come to an end.
See
http://www.legislation.gov.uk/ukpga/1988/50/section/5
and clauses
(2)
2(b)
(3)a
(3)b
(3)e
(4)
(6)
(7)
for copious references to the fixed term tenancy ending and a periodic tenancy arising - a new tenancy
@IO
Sorry. Still cannot see the words "new" or "arising" in ss 3.
ADavid
ss 3
@ Industry Observer.
I've read S. 5 of HA 1988 3 times, and cannot find the words you quote.
In which sub-section are they?
@David
Sorry that is just not correct David
It is not for the schemes to say whether or not you need to protect a deposit, only how to do it.
The rersponsibility for protecting the deposit lies with the Landlord, the schemes simply provide a mechanism for the Landlord to achieve this.
If the LAW states that a periodic is a new tenancy, and if the TDP provisions require that all NEW deposits are protected, which also means issuing PI, then that is what has to be done.
How the schemes say physically you achieve this up up to them. Saying whether or not you need to do it is not up to them - unless they are happy to pay any subsequent penalty fines of course.
Ignoring the question of if a statutory periodic is a new tenancy or not, it is entirely up to TDS to define what they need you to do at a renewal. Therefore if a statutory periodic is not a new tenancy then you simply follow TDS scheme rules and do what they ask. If a statutory periodic was to be a new agreement, you still only have to do what the scheme rules say you have to do in order to comply with the legal requirements of fulfilling the "initial requirements" of a deposit scheme.
Read s5 HA 1988 it is clearly "...a new tenancy arising..." and refers to the previous tenancy coming to an end.
Periodic is exactly that and no tenancy actually has to have a fixed term.
Whether or not to check an inventory at the end of the fixed term is an operational choice. Probably a good idea if you haven't done an inspection visit for a while and are planning to leave tenants occupying the property, but time consuming I grant you.
The whole issue here is TDS changing its system to automatically do what the Landlord previously had to do, change the end date.
But TDP is a two pronged job and if the deposit is re-protected even in some short cut qwuick way then the second part surely must also be discharged within 30 days - re-issue of PI.
Look I don't think this is any more sensible than the next Landlord or Agent does, but if that is what the LAW requires even if accidentally and inadvertently that is wehat must be done - like it or not and no matter what any Scheme says you do or do not need to do it isn't up to them if it is the LAW.
Might be a big IF personally I don't think it is. But why take the risk for the sake of re-issuing a few bits of paper (plus Scheme leaflet or for DPS their T&Cs of course)
industry observer - sorry now you're confusing (or enlightening) me.
If a periodic tenancy is a new tenancy, then surely that too would effectively have a minimum fixed term before possession and presumably the inventory from the first tenancy would need to be checked out, the deposit apportioned, a new inventory established, deposit taken, etc. ?
Sorry post below should say 5th paragraph (the TDS response) not the 4th which refers to the article.
Note also the third last paragraph with TDS implying the automatic system from April will do the job for Landlords.
Only if it also issues new PI which in the 5th paragraph TDS is confirming is needed
Now this is interesting as in the 4th paragraph TDS is finally admitting (on behalf of all schemes I would suggest) that a periodic is a new tenancy, and that the deposit needs to be re-protected even if it is the same money and all that is needed is a few boxes ticking, dates changing etc.
But here TDS is also confirming that new Prescribed Information must also be served, which some of us have been arguing ever since LA2011 meant no escape was possible if this was not done and an offence was deemed to have been committed.
Now we need to take this on a stage
TDS can have or omit whatever it likes in its rules as long as they comply with Statute and deliver at least what Statute demands of those rules. Sadly for some obscure reason some schemes seem to think they need to go further and thus make life even more complicated for their members, but that is another debate for another day.
The point here is that this requirement to re-protect the money and re-issue the PI also exists on ALL periodic deposits.
Why would it not be so and only apply to one category of membership with separate rules - just because TDS says so?
As ever what matters is the LAW.
If a periodic is a new tenancy AT LAW (s5 Housing Act 1988) then all such deposits need re-protecting, not just those held by a particular class of member, as they are all governed in what they must do in terms of protection by the LAW and not just what any Scheme says - the Scheme Rules are as much about techique as the legal requirements.
They are additional but subsidiary to the Statute - what matters is THE LAW
Sadly as usual TDS has simply caused more confusion with this attempted clarification.
Unless and until there is specific Case Law the only way to be 100% safe is to re-protect the money and re-issue the PI. In effect TDS have confirmed this for Deposit Guard members, they simply have not done so for agent members, and should do so without delay.