Posted by Emma Child MARLA on Mon, 2012-01-23 12:05
Further to Ben’s recent blog regarding the three deposit schemes available to landlords/lettings agents, we have received an update on the Deposit Protection Scheme (DPS) and the new rules relating to the release of the deposit following a court hearing.
The DPS is currently refusing to release deposits where the courts have not specifically ordered it and they have changed their rules to reflect this. Under the new rules, the 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.
Even where the contract specifically allows for the deposit to be applied against rental arrears, several landlords are still finding it difficult to get the deposit released even where a possession order has been obtained. Where there is still good communication between landlord and tenant it is more straight forward, but once possession is obtained many tenants lose interest in co-operating with their former landlord. If a tenant does not agree with the proposed deductions the landlord is left to apply to the DPS to ask for the release of the deposit.
This should be a simple case of referring to the court order for possession and rent arrears and the clause set out in the contract, which allows the deposit to be used against rental arrears. However in recent cases a landlord’s application to the DPS for the release of the deposit has been refused and they have been 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. Courts are refusing to make orders that would satisfy the DPS rules and many judges refuse to address the issue of the deposit on the grounds that the handling of the deposit is a matter for the scheme itself and the independent adjudicator assigned to the dispute.
When the deposit schemes were first introduced, their main objective was to take the matter of deposit handling away from the courts and instead use an alternative dispute resolution, that is the independent 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 they end up going round in circles. Subsequently, we would advise landlords where possible to steer clear of the DPS and allow the agent to hold the deposit, as stakeholder, with the TDS. It would then cut what can be a very long drawn out process into a quick resolution for all parties involved.
Emma Child MARLA
Lettings Manager
Emma has been working as a Lettings Negotiator in Tunbridge Wells since 2007, joining Alexandre Boyes in 2009, being promoted to Lettings Manager in 2011. Emma is involved in all elements of the letting process from viewings through to check out at the end of a tenancy. She became a Member of ARLA in 2010. Emma has grown up in the local area and enjoys spending her free time horse riding in the local countryside.
