Introduction
Citizens Advice welcomes the opportunity to comment on proposals for secondary legislation regarding Tenancy Deposit Protection.
Problems over the return of deposits make up nearly one in five of all private rented sector enquires which bureaux deal with. The issue also continues to be a very common social policy concern raised by bureaux. We are therefore very keen to see the successful implementation of this legislation. In our view effective information flows between scheme provider, landlord and tenant will be key to this success. This is particularly important given that there is to be more than one type of scheme, each with its own ADR. The potential for confusion and misinformation is therefore considerable.
We also consider it vital that mechanisms are put in place to ensure all ADR schemes operate transparently and to a high standard, so generating the confidence of both landlords and tenants.
Specific questions
Questions 1 and 2. Do you agree that the scheme administrator should be able to provide the landlord the information contained in Table 5.2? Is there any additional information you think scheme administrators should provide to landlords?
We agree that the scheme administrator should be required to provide this information. However we are not clear what is intended by the fourth item – “information explaining the purpose of the deposit”. This will not be generic to a scheme unless what is meant is a very general statement about what is meant in the Act by a deposit.
Arguably there is also a need for a more detailed statement about what a particular deposit is intended to cover and any conditions relating to it ( e.g. where the property has to be professionally cleaned). This would need to be part of the information provided by the landlord (Table 5.3). However it may be sufficient to provide this only where there is a dispute.
Questions 3. Do you agree that the landlord should be required to pass on the information in table 5.2?
Yes. It should be a requirement for the landlord to pass on this information to the tenant.
Questions 4 and 5. Do you agree that the landlord should be required to agree with the tenant the information in Table 5.3 and provide written verification of this? Do you agree that the landlord should be required to invite the tenant to sign the information to verify that the tenant-related information he has provided is correct?
Yes both landlord and tenant should sign to verify that this information is correct. There is a value to having both parties’ signatures at the outset, to match against the signatures on the subsequent end of tenancy/tenancy deposit release form, as an anti-fraud check.
We would suggest that the information should also include the name, address and contact details of the landlord if this is different from the person who receives the deposit.
We question whether the tenants should be required to give an alternative address. In some circumstances (for example homelessness, or where someone has come from overseas) this may not be possible. In other cases it will not be useful if it is the address which the tenant is vacating.
Question 6. Do you agree that the landlord should be able to choose whether to include the tenancy-specific prescribed information in the assured shorthold tenancy agreement or provide it in a separate document?
Yes we agree that the landlord should be able to choose whether to provide this information in the tenancy agreement or separately. In the longer term, the Law Commission‘s proposed reforms may require the information to be included in the written agreement and it makes sense wherever possible to ensure the TDS requirements mesh with the direction of the wider Law Commission proposals.
Question 7. Do you think that landlords should be required to complete an inventory describing the content and condition of the property?
Yes we do believe that agreeing an inventory describing the content and condition of the property should be compulsory. Again this will embed best practice and it will also make it easier for the ADR function to work efficiently and transparently. It also protects the landlord interest – without an inventory it is unlikely that the ADR will be able to uphold a landlord’s claim on grounds of content or condition.
Question 8. Do you think a standard form should be introduced or should the Government just specify the information that must be contained in an inventory, leaving landlords free to use their own version?
We would suggest both options. Clearly the information that must be contained in an inventory should be specified. It would also be helpful if a standard form was introduced to make it easy for landlords who do not have their own. But its use need not be compulsory.
Question 9. What information do you think an inventory should contain?
The TDS pilot run by the Independent Housing Ombudsman included detailed guidance on this, which could be used as a base.
Question 10. Do you have any examples of good practice regarding use of inventories?
We do not have this information but would suggest that the experience of bodies such as the National Rent Deposit Forum should be used.
Question 11. Do you agree that all parties should be required to provide schemes with the key information as set out in Table 5.5?
We agree. We particularly welcome the inclusion of details of any lettings fees which have been paid by the tenant. We would prefer this to state “any fees in connection with the letting of the property” to ensure it is as inclusive as possible ( eg is a “deposit administration fee” a lettings fee?). It would also be helpful to give examples, such as charges for check in/check out, credit checks, tenancy renewals.
CAB evidence indicates that this is a growing problem for tenants. We also fear that one consequence of the introduction of regulation on the holding of tenancy deposit funds is that some landlords/ agents may seek other ways to extract additional sums from tenants. It is therefore crucial that this area is properly monitored, so that action can be taken if it proves necessary. We would expect landlords and agents to resist providing this information for this very reason.
To ensure this additional information is agreed as correct, we would recommend that it should be signed off by both the landlord and the tenant.
Question 12. Is there any particular information you think schemes should not have?
No
Question 13. Is there any additional information you think parties should be required to provide?
No
Question 14. Do you agree that it would be inappropriate for landlords to forward a copy of the letting agreement to the scheme as a substitute for completing the information contained in Table 5.5?
Some of the information mentioned in 5.5 is the same as 5.3 so presumably a similar approach is needed. As with question 6, there is a case for leaving the choice with the landlord who can then simply forward a copy of the tenancy agreement if it includes all this information, including any lettings charges. However where lettings charges are simply not mentioned on the agreement, it would not be safe to conclude that this means none have or will be charged. It would be necessary to get a signed statement from the landlord to this effect.
The use of the lettings agreement would have the effect of transferring some of the administrative burden from the landlord to the scheme, which would presumably find inputting data in differing formats less straightforward.
Question 15 and 16. Do you agree to the provision of the information in Tables 6.1 and 6.2 to the scheme at the end of the tenancy? Is there any information you think should not be provided?
We are unclear what value there is to the scheme to have information regarding arrangements between landlord and tenants in the insured scheme for method of payment. There is also the issue of privacy in passing on unnecessary account details to a third party.
The consultation paper appears to assume (para 113) that landlord and tenant will together complete an end of tenancy form for the scheme administrator. Whilst this makes sense, it will be very important to ensure that the tenant is not required to reveal to the landlord his/her future address details if s/he does not want to. Where the relationship with the landlord has not been amicable, the tenant is very likely not to want the landlord to know his/her next address. Either the procedure should allow the tenant to provide this information separately to the scheme, or the form should allow the tenant to use the current address and make their own arrangements with the Royal Mail to forward their mail automatically to the address of their choosing.
Question 17. Is there any other information you think should be provided at the end of the scheme?
No
Question 18. Do you agree that at the end of the tenancy both parties should have the option of indicating they wish to use the ADR service?
Yes both parties should have the option of indicating they wish to use ADR, which can only go ahead if both agree. But (see answer to question 19 below) we do not consider that agreeing to use ADR is tantamount to agreeing to be bound by its outcome.
Making access to ADR conditional upon both parties’ consent does however mean that ADR cannot be used in cases of abandonment, as an end of tenancy form cannot be completed by both parties and there is no agreement to use ADR. In such cases therefore, the landlord will always have to take court action before s/he can legitimately access the deposit money (even though under the insured scheme s/he will already be holding the money). This will mean inevitable delays in accessing the money, and probably an increased burden on the courts. The same problem would apply to tenants in circumstances where the landlord or agent disappears.
We believe it may be helpful to give separate consideration to the process and information required in cases of abandonment. We note that under the IHO pilot, the scheme itself handled such cases as “technical disputes”, on which it adjudicated after having taken steps to try to contact the missing party. This enabled the remaining party to access the deposit more speedily.
Question 19. Do you agree that where both parties have indicated to use the ADR service they should also be regarded as agreeing to abide by the decision? If not why not?
We do not agree with the proposal to make access to ADR conditional upon signing away the right to subsequently pursue a remedy through the courts. This runs counter to the direction of wider DCA policy reform which is to encourage use of ADR as a first step prior to resorting to court action. We also question whether such an approach would be compliant with the Human Rights Act. There may well be very real issues regarding the quality of the ADR and parties’ confidence in this new service, especially as it will be one of several delivered by the various scheme providers. Moreover tenants have no ability to choose which scheme and therefore which ADR they use; this choice is made by the landlord.
The deposit money will have been returned to the parties in line with the ADR outcome. If either party then wishes to take court action, they should have the right to do so, but they will face the obstacles which were the reasons for establishing TDS in the first place (court costs, delays, difficulty in enforcing judgment). This is likely to prevent frivolous use of the courts.
It will be essential that ODPM puts in place adequate procedures for independent monitoring of the quality of the ADR delivered by the schemes. This will be absolutely crucial to ensuring consumer confidence and therefore minimising the likelihood that landlords or tenants choose to take court action after ADR.
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