Spike in Tenant Suing Landlords Over Deposits

Landlords are being warned that they could fall victim to ‘no win, no fee’ claims if their tenants’ deposits are not properly protected.

A leading housing law expert has made the claim after witnessing a surge in no-win, no-fee solicitors being drawn into the private rental sector. Julie Ford runs landlord services firm Gothard Rowe and says she’s seen an increase in social media adverts from what she calls ‘ambulance chasing’ legal firms.

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These firms are urging tenants to check whether their landlord has correctly protected their deposit, promising ‘thousands of pounds’ in potential recompense if they haven’t. 

Under the Housing Act 2004, tenants can be due up to three times their original deposit in compensation if the money has not been protected properly and due process followed. A landlord is already facing a £5k payout because their agent missed the deadline for protecting their deposit.

But according to Ford the amount these firms are promising is the maximum, and even if a landlord was found to have breached those regulations for the first time, it’s likely they would only be asked to pay 1x times the deposit.

Many of these legal firms also ramp up their costs, often without proof of how they arrived at the final bill, and try to put this through the court too. 

Julie had one instance where a landlord faced a £10,500 claim, but settled before the court hearing for just £650.

What has caused this surge in claims?

Most experts agree that this surge in claim activity around deposits and other housing issues, such as property disrepair, has been prompted by the loss of work during the pandemic, with general legal firms now looking to the housing sector to create revenue.

Ford says: 

They thought deposits and other housing matters were a lucrative and easy new income stream – but housing law is complicated and time-consuming, and they often don’t have the expertise in their field that you need

Without that expertise, they may not realise the significant amount of paperwork that is required for a tenant to make a claim against a landlord. Ford has even seen several firms using techniques banned by the SRA’s Code of Conduct, including not passing on ‘offers to settle’ from landlords to their tenant clients in the hope of getting a higher settlement in court.

How can landlords protect themselves from claims?

The easiest way to protect yourself is to make sure you’re following the law exactly, so there can be no claim against you.

  • Have all your legal requirements sorted. It’s not only deposits that can trip you up. Don’t let your Gas Safety, EICR or EPCs lapse and make sure that your fire and carbon monoxide alarms are all in full working order
  • Keep a historical paper trail. Keep all of your documentation – even when it’s no longer in date and you’ve updated it. Keeping a paper trail, showing you’ve never had a void in your legal requirements is also important. You can use our free Document Storage tool to keep everything in one place, it even reminds you when something is about to expire!
  • Use tech to your advantage. Pretty much everyone has a smartphone these days, so when you’re testing the alarms before your tenant moves in, film yourself doing so, so you have proof they were working
  • Check on your agent. Don’t assume that because you have an agent they’re doing everything to the letter. You are ultimately responsible for what happens in your property, so check up on your agent. Get copies of all your documentation, make sure they’re giving everything they should to the tenant before move-in and make sure that deposit has been protected within the deadline!

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