Communities and Local Government CommitteeWritten evidence submitted by Jacqueline Thornton

Reasons for Submitting Evidence

I have rented both in Ireland and London for the last 13 years and only once have I had to engage in remedial action against a landlord for non-return of tenancy deposit or any other issues. All attempts to resolve the issue using the only existing remedial system available in the UK has failed. In this instance, the landlord has a number of other rented properties and I am unable to forewarn the tenants about his activities and inability to meet legislation. While I have learned from my experiences, I feel strongly that there should be a better, more effective method for dealing with tenancy disputes and a way to legally to inform other tenants of the issues.

History

Entered into tenancy agreement on 28 February 2010.

Mortgage company appointed Receivers in April 2012.

Terminated tenancy agreement June 2012.

Started court proceedings in August 2012.

Tenancy deposit still outstanding.

Summary

The Small Claims Court does not work as a dispute resolution service for tenancy deposit and other tenancy issues. All attempts to recoup our deposit have cost us significant amounts in time, stress and monetary terms. The Court is intended to be a resolution service without the need for legal advice, yet clearly it is not satisfying this remit and without the informative assistance from Steve Pound MP and Ealing Council and many hours research, we would not have known how to address this problem. Many tenants do not have access to this information and walk away, under more stress and anguish from the cash flow issues that losing your deposit brings.

There are some calls for regulation of the private rented sector. Having worked in financial services regulation for some years, I remain unconvinced that regulation of the private rented sector would be a positive move. I understand that the costs and implications of regulation are significant and could have a negative impact on the sector. However, if the market is to remain unregulated, a more effective remedy needs to be designed. It would be interesting to note what remedies are in place in other countries and investigate their suitability for the UK private rented market.

Background

In February 2007, three tenants ([***], [***] and [***]) moved into a flat at [***], each paying a deposit of £690. This flat was sourced via [***] in Ealing and owned by [***] of [***], landlord. The estate agents handled both the letting and the on-going collection. In 2008 [***] suggested to the tenants that money could be saved if [***] directly managed the property. This was deemed agreeable and [***] fulfilled his duties as a landlord whenever necessary.

Over time, [***] moved out to be replaced by [***] and then [***], again paying a deposit of £690. On both occasions the deposit was returned to the tenants in a timely fashion. Although new Tenancy Deposit Scheme (TDS) legislation came into force in April 2007, [**] neglected on each occasion to place the funds in a scheme and did not inform the new tenant of this.

I moved in to the property in February 2010. [***] handwrote and signed an addendum to the existing lease, naming me as the replacement tenant for [***]. He also wrote a receipt documenting the deposit of £660 paid. At no point was an inventory carried out and again, no reference to the TDS was made. I requested from the other tenants to see a copy of the original lease, which was produced from a folder of all flat-related documents.

In March 2012, the tenants received a typed note through the door, explaining that a man by the name of [***] had called and it was a matter of the utmost urgency that we call him back (attached).1 Although there was no company heading or reference on the note, I did so and he informed that Woolwich had appointed a company called [***] to gain entry to the property and evaluate its condition. Based on the fact that we had no evidence of this, as the letter was merely typed on standard paper, I refused to give him any information and asked him to contact the landlord. [***] was promptly informed.

In April 2012, we received a letter addressed to “The tenants” and in this was a deed of appointment whereby Woolwich appointed [***] as Receivers and requested proof of tenancy from us, as [***] has defaulted on the mortgage and the bank was in the process of deciding whether to repossess the property—in fact, his father [***] was the legal owner. This was not reflected in the original lease and no agency agreement has ever been produced. We have since requested that [***] explain why this was not disclosed and again have been ignored.

Obviously this caused much concern and we went straight to [***] residence, where he informed us that only “a couple of payments were missed” and he would deal with the issue; we were not to be concerned as it would be rectified shortly. He also admitted on that occasion that he had “mistakenly” taken our copy of the lease while on a previous visit to the property. This caused significant detriment as without it, the tenants were unable to prove legal tenancy. He agreed that he would produce the lease so that we could prove tenancy and also deal with [***]. He also admitted that the deposits were not in a protection scheme and signed a letter committing to return the funds as soon as we moved out (attached)2. However, we did not receive the lease and had no option but to report it stolen (REF: [***]) to Ealing Police. Understandably, Ealing Police were unwilling to get involved in what they perceived to be a civil dispute.

Over the next few weeks, we continued to receive threatening letters from [***] stating that unless we complied with their requests, we would be evicted. We repeatedly contacted [***] by email or phone, whereby we were reassured that we could ignore the letters as they were standard letters and they understood our situation. None of these letters referred to our engagement with [***] and in fact continued to claim we had not contacted them. On the evening of Friday 1 June we returned after work to find an eviction notice taped to our door (attached)3. It was dated incorrectly and gave notice of six days to evacuate the property—five of which were non-working days due to the Queen’s jubilee bank holiday. Upon finally speaking with [***] on the fifth day, they admitted that they had no legal right to do this as no repossession court hearing or order had been issued and therefore they would not be entering the property. This caused much stress and anguish, on top of the concerns which were already being dealt with.

All the tenants left the property on 15 June 2012, without repayment of £2,040 deposit.

Attempts to Recoup Tenancy Deposit

[***] refused to return engage with our repeated attempts to compel him to abide by his written promise to return our deposits. We tried email, telephone, calling in person and he refused all contact. This left us no option but to attempt to reclaim our deposit under the Courts system. The TDS legislation is quite clear that if a landlord neglects to place the deposits received after April 2007 into a TDS, then the Small Claims Court can award up to three times the deposit amount as compensation. Even without this legislation, we had a debt that needed to be met. The tenants incurred significant costs for us in having to get a deposit for a new flat and some of the tenants were forced to take out credit, which is still being repaid with interest.

In the first instance, a letter before action (attached)4 was posted to both [***] and [***] with proof of postage and also hand delivered to the property in mid-July. [***] was not available and so his sister, [***] accepted the letter on his behalf. We also visited Steve Pound MP, who was very helpful and arranged for Ealing Council to assist us in what we should do in this issue. We were informed that as [***] was not the legal owner of the property but had signed the agreement, we could not seek our deposit back from [***] (the actual owner) as he was not party to the debt. So, we obtained a County Court Judgement (CCJ) in August 2012 (attached)5 at a cost of £80.

We were disappointed that neither [**] nor [**] made any efforts to contact us to acknowledge. We were also disappointed that there was little opportunity to specify the claim and claim compensation under the legislation.

Attempts to Enforce the CCJ

As [***] does not work, living instead off the income from his numerous rented properties, there were a number of restrictions in how we could legally enforce this claim. Attachment of earnings for example would not work and a charge on the property would also not work as he did not legally own it. Instead, we applied for and were awarded a Warrant of Execution, whereby a bailiff goes to the property and removes goods to the worth of the debt. After our own threatening experiences with bailiffs, we were surprised to discover that the bailiff could not actually enter the property to remove the goods (despite having a legal court order) unless allowed by the defendant, who of course did not allow entry. This resulted in no satisfaction at a cost of £100.

Our next attempt was to apply for a third party order. This would freeze his bank account and should there be enough funds in the account, the judge would decide whether to award them to us to fulfil the debt. We applied for this on 29^th November 2012 and the order was awarded on 30^th January 2013. However, Brentford County Court sent notification of the order to the defendant, [***], instead of to myself, the claimant. This resulted in [***] removing all funds from his bank account immediately before the order was enacted. Again, this resulted in no satisfaction at a further cost of £100 and we have submitted a maladministration complaint to the Court which is on-going. We attended the third party order hearing in the hopes of getting more information ([***] did not turn up as requested by the Court), only to find [Judge ***] (presiding) was clearly upset at the maladministration complaint and made it clear that he would not make any attempt to assist or re-issue the order while the complaint was on-going. We stressed that the complaint was based on the maladministration and not judicially related but this seemed to have no effect and he continually referred to the on-going complaint.

This was especially unfortunate as we discovered that the property at [***] had been sold and there was a chance that funds were in the account at the time of the order. Upon calling [***] to query return our deposit now that we knew he had funds, the ring tone indicated that he had left the country.

However, it must be noted that was also a possibility that there were no funds in his account and regardless of the maladministration, we would not have satisfied the debt. In this instance, there is no other way to enforce the CCJ and not only have we been unable to recoup payment, we have also incurred costs in trying to enforce it.

The only other option now is to engage a solicitor and leave the small claims process, which is not cost effective given the level of debt.

Conclusion

While I do not expect to ever recover my deposit, it is clear that the existing remedial system was not effective in resolving this issue for our situation. At every turn, [***] was protected and the tenants were left penalised. Mediation does not work as it depends on both parties being engaged and, as you can see, in this instance [***] was refusing to engage. The existing protection schemes declined to assist with information unless the issue specifically included them.

In addition, we were unable to claim compensation under the TDS legislation despite this being the only method in which to do so.

I believe that my case is not alone and highlights the need for an alternative remedial system.

May 2013