STATES OF JERSEY
RENTAL DEPOSIT SCHEME TO PROTECT TENANTS’ DEPOSITS
Lodged au Greffe on 29th August 2008
by Deputy G.P. Sourthern of St. Helier
STATES GREFFE
PROPOSITION
THE STATES
are asked to decide whether they are of opinion -
to
request the Minister for Housing to bring forward for approval, by the end of
2009 if possible, legislation to establish a rental deposit scheme to protect
deposits paid by tenants and to resolve disputes arising from the operation of
the scheme.
DEPUTY G.P. SOUTHERN OF ST. HELIER
REPORT
The Draft Residential Tenancy (Jersey) Law 200- has
been out to consultation as a “White Paper” since 29th April 2008. As part of
the consultation, Article 23(l) contains the capacity to bring general
regulations for the setting up of a scheme for the safe-keeping or investment
of deposits paid in respect of residential tenancies.
In his examination of tenants’ deposits the Minister
states the following concerning an amendment to the then Housing Committee’s
Policy Report (P.2/2002) –
“vi) Recovery of tenants’ deposits:
Subsequent to the Working Party’s Report Senator
Corrie Stein lodged a proposition in the States[1]
in which she asked the States “to charge
the Housing Committee to bring forward for States’ approval a scheme to safeguard the rental deposits paid by tenants to landlords or agents in
the private sector, and deposits paid by lodgers to lodging house owners and to
ensure the prompt return of monies at the end of the period of occupation.”
Since that time questions have been put to the States
asking when a deposit scheme to protect tenants’ and lodgers’ deposits will be
introduced.
The proposal was researched and considered by the
former Housing Committee and has been reviewed again as part of the final work
done in connection with the proposed RTL.
It has been decided not to put forward proposals for a
Tenants’ Deposit Scheme as part of the RTL at
this time.”
As justification the white paper puts forward the
following –
“The true extent of any problem is unknown as there is inadequate
documented evidence regarding the current situation. That is not to deny that
problems do exist but there are only limited records kept by the Citizen’s
Advice Bureau and the Petty Debts Court to assist with an analysis of the problem.
Further information is required as to the nature of the problem, the number of
people affected and the amount of deposits currently paid.”
Further on, the consultation document lists further
reasons for not acting at this stage –
“Overall, it is therefore
concluded that no legally binding Tenancy Deposit Scheme should be introduced at present in the Island for the
following reasons:
a) the real extent of the
problem is not known;
b) any scheme established
in law will create bureaucracy and Government is committed to reducing “red
tape” where possible;
c) setting up and
administering a scheme is likely to have a cost. If government were to be
involved in any way it would require resources which would entail additional
government expenditure;
d) there is already
provision available in the Petty Debts Court for applicants to have their cases
dealt with privately using mediation processes and additional means of
accessing mediation are available;[2]
e) there are several new
provisions in the RTL which seek to clarify the rights and obligations of
tenants and landlords with regards financial transactions which take place
between them, including the payment and repayment of deposit monies. It is
hoped that these provisions will help manage any issues arising over the return
of deposits;
f) as described above, the
RTL at present only extends to those qualified to rent property. Thus, any
scheme established under the RTL would not afford protection to those falling
outside its remit, including lodgers;
It is proposed that:
i) the current mediation
process in the Petty Debts Court be promoted for resolution of deposit
disputes;
ii) further research be
done on the value of deposits and cases where there is a dispute concerning the
return of a rental deposit;
iii) once further evidence
has been acquired a review of the need for a Tenancy Deposit Scheme takes place
within the next 2 years.”
I believe that this do-nothing attitude for at least 2
years is completely unacceptable.
To start with, the basic tenet of this argument, that
the true extent of the problem is not known, is untrue. The Jersey Citizens
Advice Bureau (the Bureau) believes that the Residential Tenancy (Jersey) Law
provides the best opportunity to end the problems of rental deposits being
unreasonably withheld by landlords and agents. In its response to the white
paper, from which much of this report is taken, the Bureau produces a great
deal of evidence to support its case for action now.
Over the last decade, disputes over the partial or
non-return of rental deposits has consistently been amongst the most common
issues of concern brought to the Bureau by Jersey residents renting in the
qualified or non-qualified sector. Problems include –
·
disputes over cleaning
costs and whether the employment of “professional cleaners” was really
necessary;
·
disputes over whether
any deterioration of fixtures and fittings is more than reasonable wear and
tear;
·
cases where the landlord
simply says he has not got the money available or where the agent is having
difficulty contacting a landlord who lives abroad;
·
rental deposits used by
landlord to replace carpets at the end of a short tenancy;
·
cases where the landlord
denies ever receiving a rental deposit;
·
disputes over what
notice period should have been given by a tenant, where there is no written
agreement, resulting in deductions from rental deposit;
·
rental deposit not
passed on to new owner when property is sold;
·
unreasonable delays in
returning rental deposits following inspection of accommodation.
A selection of case studies illustrating these
problems and the size of the sums involved are given in the Appendix.
The Bureau points out that a key objective of housing
policy over the last 15 years has been to encourage the provision of private
rental accommodation. The number of private rental accommodation households in
the last Census was 7857, which represents 22% of the total number of
households. Non-qualified accommodation, in private houses or registered
lodging houses, consisted of a further 2808 households, representing 8% of the
total number of households. (Census 2001)
In addition, there has been considerable expansion of
Housing Trust rental accommodation over the last 7 years and it is reasonable
to estimate that the total number of rented units, both qualified and
unqualified, now exceeds 11,000. In nearly all tenancies or lodgings a rental
deposit, equivalent to one month’s rent, is held by the landlord or his/her
agent. The average rent for all types of private lettings is currently £209 per
week (Income Support Housing Component – May 2008) which equates to an average
rental deposit of £905. It follows, therefore, that the total amount of rental
deposits held by landlords or their agents can be estimated at around £10
million.
A deposit of the order of £905 is a large sum of money
for those tenants who are on low incomes to find. This leads to major problems
for tenants raising the deposit in the first place and regaining it quickly at
the end of a tenancy, so that it can be available for the next tenancy. There
is currently no regulation over the size of deposits which can be charged; over
how the landlord should hold and account for the money; over how quickly
deposits should be returned or over who should benefit from the interest on the
money held. The Bureau describes such a system as an invitation for
misunderstanding on both sides and for landlord abuse.
If the landlord fails to return the deposit, the onus
is on the tenant to take action, ultimately through the Petty Debts Court, to
try to establish a claim to the money. Increasingly the problem is becoming a
concern for landlords as well, since tenants who have lost their deposit once
may decide not to pay the last month’s rent rather than risk being out of
pocket again. Such action leaves landlords without any security to cover loss
or damage to their property.
The Bureau has raised this problem and pressed for
reform since 1996. The Consultation Paper on the Residential Tenancy [Jersey)
Law 200- proposes that “further research
be done on the value of deposits and cases where there is a dispute concerning
the return of a rental deposit” in order that “ a review of the need for a Tenancy Deposit Scheme takes place within
the next 2 years”. The Bureau believes that there is already an
overwhelming case for the enactment of legislation to ensure that a custodial
rental deposit scheme is set up in Jersey without further delay and
prevarication.
The scale of
the problem
The Bureau keeps statistics on the number of enquiries
received in respect of Housing Costs. Within this category they include issues
concerning rental deposits.
A detailed analysis of the Housing Costs category for
2007 reveal that out of a total of 236 issues, 212 [90%) related to rental
deposits.
The following statistics cover the 5 year period from
January 2003 to December 2007 –
Housing Costs –
|
Year |
2003 |
2004 |
2005 |
2006 |
2007 |
|
|
Cases |
306 |
305 |
241 |
278 |
236 |
total = 1336 |
90 % of this figure is 1,229 giving an average of 245
rental deposit issues per annum.
Furthermore, in 1998 the Bureau carried out a survey
of its clients for a 2 week period, 26th January to 6th February, which
involved asking every client who was or had been a private tenant in the last 5
years whether they had ever been charged a rental deposit; if so they were
asked to complete a short questionnaire with the help of an adviser. The survey
was therefore not confined to people who had come to the Bureau with a rental
deposit problem or indeed any problem relating to a private tenancy. This
resulted in 58 questionnaires being completed by clients.
Key findings were that –
·
31% of the respondents
who took part in the survey said that they had had a deposit unreasonably
withheld in the last 5 years.
·
Only 5 out of the 18
respondents who said that they had had a deposit unreasonably withheld were
successful in getting their money back. In two cases it took over 3 months for
the rental deposit to be eventually returned.
·
75% of the respondents,
who had had a rental deposit unreasonably withheld, agreed with the proposal
that a Custodial Scheme to safeguard deposits should be set up.
It is of course likely that, in some of the cases
where the tenant felt the deposit had been unreasonably withheld, an
independent arbiter might have found differently. Indeed the Bureau provides
advice to landlords as well as tenants, and it is clear that there are
occasions where the deposit provides a crucial safeguard for the landlord.
Summary
·
It is clear from the
case studies contained in the Appendix that the current system is open to
abuse; that the scale of the problem is significant and that for many tenants
and lodgers the rental deposit system is unsafe.
·
When the landlord or
agent refuses to return a deposit the tenant only has the option of instigating
legal action through the Petty Debts Court. Clients of the CAB, however, have
commented that they do not think it was worth the hassle of taking court
action.
·
Legal Aid is not usually
available for small claims under £1000 and it is unrealistic to expect lay
people to put forward argued legal case at a hearing, especially if the
landlord is legally represented and particularly if English is not their first
language.
·
Speed is of the utmost
concern to the outgoing tenant who will require a fast return of the rental
deposit, within days rather than weeks, in order that it may be used for the
next tenancy.
·
In order to use the
Petty Debts Court the plaintiff is required to pay court fees. Thus a claim for
the return of an average deposit of £1,000 would cost £30. This presents an
additional barrier to tenants who may have already faced the problem of having
to find a further deposit.
·
The most serious
weakness of the Petty Debts Court procedure to recover a rental deposit is the
potential difficulty of enforcing the judgment as the onus remains with the
plaintiff to initiate enforcement, through the Viscount’s Department, by means
of a wage arrest or arrest on assets.
Conclusions
The Bureau believes that the case for reform of the
system for holding rental deposits is overwhelming. The Residential Tenancy Law
focuses on raising standards in the private rented sector and therefore is the
appropriate place to tackle this issue.
Any reform must meet the reasonable requirements of
both landlords and tenant for a secure, easy to use and non-bureaucratic system
for holding deposits and ensuring their prompt return to the appropriate party
at the end of the tenancy.
The custodial model used in England and Wales, called
The Deposit Protection Service (DPS), supported by an independent Alternative
Dispute Resolution (ADR) service, meets these requirements.
In order to gain the trust and support of all parties
the selected scheme administrator would need to demonstrate its independence
and its ability to deliver a fast and efficient service with user friendly
procedures and a clear system for complaints and redress.
A statutory, custodial rental deposit protection
scheme would do much to improve the image of the private rented sector – a
sector which it is current States policy to promote, given the difficulties
young people have in accessing affordable housing to buy in the island.
In the face of this serious and significant issue, the
Housing Minister proposes to prevaricate until possibly the end of 2010 or beyond.
He cites six reasons (page 2 above) for delay, none of which stand up to
scrutiny.
The Minister’s call for further research into the
scale of the problem is redundant. The work has already been very adequately
carried out by CAB and shows clearly that the problem in significant and needs
to be addressed.
The Minister dismissal of such schemes as
“bureaucratic red tape” does not bear up in the face of the evidence already
gathered. Surely protection of tenants (and landlords) is a legitimate and
justified action. As to cost, as the CAB report points out with some £10
million in total held in deposits, there should not be any problem in making
the running costs self-funding. Further, given that there is a U.K. model (DPS)
as reference, devising a suitable scheme, perhaps involving a body such as the
Community Savings and Credit organisation, should not prove arduous.
As the CAB report confirms, the Petty Debts system
does not adequately address the problem, yet the Minister remains reliant on
it.
Finally, in proposing his RTL, whilst failing to
address the issue of tenants’ deposits, the Minister is surely failing in his
duty to a significant proportion of the population, especially since the
proposed law already contains the articles required enable a scheme to be put
in place. To suggest that the RTL only applies to qualified tenants is merely
an excuse for doing nothing.
Manpower and
Resource Implications
Given the massive resource dedicated to achieving the
effective change from the rent rebate/abatement schemes to Income Support which
took place over the past year, it would seem probable that sufficient officer
time and resource could be found from the current departmental resource to
deliver such a scheme in the timescale proposed.
APPENDIX
THE NATURE
OF THE PROBLEM
The following case studies case studies illustrate the
nature of the problem of non-return or partial return of rental deposits. The
case studies are taken from CAB records for 2007.
1. Disputes over cleaning costs
(A) Client advised that relationship with his
landlord became difficult as she disapproved of his girlfriend living with him.
When the lease expired his landlady retained £350 out of his rental deposit of
£1000 for professional cleaning.
(B) Client was informed by his landlord, at
the end of the tenancy, that he would not be returning the rental deposit as he
would have cleaning expenses. Client was willing to pay the cleaning bill, on
receipt of proof of the cost of cleaning, but landlord refused to do this.
(C) Client stated that she left her property
“spotless” at the end of the tenancy and no complaint was made by the landlord
at the inspection when the keys were returned.
Landlord
has now told her that he won’t be returning the deposit as he had to use
professional cleaners and plumbing expenses were also incurred.
(D) Client had been in lodgings for 6 weeks
but decided to leave because of the damp conditions. Landlord wants to deduct
the cost of professional cleaners from her deposit of £450.
(E) Client had been living in “unqualified”
accommodation for 2 years. Client felt he left the property in better condition
than when they moved in. Landlady said she used a “professional cleaning team”
and there was no refund due from his rental deposit.
(F) Client’s lease expired and the landlady
agreed, at the inspection, that the only deduction from his deposit would be
occupier’s rates. He was subsequently informed that £96 would be deducted for
cleaning the flat.
2. Disputes over whether any deterioration
of fixtures and fittings is more than reasonable wear and tear
(A) Client has carpets professionally cleaned
when he moved into “unqualified” accommodation due to poor condition and
stains. The landlord “at the time” informed him that he would put in new carpets
but this never happened. When client vacated the property the “new” landlord
told him he would be deducting the cost of new carpets from his rental deposit.
(B) Client was informed by landlord, at the
end of a 5 years tenancy, that his deposit of £500 would be retained to pay for
new carpets. Client stated that the carpets were not new when he moved in.
(C) Client moved out of accommodation and was
informed by his landlord that his deposit would be used for redecoration of the
flat. Client disputed that the deterioration was anything more than normal wear
and tear.
(D) Client’s landlord refused to return his
deposit as “a piece of the bath tap had been damaged”.
(E) Clients vacated property after 6 years.
They believed flat was in better condition than when they moved in. Landlord
refused to return their rental deposit of £700 as in his opinion “money had to
be spent to put things right”.
(F) Clients leased flat for 5 years. They
were informed that the lease would not be renewed on expiry, by the agents for
the landlord, because it was going to be sold. A week before expiry of the
lease they were asked if they would be willing to move out earlier to allow
redecoration to commence. They agreed to this but the agents subsequently
refused to return the deposit as, according to a letter received from the
landlord, the flat required redecoration of walls and doors, cleaning of
blinds, curtains and oven.
(G) Client was evicted from her flat due to a
breach of one of the terms of her lease. She had recently redecorated the flat
and left it in a clean condition. Landlord’s agents failed to agree an
inspection date and then told her that the deposit would not be refunded as
they would have to clean and decorate before a new tenant could move in.
(H) Client’s rental deposit of £600 was
retained by the landlord for cleaning and redecoration of the flat. He was then
sent a bill for a further £300. Client was advised to obtain proof of the
landlord’s expenditure as, in his opinion, only the lounge needed redecoration.
(I) Landlord deducted £150 from rental
deposit “for marks on the wallpaper”. The client states that the flat and
garden were in a “diabolical” condition when she took on the lease and that the
marks on the wallpaper were only wear and tear after 3 years.
(J) Client has been warned that his rental
deposit of £700 may be withheld as there is a minor crack in the washbasin
caused by a dropped perfume bottle. The tenant thinks the landlord intends to
use his deposit to replace the whole bathroom suite.
(K) Client took on the tenancy of a flat. The
carpets were in such a bad condition that he stayed in a hotel whilst they were
being professionally cleaned. When he moved out the landlord refused to repay
his rental deposit of £600 because of the state of the carpets.
(L) Client lived in the same rented property
for 19 years. Landlord refused to return his rental deposit of £1000 “as the
cost of redecoration was going to cost more than he anticipated”. The lease did
not require the tenant to decorate at the end of the tenancy.
(M) Client’s son and a friend rented a
non-qualified flat in St. Helier and paid a rental deposit of £1200. At the end
of the 3 months tenancy the landlady stated that a dent in the bedroom wall,
previously hidden by a headboard, would have to be repaired and the cost taken
out of their deposit.
(N) Client vacated her flat at the end of a 3
year lease. She was sent a cheque for £380 as the landlord retained £620 for
redecoration and cleaning of carpets and cooker. Client felt that this was very
unfair as there was no discussion on these matters at the final inspection.
3. Cases where the landlord simply says he
has not got the money available or where the agent is having difficulty contacting
a landlord who lives abroad
(A) Client moved out of rented accommodation
in March 2007 and by December 2007 the rental deposit of £800 had still not
been returned. The managing agents had stated that it was up to the landlord to
return the deposit and they would not supply their client’s name and address.
(B) Client received back half of his rental
deposit of £1400 but did not know how to contact his landlady to dispute
deduction. He used to pay his rent to the caretaker of the flats.
4. Rental deposits used by landlord to
replace carpets at the end of a short tenancy
(A) Client’s rental deposit was retained for
cleaning and replacement of carpets. Client doubted that new carpets were
purchased and the landlady refused to provide proof of purchase.
(B) Client had £1100 deducted from her rental
deposit of £1500 for replacement of staircase carpet. She disputed that it was
ever necessary to replace this carpet. Six months later she had occasion to
visit the same property and discovered that the staircase carpet had not been
changed.
5. Cases where the landlord denies ever
receiving a rental deposit
(A) Client moved out of accommodation that he
had lived in for 15 years. He claimed back his rental deposit of £800 but the
landlord stated that he was not sure that such a deposit was ever paid. Client
had a receipt for the deposit and was advised to sue.
(B) Client paid her rental deposit of £800
with a cheque for £600 and £200 cash. At the end of the tenancy the landlord
said he could not remember receiving the £200. Client had a receipt.
Subsequently the landlord stated that he had returned £540 to her flatmate but
client was adamant that this was untrue and was advised to sue.
6. Disputes over what notice period should
have been given by tenant, where there is no written agreement, resulting in deductions
from rental deposits
(A) Client had been living in an attic flat
with shared electricity. When she received the first bill it equated to £8 per
day. The flat was always cold so she went to see the landlady and they mutually
agreed that she could leave. When she went to collect her rental deposit of
£500 the landlady said it was being retained as she should have given one
month’s notice.
(B) Client gave 2 weeks notice to vacate
unqualified accommodation. A new lodger replaced him immediately. Landlord
refused to return his deposit of £250 as he claimed insufficient notice was
given.
(C) Client’s rented flat had serious damp
problems which were pointed out to the landlord. Promises to carry out remedial
work to address the problem never came to fruition and the tenant finally
decided to break the lease. He gave notice on the 6th of February
and moved out on the 1st March. Landlord refused to return his rental deposit
as he had not given a full month’s notice.
(D) Client paid a rental deposit of £388. He
was not given a lease but paid his rent monthly. He gave one month’s notice to
leave but the landlord said he had to give 3 months’ notice and retained his
deposit. Client was advised to sue.
7. Rental deposit not passed on to new
owner when property is sold
(A) Client’s landlord denied any knowledge of
a rental deposit having been paid. Flat was sold with our client as a sitting
tenant. The seller had left the island.
8. Unreasonable delays in returning rental
deposits following inspection of accommodation
(A) Client moved out of rented accommodation
in February. The rental deposit was not returned until late April.
(B) Client had been waiting over 4 weeks for
return of her rental deposit.
(C) Client has been waiting over one month
for return of rental deposit of £2060. Client desperately needs the money for
new accommodation.
(D) Client left accommodation in April and in
July was still awaiting return of his rental deposit.
(E) Client left flat in February. He was told
by the agents that he would have to wait for repayment of his rental deposit of
£1000 until the end of March, as the owner was on holiday in South Africa.
(F) Client left the property he rented in
January. Eight months later he was still waiting for return of his rental
deposit of £300.
(G) Clients vacated flat at end of lease.
Three months later they are still waiting for return of their deposit of £1500.
(H) Rented non-qualified apartment for 3
months. Vacated in July and was still awaiting return of rental deposit of £500
in September.
(I) Client returned to South Africa when her
visa expired. Her Uncle has been trying to get her rental deposit of £600 back,
on her behalf, for over 3 months.