I got a tenancy agreement signed by 2 tenants and myself, they also paid a deposit.
A few days after signing the contract (and 10 days before the move-in date), they decided not to take the lease and are requesting their deposit back which is already secured in one of those deposit schemes.
This is causing me a lot of additional work to find new tenants (new viewings, background checks, drafting new contracts…).
My understanding is that the deposit can be used to cover the first month rent which they will obviously not be paying. Am I correct? (note the property is based in Scotland)
PS: they even requested the deposit to be paid back to a different bank account!
We’re talking about security deposit of one months’-5 weeks’ worth, aren’t we?
In this case, you will have to give the money back. Till the date of move-in TA has a provisional value for TT (not sure if it’s the same for LL), and they can pull out at the last moment. Security deposit in itself is never your money, it always belongs to TT unless adjudicated/ordered by court otherwise.
Horrible situation but LL-TT legal rights and are not equal in general.
Oh, I wouldn’t pay deposit into a different bank account. Ask them if there’s any particular reason they can’t transfer money themselves later on. Ask maybe they prefer to be refunded in bitcoins or through Western Union.
What I would do, I will take my precious time to refund it. I will be too busy looking for a new TT. I will also tell them that I will consider recovering money through the court for the loss of rent from the start of their failed tenancy till a new-found T moves in. Now that you know where they work.
I’m afraid I’m not familiar with Scottish law, so you should get professional advice, but in England, you would be entitled to claim compensation for breach of contract, which would amount to your costs, but no more, and you would be expected to mitigate those costs as they are contract holders but not tenants.
I find it very odd that a tenant can break a tenancy agreement, which is legally binding, with no penalties, specially when it says the tenants are required to provide 28 days notice.
If you have carried out their referencing and credit checks their bank account numbers should be on there. I would simply pay back into the account where the money came from!
In England: if you have administered the holding deposit properly, you could withhold it as the prospective tenants are the ones who withdrew from going ahead with the tenancy.
No idea if the law is different in Scotland. In England as you both signed, you have created a tenancy and both of you are obliged to it for the fixed term. You can’t put out without agreement. So you could keep them to the agreement. You could agree to early termination and recover your costs (including any reduction in rent) and yes you can recover that from the deposit. If you have received the deposit remember to protect it as usual within the time-limits (you have a tenancy and your usual obligations).
Its further down the track than that. Theyve signed a tenancy agreement, which means theyre contractually bound for the whole period, subject to mitigation.
I am a Scottish landlord. You have, of course, provided your reluctant tenant with the ‘easy read’ notes for tenants? The relevant bit makes it clear that they can’t do this, must give you notice.
copied from govt website:
If you want to end the tenancy
You have to give your landlord at least 28 days’ notice in writing if you want to end the tenancy (unless you ask for shorter notice and they agree in writing).
The notice period will begin on the day your landlord gets your notice, and ends 28 days after that date.
So if you send the notice to your landlord by post or email, you must allow your landlord 48 hours to receive it. This delivery time should be added onto the amount of notice you give your landlord.
If you send your landlord a notice to leave by recorded delivery post on 23 January, they will be expected to receive the notice on 25 January; the 28 days’ notice period will start on 25 January and end on 21 February, so the earliest date you could leave the let property would be 22 February.
You cannot give notice before you move into the let property
I dont know whether the notice periods will apply yet as there may not yet be a tenancy. In England there would at this point only be a contract to supply one. However, we know that Scottish law is different, so…
The ‘easy read notes’ also say “When a tenant has signed a tenancy and changes their mind a day or two before the tenancy is due to start, the deposit should be returned as any deduction from it would be equivalent to charging a premium.”
So the question is how can I get the month rent if I need to return the deposit? Does this mean I have to go to court?
It is more than that, it costs me time and money to find new tenants. To be frank the notes says the deposit cannot be used in such situation but it also does not say that the 28 days notice period does not apply…