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Tenants’ deposits

Are they now “safe as houses”?

Lawyers always advise that clarity avoids disputes; uncertainty breeds them. Residential landlord and tenant law in Jersey was sparse and the legal position of both landlords and tenants was far from clear.

It bred dissatisfaction. Lack of clarity would often bubble up as a row in Court.  As a measure of the number of disputes, the second biggest issue which Jersey Citizens Advice deals with each year concerns housing. Of the 1,490  occasions for advice to do with housing in 2014, roughly 10% concerned disputes about lease deposits. With the introduction of a new scheme on 2nd November, residential tenancies in Jersey should now be much clearer and there should be fewer disputes between landlords and tenants.

The stereotypical dispute is where the landlord retains the deposit, or a large proportion of it, to pay for cleaning charges. Often a landlord will say that money needs to be retained for his or her time to carry out cleaning or remedial works, but this is charged at a rate which is plucked from the air. Horror stories abound of the unscrupulous landlord who, for example, retains money from the outgoing tenant’s deposit to pay for the replacement of a stained carpet, but simply passes the stained carpet on to the new tenant and pockets the money. On the flip side, some tenants have taken contents with them when they leave, claiming them to be their own property when they are not. The new requirement to have a clear inventory and schedule of condition at the beginning of the lease should solve this issue. The property’s contents and its state of repair will be recorded at the beginning of the lease so that it can be easily compared at the end of it.

Where will deposits be held?

Similar rent deposit schemes have been run in England and Wales for some time.  The new law stipulates that deposits must be held by a UK company which already has experience of holding tenant deposits. Landlords will have to register and pay across to the company any deposit taken after 2nd November, 2015. Principally, registration will be through the landlord’s website www.mydepositsjersey.je but may also be completed by telephone or post. The company will hold the deposit safe as a neutral party. To encourage compliance, a landlord can be fined up to £2,000 if a deposit is taken and not paid over to the company after 2nd November.

There is a small charge levied for holding the deposit. Tenants may also search the company’s database to check that the deposit is in fact held by them. The deposit will not be released to the tenant until it is clear that their lease has come to an end.

Clarity

Deposits for new residential leases will have to be held by a neutral scheme. It is the final part of a list of measures aimed to improve the relationship between landlord and tenant.

The Residential Tenancies (Jersey) Law, 2011 requires the landlord to prepare:

  • a written lease including minimum terms;
  • an inventory of landlord items at the property; and
  • a condition report of the state of repair and decoration at the property.

The above are aimed to establish a clearer relationship between landlord and tenant so that there are fewer disputes which have to be resolved.

What will happen if there is a row about return of the money?

Deposits are held for a reason; to cover the expense of accidental damage or other things which might go wrong during the course of the lease. The landlord and tenant may not agree on the costs of the remedy, e.g. a new carpet or redecoration job. How would this disagreement be resolved? Will mydepositsjersey have an office in Jersey with a panel of people ready to deal with disputes?

Unless court proceedings are initiated, the scheme dispute resolution process will automatically apply to the row. The scheme has a panel of adjudicators but they will not be based in the island. If, at the end of the lease, the landlord would like to retain a portion of the deposit then written statements will have to be sent to the adjudicator giving reasons why the money ought to be held back. A similar right is to be provided in favour of the tenant if he or she has objections. The process should be simpler since the introduction of a requirement on landlords to provide condition reports about the state of the property at the beginning of the lease. That requirement was brought into force in October last year. The exercise of the adjudicator should purely be a paper one, to decide what should be deducted from the deposit and what should be disregarded. The decision of the adjudicator should bring a swift end to the matter.

How effective is the scheme likely to be?

The aim of the scheme is to help resolve the dispute as quickly as possible. However, judging by reports from English Solicitors on the experience in England, the reality has fallen short. Some schemes in England quickly became bogged down with disputes and took months to resolve. It was intended to be quicker than referring to the Court but ended up being slower. Hopefully Jersey will have a better experience.

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