The ‘no win, no fee’ lawyers make their money from poring over deposit protection paperwork to find errors.
If they reveal a mistake, the tenant can go to small claims court to ask for three times the value of the deposit as compensation, plus an award for legal costs.
Whether the deposit is protected or not is irrelevant to the case.
The lawyers are looking for mistakes in providing ‘prescribed information’ under deposit protection rules.
For instance, a tenant recently won almost £2,000 compensation when a letting agent wrongly inserted their names and contact details instead of that of the landlord when placing a deposit on protection.
The lawyers are exploiting a legal loophole as the courts and deposit protection organisations have realized that the rules are poorly drafted and, in some cases, ambiguous.
In another recent case, involving a letting company called Superstrike, a judge ruled against approved advice offered to landlords and letting agents by deposit protection organisations.
Another issue for landlords is mistakes in lodging a deposit for protection also affect possession proceedings.
The law says that a landlord cannot ask a court to evict a tenant if a deposit is not properly protected – which includes correctly giving the prescribed information to a tenant.
One firm heavily marketing to tenants is Tenants Deposits Claimline, based in Bournemouth, Dorset, which claims a 92% success rate against letting agents and landlords for misfiling deposit protection paperwork.
“Private tenants including students renting from a private landlord can make a claim if the deposit has not been registered correctly,” says the firm’s web site.
Claims may be made for up to six years after the date the tenant left the rented property.
