Tenancy deposits: FAQs

Don’t let’s argue

29 November 2017

Steve Harriott answers some frequently asked questions on tenancy deposits and advises on avoiding or settling disputes

The Tenancy Deposit Scheme (TDS) not only protects deposits in its custodial and insured schemes, it also provides free dispute resolution and adjudication services. This article outlines how it addresses some common issues.

Q If a tenant has damaged a property, how can a landlord or agent claim for the cost and prevent the same thing from happening when another tenant moves in?

A Fewer than 2% of tenancies end in a formal dispute to TDS, but landlords rightly want to protect their investment and reclaim the cost of any loss or damage. Tenancy deposit protection was introduced to safeguard both the tenant’s deposit and the landlord’s financial interest.

The first requirement is to have a clear tenancy agreement, outlining the tenant’s responsibilities and the landlord’s or agent’s obligations. This will serve as the foundation for any subsequent argument regarding deposits or compensation.

The agreement cannot dictate all elements of a tenant’s lifestyle, by banning visitors, for example; the best way to ensure that a tenant looks after a property is to maintain communication with them throughout their tenancy to build a trusting relationship.

If a tenant does cause damage leading to financial loss or falls behind on rent, landlords can seek to make reasonable deductions from their deposit to cover these. However, as the deposit belongs to the tenant, the burden of proof falls squarely on the landlord. They must demonstrate that the tenant broke a contractual obligation that resulted in the loss being claimed.

Q Where properties are in multiple occupation, if one tenant is more liable for deductions at the end of a tenancy than others, can the deposit be split accordingly, or is every tenant equally liable?

A Most tenancy agreements for multiple-occupancy properties, popular among students, stipulate that the tenants are jointly and severally liable. This essentially means that each tenant is responsible for the action and inaction of themselves and the other tenants collectively.

If one tenant falls behind on rent, for example, the other tenants may consider that an issue simply for that person, but the whole group is responsible for paying the full rent. Although they can divide the total among themselves, ultimately, they all have a joint obligation.

The same rule applies to the deposit. If one tenant is responsible for missed rent, damage or cleaning issues, landlords are entitled to deduct the cost from their deposits: all joint tenants are responsible for compensating the landlord.

In these cases, TDS cannot consider tenants’ claims against each other to recoup costs or deductions. Should a disagreement about deposit deductions or rent payments arise between tenants, they should think about taking legal advice.

Q What are the most common disputes and what should tenants, landlords and agents do to make sure these do not arise or are settled fairly?

A The most common deductions and disputes concern cleaning, damage, redecoration, rent arrears and gardening, but the risks to landlords and agents can be minimised by following some simple steps.

Attracting high-quality tenants is important for landlords and agents. Having a trustworthy tenant is likely to decrease the chance of damage or disregard to the property.

Before a tenant moves in, they should be provided with a detailed check-in inventory. At this stage, tenants should flag any issues to the agent or landlord, where the report does not correspond to the condition of the property.

At the end of the tenancy, a check-out should take place to compare the condition and cleanliness of the property with how it was at the start.

Q Even with the best-laid plans, disputes can still arise at the end of a tenancy. If a dispute goes to a TDS adjudicator, what evidence should landlords or agents provide, and how should they present their case?

A An adjudicator can only make a judgement based on the information provided and will not normally contact either party for supplementary evidence or follow-up enquiries. Supplying appropriate and comprehensive evidence before adjudication is therefore vital.

Adjudicators need to understand what the claim is about and how much is being claimed, so the submissions of the landlord and tenant must be set out clearly and logically. These should come in the form of a dispute application and response, where contested subjects should be broken down by category, for example, cleaning, damage or rent arrears.

When reviewing the case, the adjudicator will ask themselves what the tenant’s obligations were, and whether the tenant failed to meet them. If so, the adjudicator will then consider what loss or damage this caused the landlord, and what evidence is there to quantify the loss.

Landlords and agents should demonstrate clearly what they are claiming for, why they are making the claim, why they think they are entitled to be paid, and that the amount being claimed for is justifiable. Agents and landlords will find it helpful to use TDS’ deposit deductions template, which provides a framework for setting out their case.

Q A recent survey showed that some 40% of students do not get their full deposit back at the end of their tenancies. What are the main reasons for this, and what can they do to avoid deductions?

A Cleaning is a factor in 57% of all tenancy deposit disputes handled by TDS. Ensuring a property is clean and tidy is not at the forefront of many students’ minds when they are finishing their studies, but leaving a messy property can incur heavy deposit deductions.

The easiest remedy is for tenants to maintain the property’s cleanliness throughout the year, perhaps by establishing a cleaning rota or doing monthly deep cleans together. If cleaning is left to the last minute, tenants should give the property a full, deep clean before the tenancy ends, to at least the standard outlined in the check-in report.

Damage to a property is another easily avoidable but leading cause of deposit reductions. When moving in, tenants should be encouraged to do their own inspection, documenting any evidence of existing damage and reporting it to the lettings agent or landlord to avoid being charged at the end of the tenancy.

Accidents do happen. If the property is damaged during the tenancy, this should be reported in writing to the agent or landlord. Open communication can help, so it can be in the interests of tenants to gather quotes from reputable contractors to repair any damage because this may be cheaper than the level of deposit deduction.

Steve Harriott AssocRICS is Chief Executive of TDS

Further information