Disputes on deposit deductions18-05-2022 | Financial
In an ideal world, your tenant will leave your property sparkling clean when they move out. But the reality is that some tenants won’t restore your property to its original condition when they had over the keys - be it damaged sofas, miscellaneous items left in kitchen cupboards or even broken windows.
In some cases, landlords are left with no choice but to deduct money from the tenant’s deposit. Some tenants will be understanding and have no issues with this. However, others will not let their money go without a fight, leading to disputes on deposit deductions.
The majority of deposit disputes are raised by tenants. 75.5% to be exact. Arguably, the most common reason why disputes from tenants are rising year on year is because of the increased awareness of the government’s resolution service, which allows tenants to commence the dispute process.
Understandably, this process can be pretty stress-inducing for landlords, but we’ve got it down to a fine science. Here’s everything you need to know about dealing with disputes on deposit deductions.
What can a landlord deduct from deposit?
First things first, it’s important to understand what a landlord can deduct from a deposit and, more importantly, who usually wins deposit disputes.
1. Rent arrears and unpaid bills
Unpaid bills and unpaid rent are two of the most common things landlords deduct from deposits. After all, how will you make your mortgage payments if the rent isn’t coming in?
But, believe it or not, rent arrears only accounted for 15% of contested deposits in 2021. This suggests that as long as you provide evidence of rent arrears, tenants will find it difficult to raise a deposit dispute.
If the tenant does not clean the property to the same standard as it was when they moved in, you may be able to deduct cleaning expenses from the deposit. Though, it’s worth noting that you may only be able to deduct money from the deposit if a professional clean is necessary. Otherwise, this would be considered unreasonable.
Unsurprisingly, disputes on deposit deductions for cleaning costs are far more likely, as cleaning standards can be subjective. In fact, cleaning was the most common reason for disputes on deposit deductions, accounting for 49% of all contested disputes.
In such cases, carrying out regular property inspections and documenting the cleanliness of the property in the inventory will prove useful.
3. Rental property damage
You may be able to use the tenant's deposit to cover damage to your rental property. Though, it’s worth noting that you should only charge tenants a reasonable amount on a ‘like for like’ basis.
Say, for example, your tenant wrecks a cheap, old sofa, it would be unreasonable to use the deposit to purchase a high quality, brand new one. It’s unlikely that you will win the dispute if you are being unreasonable.
4. Missing or damaged contents
You can also use the deposit to replace damaged or missing items provided for tenant use, such as white goods.
Gardening accounts for 12% of contested deposit disputes. If your tenant fails to keep the garden well-maintained and fulfil their tenant garden maintenance responsibilities, you may be able to deduct money from their deposit.
How long does a tenant have to raise a deposit dispute?
Unlike other disputes, you cannot necessarily resolve deposit disputes in an informal manner, as the tenant will have to raise the dispute with the Tenancy Deposit Scheme (TDS).
If the tenant wishes to contest deposit deductions, they have up to three months after the tenancy has ended to raise the dispute with the TDS. The TDS will then request that you pay the disputed money to them straight away.
As soon as the TDS has received the tenant’s case, it will seek a response from the landlord. The evidence will then be sent over to an impartial adjudicator, someone who has no personal interest in the outcome of the dispute.
Before the impartial adjudicator makes a final decision on how the deposit will be appointed, they will assess all the evidence provided by you and the tenant and then write a report that breaks down the reason for their decision. This process can take up to 28 days. Once the report has been issued, the disputed money will be paid accordingly,
If a letting agent manages your property, it’s worth asking them to provide you with the relevant information on where the tenant’s deposit is registered and what the deadlines are.
Protect your property
For extra peace of mind, have you considered taking out landlord insurance to protect your property? A comprehensive landlord insurance policy can protect your property against insured perils, such as fires, storms and floods. To learn more about how CIA can help you find an affordable policy, get a quote or arrange a callback today.