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Deposit disputes – what causes them and how to prevent them

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The end of a tenancy can be a difficult time for both landlords and tenants and disputes over how much of a deposit is returned to the tenant can be a real problem. Cleaning is the most common dispute in cases brought to the Tenancy Deposit Scheme (TDS), damage to property comes second followed by the need for redecoration.

Our management team have a number of strategies in place aimed at ensuring disputes at the end of a tenancy are kept to a minimum. As a result, the number of disputes we have as a percentage of the total deposits we have registered with the TDS is only 0.3%. These disputes range in value from £336 to £3,360.

Damage to the property is the most common cause of deposit disputes for us, accounting for 30% of disputes, but cleaning too is a contentious issue. So how do we minimise disputes and make the process of moving into and out of a property as straightforward as possible?

What happens at the start of the tenancy?

First, at the start of a tenancy the landlord or letting agent must ensure all deposits relating to Assured Shorthold Tenancies are protected within a Government approved scheme. Ours are held with The Tenancy Deposit Scheme. The landlord (or letting agent) has to protect the deposit and issue certain information to the tenant within 30 days, under the terms of the Housing Act 2004.

The inventory

We ensure a thorough inventory is completed at the start of a tenancy – this has to be signed and agreed by both parties and should detail the furnishings and other items within the property and their condition. We organise a check-in which is carried out by an independent inventory company and paid for by the landlord – this is signed off by the tenant when they move in.

The check-out procedure

At the end of the tenancy we arrange a thorough check – out which is paid for by the tenant.  The level of detail contained within both the inventory and the check – out is important. If a photo is taken of damage, perhaps a burn on a carpet, it is useful to show alongside it either a ruler or a pen to give a sense of scale. Although of course there are exceptions when this doesn’t work – if the property smells of cigarette smoke, a photo cannot help!

Standards should be detailed in the tenancy agreement

The information set out in the tenancy agreement is very important. As standards of cleaning vary from tenant to tenant, it is important that the agreement clearly states the landlord’s expectations and the tenant’s obligations.

Clearly, the property should, when vacated, be as clean as it was when the tenant moved in. The original inventory will document the exact condition of the property (if it was cleaned to professional standards it should say so) and this can be compared to the check – out report. If the property is not cleaned to this standard, the landlord may withhold part of the deposit.

If the landlord believes it is necessary to withhold some of the deposit, they should have evidence to support the tenant’s failure to meet their obligations.

From the tenant’s point of view, if they employ a specialist cleaning company to carry out a professional clean they should have a detailed invoice to show the landlord if necessary.

Cleaning to a professional standard

Often, as we mentioned, a tenancy agreement will stipulate that the rental property must be cleaned to a professional standard but what exactly does this mean?

This may vary according to the original condition of the property so can be hard to define but generally it means cleaning to a very high standard. Some guidelines might include hoovering or mopping floors, dusting and cleaning all surfaces and furniture, cleaning windows and doors, cleaning the kitchen including inside appliances (including the oven), defrosting the freezer, cleaning the bathroom and making sure there is no mould or other signs of condensation and generally ensuring all spaces beneath furnishings and fixtures are swept and clean.

A landlord may have grounds to withhold part of the deposit if the tenancy agreement states that the property should be cleaned to a professional standard but some areas are not up to this standard, for example if the oven is dirty.

Reasonable wear and tear

Landlords should also be realistic about general wear and tear.  A property will not be in exactly the same condition at the end of a tenancy as it was at the beginning.  But landlords are receiving a rental income and usually benefit from capital growth too so they must be realistic.

Some landlords expect to use the tenant’s deposit to make general repairs but this is not what the deposit is for. Repairs and maintenance will need to be carried out whether the tenant was occupying the property or not, so their deposit cannot be used for this purpose.

What happens if there is a dispute?

Landlords or tenants who cannot agree can raise a dispute with their Tenancy Deposit Scheme and ask for an adjudicator to decide how much should be returned to the tenant.

For example, a common problem could be a stain or burn on a carpet – if the landlord wants to replace the carpet throughout the entire property and withhold the tenant’s deposit to pay for this, the adjudicator would probably not decide in favour of this. ‘Betterment’ is not permitted, ie landlords are not allowed to be in a better position than they were at the start of the tenancy.

Adding clauses to the tenancy agreement

In certain circumstances, for example if a tenant wishes to bring their pet with them to the property, we will ask for a larger deposit and also add a clause to the tenancy agreement which stipulates that the property is deep cleaned when the tenant leaves.

An amicable relationship helps keep disputes to a minimum

As ever, communication and remaining amicable with the tenant throughout the tenancy is incredibly important. The landlord should keep on top of repairs and maintenance to ensure the property is well maintained. If the landlord knows the tenancy is ending soon, they’ll want it kept clean, neat and tidy so that it is well presented for viewings. If the landlord has been on good terms with the tenant, they will be more likely to co-operate.

Remaining on good terms with the tenant so any problems can be discussed rationally is a much better option for landlords and tenants than resorting to adjudication.

Professional property management

Using a property management service will reduce the risk of deposit disputes arising in the first place. We are proud of our track record, with only 0.3% of our total deposits registered with the TDS under dispute.

This is due to diplomacy, experience and of course the detailed systems we put in place to ensure both landlords and tenants are clear about their responsibilities. And it is why many landlords use our property management service to handle these issues for them, ensuring that, if a dispute does occur, an agreement can be reached quickly and amicably.

Not familiar with how professional property management can benefit you?  Please do contact us on 020 7319 9782 and we will bring you up to speed.  



About the Author

A qualified lawyer (she studied Law with French Law) at UCL, Simran began her career working for a city firm specialising in commercial real estate, before joining Benham and Reeves in 2006. During this time, Simran has put systems in place to streamline administration, enabling the company to compete effectively with much larger organisations. As a result, the company’s property management department has grown substantially – in 2006 it managed 885 rental homes whereas today the department manages nearly 2000 properties for clients, including a growing number of overseas clients. Read more about Simran Prasad here - Read full profile