When you start out as a landlord aged 22 you learn a thing or two about managing property. Here, James Davis offers a helping hand for landlords facing deposit disputes
When tenants hand in their notice, less interested landlords strap themselves in for the inescapable deposit dispute.
Proactive landlords will be comfortable, knowing how to safeguard themselves and their property from the start of a tenancy agreement.
Where we fail
Most landlords are aware of the gaping grey area that sits between a check-in and check-out inventory. Cleanliness now accounts for 53% of all deposit disputes, which has increased by 13% in the last three years.
The key is to raise observations around cleanliness during the check-in inventory, writing that you expect your property to be in similar condition, minus fair wear and tear, when the tenant checks out. Fair wear and tear can often be badly defined and therefore leaves certain classifications of damage open to debate.
The importance of a good inventory, complete with time-dated photographs, signed by both landlord and tenant, cannot be over-stated.
It is also important to raise any concerns during periodic property inspections throughout the tenancy.
If you see signs that the tenant has been smoking in the property, has caused damage, or perhaps is keeping a pet when it is prohibited by the tenancy agreement, you should point out that the tenant is in breach of the terms.
Reminding tenants of their responsibilities under the agreement during the tenancy can help avoid issues arising when they move out. Ensure you keep written communication when you have notified a tenant of your concerns as this will be important should there be a dispute.
It could be equally difficult to prove if damage such as blocked drains and wall plaster chips are down to negligence and not legacy issues from before the tenancy began.
Again, the only way to counteract this argument is to identify these issues in writing, and with time-dated photographs, from the outset.
For example, why not state in the agreement that minor scuffs and scrapes to the plaster come under ‘wear and tear’, but if plaster damage is clearly negligent or intentional then a repair cost will be claimed.
It is more effort at the start but it will cover you long-term.
You could also state in the agreement, provided the tenant has agreed beforehand, that the tenant must pay for a professional clean when they move out. This ensures the cleaning is completed to a high standard.
If a tenant seems hesitant to agree to this, it might be worth pointing out that should the cleaning not be up to standard upon check-out, they may be charged for the cost of a professional clean anyway which will be deducted from their deposit.
It is also important that you have been diligent when choosing your tenant in the first place.
Thorough referencing, with a demonstrable and positive rental history, will give you a better chance of finding someone who will look after your home and not trash it.
There are three deposit schemes which will deal with a deposit dispute: the Tenancy Deposit Service, My Deposits, and the Deposit Protection Service.
Since April this year, all schemes now offer both custodial and insured schemes – previously it was only the Deposit Protection Service that offered a custodial scheme but now all do.
A custodial scheme holds the actual deposit money during the tenancy. In the event of a dispute it will release the undisputed amount, as agreed between the landlord and tenant, and hold on to the disputed amount until the adjudication is completed.
With an insured scheme, the landlord (or a stakeholder such as an agent) holds the deposit and pays the disputed amount to the scheme before the adjudication. Custodial schemes are free to use, whilst insured schemes require either a fee per deposit and/or a membership fee.
The final decision is with the adjudicator: their decision cannot be appealed other than through a court.
The RLA also offers DepositGuard, which is an exclusive service to members with reduced deposit protection rates at the Tenancy Deposit Service. For more information see www.rla.org.uk/ landlord/tenancy_deposits/
Burden of proof is yours
If a tenancy deposit dispute goes to arbitration, you have the burden of proof. That means you must display evidence to support your claims, and allow an independent adjudicator to review everything you present.
Not all disputes go to adjudication and some can be resolved without: however, around 40% were adjudicated in the last financial year.
The more thorough your evidence, the better chance you have of a favourable outcome. So I repeat: that means you will need detailed check-in and check-out inventories. These include time-dated photographs, cleaning receipts and quotes from cleaners that prove what you paid. All will help to verify that your charges are proportionate, allowing you to fully cover your costs.
If at any stage, from the start of the tenancy agreement through to the checkout inventory, you have been lax with your written detail, there is the risk that you will become unstuck when negotiating expensive maintenance disagreements.
James Davis is founder of online letting agent Upad