Repaying a Tenants Deposit

What a landlord needs to consider in repaying their tenants rental deposit

Landlords who have take a tenancy deposit on or after 6th April will have to place the deposit with one of the governments approved tenancy deposit schemes.  The starting point for the deposit repayment process is always at the property ‘check out’.  At this point the landlord/ letting agent and tenant need to realistically assess and agree on the state of the rental property at the end of the tenancy.  At the property ‘check out’ a landlord will need to make a snap decision in light of the inventory & schedule of condition often in front of the tenant about what is fair wear and tear of the rental property and what amount they need to withhold from the tenancy deposit.

Assessing what a landlord should withhold from their tenants deposit

The final inspection or ‘check out’ of a rental property fills many landlords with trepidation.  The tenants look anxiously around the rental property, hoping they’ve done enough to warrant the return of their full rental deposit.  They stare nervously at the state of the floor, wondering if it’s polished enough, then turn to the landlord for a clue as to whether everything is ok.

“So will I get my full rental deposit returned ?”

It’s an awkward situation for all concerned. The final inspection of a rental property is often when those problems a tenant, never quite got around to phoning the landlord about, first come to light.

“Oh yes that thingy, seems to be broken, and somehow that was ripped… oh that was like that when we moved in.”

The landlord looks around. The place looks a wreck. Copious amounts of bluetack dot the recently emulsioned walls, where once a thousand postcards had been displayed. The landlord tries to remember whether the tenants had told him they were smokers. The room stinks. The decor is sullied and the hob is thick with cooking slime. It’s a lot for a landlord to take in all at once. The tenant is jabbering on in one ear, whilst the landlord tries to focus on the state of the place. Stay calm and breath.
I try and assimilate as much as possible in the first couple of minutes.  It’s usually pretty clear if a tenant has taken care of a rental property or not. Take a quick walk through of the whole property to get an idea if there are any major issues.

A landlord should try not to get rushed into a reaction. Making a rash decision can be costly, however much of a hurry a tenant insists they’re in, take time to evaluate the condition of the property.  It’s worth a landlord verbalising their initial thoughts to the tenant such as; ‘everything looks to be fine’ alternatively, if there appears to be some problems, calmly express your concern.

At least then everyone can calm down and get a handle on what the situation is. Whatever they do, landlords must give the tenants chance to respond.  The tenant may offer to deal with any problem by removing an unwanted item or to attend to the repairs or redecoration.  It’s only reasonable that a landlord gives tenants an opportunity to put any situation right.  

If a landlord is not happy with the resolution they should give the tenants an indication of the standard required and the tenants in turn should give the landlord a timetable for action.

If following a further re-inspection of the rental property the work has been carried out to a landlords satisfaction, then the tenants deposit can be repaid.  The landlord may feel they want to impose a charge for this re-inspection, given the additional time and travel expenses in making it.  

Obviously, if the landlord employs a letting agent they’d expect them to deal with all this.  Occasionally, there are tenancy deposit disputes over the amounts returned, but it is always best to try and resolve these matters amicably, without the need to have to potentially defend legal action.

Repaying the tenants deposit after the tenant has moved out

If the landlord and tenant agree on whether there should be any deductions from the deposit and the amount; then repayment is pretty quick and straightforward.  In the case of the Deposit Protection Service (DPS) landlords will be able to go to the DPS website and do all this online.  A landlord needs to log in to their account and complete the Joint Deposit Repayment (JDR).  One aspect a landlord needs to be aware of before starting the process is that to complete it successfully they need both their own and their tenants repayment ID.  This is emailed to the landlord and tenant at the start of the process when the deposit was initially lodged with the DPS.  Be aware that if a landlord has not picked up their email from the DPS at the start of the tenancy then it may well have gone into a landlords spam filter and been deleted.  It is possible to phone up the DPS to get the email and repayment ID resent.

Repaying the tenants deposit -what happens if the tenant can’t be contacted?

In the situation where a landlord is no longer in contact with the tenant because they have moved or disappeared then a landlord will have to go down what is known as the single claim process.
To initiate this a landlord needs to contact the DPS and state they would like to use the single claims process.  The DPS will then send out a Statutory Declaration to the landlord or their letting agent.  The landlord or letting agent then completes the Declaration and sends it back to the DPS stating the amount they are seeking and the reasons.  The declaration does need to be witnessed by a Solicitor, Commissioner for Oaths or Magistrate.  The DPS then need to check that it’s been completed correctly.  Assuming it has they will serve notice on the tenant at either the tenants forwarding address, or if unknown the buy-to-let property address enclosing a copy of the Statutory Declaration.  If no response is received from the tenant within 14 days then the claim is settled in full to the landlord or letting agent.  Where the tenant disagrees with the Statutory Declaration then they must complete it and send it back to the DPS in 14 days.  A copy of the notice is sent to the landlord/letting agent stating the claim has been rejected.  They have 7 calender days to accept or disagree with the contents of the notice and submit any evidence to support this.  Whether the landlord responds or not the evidence & the case will then be referred to the Alternative Dispute Resolution Service.   It’s always advisable to submit their side of the story.  For tips about how to win a tenancy deposit dispute

When do I need to have repaid my tenants deposit?

In the old days before the arrival of the TDS a landlord would just hand or send the tenant a cheque for their deposit or make a BACS transfer.  Now the legislation requires that a landlord needs to initiate the repayment process of the tenancy deposit within 10 days of the end of the tenancy.  Remember with the advent of the TDS a landlord is no longer ‘judge and jury’ in deciding what happens to the tenants deposit.  What you need to ensure is that you clearly remember that the deposit is the tenants and the schemes administrators will be minded to return the entire amount to the tenant UNLESS the landlord can evidence the fact that any of it should be withheld.

Read what you can expect to put down as fair wear and tear of a rental property.

The situation also underlines the importance of carefully preparing a property inventory each time you let out a rental property.