Tenancy Deposit Disputes
How common are tenancy deposit disputes?
Thankfully, tenant deposit disputes are relatively rare. Despite media claims that landlords frequently withhold tenant’s deposits without justification, research from the Deposit Protection Scheme (DPS) reveal disputes only happen in around 1% of deposits held. The DPS claim their adjudication process (the final stage if agreement cannot be reached between landlord and tenant) is the lowest of the 3 approved schemes at 0.81%, this compares to the two other scheme providers at 1.02% and 0.87%.
What should a landlord do if they dispute the repayment of a tenants deposit?
A landlord should first try and resolve any disagreement with their tenant amicably. Break down the items and amounts, showing why and what any withhold money is for, whether that be for damage to the rental property or owed rent.
If all else fails then the starting point with all tenancy deposit disputes is the property inventory and the tenancy agreement. This is why preparing a good inventory with a precise schedule of condition is so important. The quality of this documentation will enable a landlord to sunbstantiate any damage or missing items in the rental property, and to how they go beyond what should be considered the reasonable wear and tear of the rental property . The tenancy agreement can be referred to in the case of any rent being owed or sufficient notice to leave being given.
Have a look at Property Hawk’s guidance on repaying a tenants deposit as to the procedures involved and at what stage the arbitration process starts. This is a useful piece of guidance on what a trained arbitrator looks for when assessing what a landlord can withhold from a tenant deposit. We have over 50 tips on how landlords can win a tenancy deposit dispute if the process goes to arbitration.
This will help landlords avoid getting into a protracted arbitration process.
Figures from the DPS, show that following disputes, 18.5% of tenant deposits are returned in full to the landlord or letting agent, 54.7% are split between both landlord and tenant, and 26.8% are refunded in full to the tenants.
Do landlords need to take a tenancy deposit?
Some landlords avoid taking a tenant deposit. The practice is perfectly legal and acceptable. This approach is particularly popular with student landlords and landlords with benefit tenants who often struggle to raise a rental deposit.
Instead of using a rental deposit for assurance, these landlords obtain a tenant guarantor , usually charging a non-refundable administrative fee for doing this. If the tenant goes on to cause damage or stops paying the rent, the landlord simply charges the tenant’s guarantor for the costs. If they refuse to pay the landlord will then take the guarantor through the small claims court for costs.