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The Most Common Issues for Deposit Disputes and How to Avoid Them

The Most Common Issues for Deposit Disputes and How to Avoid Them! Introduction

Since the introduction of tenant deposit protection in 2007, many landlords are none the wiser when it comes to deposit disputes. This is not helped by stories of contradictory adjudications being produced by the deposit protection schemes and accusations of tenant bias by many agents and landlords.

In this Article, I look at the basic principles behind the tenant deposit, how disputes can hopefully be avoided at the end of the tenancy and look at some common issues for deposit disputes.

Basic Principles

The starting point must be clear that at all times the deposit belongs to the tenant and there is no automatic right to the tenants’ deposit. Some agents and landlords wrongly believe that they have a right over the tenants’ deposit.

A deposit is paid by a tenant as security for the landlord for failure to pay rent, breach tenancy terms, cause damage or not leave the property in the same condition (e.g. cleaning) as it was at the start of the tenancy.

If there are issues at the end of a tenancy and a landlord wishes to make a claim against the tenants’ deposit, regardless of how “obviously liable” the tenant is, the tenant’s agreement must be sought. There is some confusion with novice landlords that, (say for example, they know rent arrears exist) they can just deduct this from a deposit without getting the tenant’s agreement. I have personally heard landlords in that situation saying “why would I need agreement when I am owed rent!”

If agreement to any deductions cannot be sought from the tenant then regardless of how “obvious” the claim may be by the agent or landlord, deductions cannot be made from the deposit.

If negotiations fail, then the parties can agree to free adjudication via the deposit scheme the deposit is protected with. If either party does not agree to adjudication, then the only other option is Court.

Avoiding Disputes

If at all possible, the ideal scenario is to avoid any deposit disputes at the end of the tenancy. This does not mean that all tenants will be perfect – it means that if a proposed deduction is reasonable, understandable and explained to the tenant that it will be an agreed deposit deduction rather than a dispute.

Educating Tenants

A pivotal part of avoiding disputes is to aid the understanding of tenants from the outset, explaining what they are responsible for and what needs to be done at the end of the tenancy.

Whilst it is not a legal requirement to have an independent inventory and schedule of condition at the start and end of a tenancy, the importance of such cannot be emphasised enough.

A common problem with novice agents and landlords is that either a check in inventory/schedule of condition does not exist or is poorly drafted with equally no check out report or one of poor quality.

An independent inventory clerk can produce detailed reports, often with photographs. The fact they are independent from the agent and/or landlord provides tenant’s with trust from the outset knowing that the inventory clerk is independent and not on anyone’s side.

It is crucial to advise tenants at the outset that the property must be returned in the same condition and cleanliness at the end of the tenancy as it was at the start of the tenancy with the exception of reasonable wear and tear. Reference should be made to the tenancy agreement and inventory and how at the end of the tenancy, the check in documents will be used to compare the condition and cleanliness of the property and a check our report compiled.

Tenants should understand how the inventory/schedule of condition is the “start” document and the “end” document is the check out inventory/schedule of condition” and how any issues arise out of direct comparison of the two.

Agents and landlords should explain in much detail as possible that before moving out, the tenants should use their check in documentation as a checklist before leaving the property. This assists tenants in understanding why a deduction may be proposed.

If a property has been professionally cleaned at the commencement of a tenancy and this is confirmed in a check in inventory, this should be highlighted to tenants and that they will be expected to return the property clean to a professional standard and not a domestic clean. Any reference to a tenancy agreement term which asks for a written receipt of a professional clean should also be explained at the outset.

Inspections

Some disputes can be avoided if an agent or landlord undertakes regular inspections throughout the tenancy. If this is done correctly, then any issues can be picked up as they occur and highlighted to the tenants. This assists in having no last minute surprise at the end of a tenancy.

Pre-Move Inspection

A pre-move inspection a few weeks before the end of a tenancy is useful to pick up issues that may be an issue at the end of a tenancy. For example, if a landlord sees damage caused by the tenant, then it is an ideal opportunity to document it and then discuss the matter with the tenant.

If there is an understanding at this stage, then the tenant may be more inclined not to dispute any proposed deduction.

Pre-Move Checklist

Another helpful tool is either a letter or checklist to the tenant, a week before move out just as a gentle reminder of how the property must be returned at the end of the tenancy.

The combination of a clear understanding from the outset as to responsibilities, inspections during the tenancy, pre-move out inspection and final letter/checklist should provide the tenant with every opportunity to understand any proposed deductions from a deposit (so long as the costs are reasonable).

Most Common Issues

It appears certain issues appear frequently as tenant deposit disputes. These include cleaning, mould, redecoration, damage and missing items.

One of the biggest areas of tenant deposit disputes is cleaning. Usually cleaning disputes focus on to what standard and extent a property was clean at the start of the tenancy.

A check in inventory/schedule of condition should be very clear on the matter of cleanliness. The first part of cleaning that ought to be defined is the standard of cleaning – has it been domestically cleaned by the landlord or where professional cleaners engaged. This creates the standard that the property can then be judged against at the end of a tenancy.

If a landlord has had a property professionally cleaned at the start of the tenancy, they can insist the property is professionally cleaned at the end of the tenancy. Landlords/agents should retain any invoices and receipts as evidence of professional cleaning prior to tenants moving in. It is not good enough for a tenant to merely clean the property to a domestic standard.

The next part of cleaning that needs to be clearly highlighted in the check in documentation is the extent of the cleaning.

Let’s say a property has been professionally deep cleaned throughout with no item untouched. A check in inventory/schedule of condition should in very clear terms state this so the tenant is clear the property has been professionally cleaned but also deep cleaned throughout and there are no cleanliness issues at all.

If any item is unclean, say an oven, then it not very helpful to simple mark this item as “not clean” – think about it logically, what does that really been? What does a comment like “not clean” tell anyone about the extent of the cleanliness? Any description of cleanliness issues should be clear and precise to avoid any misunderstanding and subsequent dispute. A description of an unclean oven may be “small crumbs to base, very slight grease to back of oven, otherwise clean”

Mould

Another big area for disputes is mould, in particular; in bathrooms in apartments or flats where there is no window.

It is crucial that where there is no window in a bathroom then a ventilation fan is installed. Without any ventilation, a landlord would fail on a claim for mould.

Mould forms if bathroom ventilation is not correctly used and the bathroom is left wet.

Agents/landlords should ensure tenants are aware at the outset that mould is not wear and tear. Tenants should also be informed that they must not switch any ventilation fan off and if there is a window to open it to ventilate the bathroom. Some tenants turn the ventilation fan off which then results in mould forming.

On inspections, the agent/landlord should check the ventilation fan (if present) is on and advise the tenant to ensure sealant is not left wet and the bathroom is properly ventilated.

The same principles apply if a tenant is drying clothes in the property and not ventilating properly.

Redecoration

Most ASTs prohibit redecoration of any type without express written permission from the landlord.

Tenants should be advised that if they wish to redecorate it is in their interests to seek the landlords’ written permission. In the majority of cases, the landlord will agree so long as the colours are agreed and the standard of work.

Damage

Damage to property can vary from minimal to almost everything. They key here are regular inspections and a pre-move inspection; in particular, where there is greater damage, this can be visible. Ensure the tenant understands their liability and the cost of repair in order to agree deductions at the end of a tenancy.

Missing Items

Tenants sometimes mistakenly take the landlords belongings with them and there of course will be instances of theft. They key is to emphasise to the tenant that the “end point” will be compared to what was in the property at the start of the property with the exception of any items reported as removed by agreement during the tenancy.

When a tenant has a copy of the check in inventory, there is less of chance that any landlord’s items will go missing as the tenant can work room to room with a copy of the inventory to ensure nothing is taken that does not belong to them.

Conclusion

Be clear with tenants from the outset what their responsibilities are; with the assistance of detailed inventories at check in and check out coupled with regular inspections and pre-move procedures should ensure that whilst there may be agreed deductions from a tenant deposit, there will not be a deposit dispute.

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