Landlords, do you know what the deposit covers?

Posted 15/09/2016 by: Reeds Rains

The landlord’s view

Any deposit you take has to be protected in one of the government-approved schemes and that legislation came in precisely because too many landlords were keeping some or all of their tenants’ deposits unfairly at the end of the tenancy. So when can you legitimately retain a deposit?

The most common reasons are to cover the cost of cleaning and repairing damage or in lieu of rent owed. Be aware that you can’t ask tenants to pay for repairing natural wear and tear, because that’s not damage, although the problem is that it’s not always easy to differentiate between the two. So the best way to ensure you’re claiming legitimately is to have the check in and out inventories and periodic checks carried out by an independent inventory clerk who is a member of the AIIC – that way, the tenant can’t claim bias and any dispute is more likely to be settled in your favour. 

You should also be aware that there are ‘no win, no fee’ legal companies out there encouraging tenants to contest proposed retentions, so make sure you protect the deposit properly and issue the tenants with prescribed information within the first 30 days.

The tenant’s view

Probably the most common misconception among tenants is that the deposit is somehow an advance payment of rent and a huge number still assume that they can simply deduct it from their last month’s rent at the end of the tenancy. Some also don’t appreciate that they are expected to hand the property back in the same condition as when they moved in, allowing for wear and tear. So they’re surprised when they’re told that, say, £100 is being retained to cover the costs of a professional clean, because they thought that a quick tidy and vacuum was fine. 

According to the latest annual report from the TDS, one of the biggest areas of dispute is over oven cleaning, so make sure either you or your agent/clerk shows the tenant the inside of the oven at check in and emphasises it needs to be handed back clean!

But the reality is that if a tenant doesn’t understand what the deposit is for and what issues might mean they don’t get it all back, that’s generally down to it not being properly explained to them at the outset, so make sure that’s done – by you, your agent or the check-in clerk. 

The agent’s view

It’s especially important for us to get the administration of the deposit right, as we’re acting for our landlords and have a responsibility to them. We carry out professional inventories and periodic checks to make sure that any damage or theft problems are caught as early as possible and the tenant has a chance to put things right before it comes to the end of the tenancy. 

We have to be meticulous in the way we gather and record evidence, so that we can make the strongest possible case to the deposit scheme on behalf of our landlord if there is a dispute with the tenant. 

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