A landlord’s guide to deposit disputes

At the end of a tenancy, some elements of your property may not be in the shape they were at the start.

Deciding what should be remedied at your own expense and what should be charged against the tenant’s deposit can be a sensitive business.

By law, your tenant’s deposit should be kept in a third-party scheme, so you can’t just raid it for whatever you like. The tenant needs to agree any deductions, and if you can’t come to an arrangement then it will have to go to dispute.

There are a few things you can do to ease the process:

Do proper inventories

Do a full inventory at check-in. Note down all imperfections, however small, and take photos. Include information on cleanliness (even mundane things like a touch of limescale on the taps). Give the tenants the opportunity to check the inventory thoroughly, and ask them to formally approve it.

When it comes to check-out, do exactly the same thing, and take the check-in report with you. The more thorough the documentation, the more difficult it is to argue with. You might want to use an independent inventory service, to ensure impartiality.

Be realistic about your expectations

Some wear and tear is inevitable, and this should not be coming out of the tenant’s deposit. You’re looking for genuinely unreasonable damage caused by negligence or ill-treatment.

The original condition of things is also a consideration. If a tenant has burned a hole in a carpet that was a decade old and threadbare, then while they bear some responsibility, it’s not fair for them to cover the full cost of a brand new replacement. This is called ‘betterment’, and a disputes adjudicator will slap you for it.

A tenant should not be held to a higher standard of cleanliness than the landlord, but if they leave the property less clean than they found it, then it isn’t unreasonable to make carefully-calculated deductions for further cleaning. A detailed check-in report is essential if you’re going to be able to prove this.

Be diplomatic

The tenant has (hopefully) paid you a decent amount of rent during their tenancy. So while you might be entitled to add seven-pounds-worth of light bulbs to the bill, it might not encourage co-operation.

If the tenant does challenge your proposed deductions, bear in mind that going to formal dispute is a hassle, and that the adjudicator is unlikely to rule entirely in your favour. Consider negotiating a compromise. Always be polite and professional (even if the tenant isn’t).

Where remedial work is necessary, seek out competitive quotes, and if the tenant still thinks it’s overpriced, you could invite them to obtain quotes of their own from certified professionals.

Prepare for dispute

Formal disputes will be managed through your deposit scheme. You’ll need to provide all the evidence to a third-party adjudicator, who will make a decision about how much to award to you, before returning the rest of the deposit to the tenant. You can’t appeal the ruling, except by going to court.

The deposit still belongs to the tenant, so unless you can actively prove that you deserve some of it, the adjudicator won’t award you anything. However, you should have nothing to fear from the process so long as you can support your claim with full check-in and check-out reports (preferably compiled by a third party), and can prove that the amount you’re requesting is based on accurate quotes.