Causes of Deposit Disputes at Checkout and How to Resolve Them

Causes of Deposit Disputes at Checkout and How to Resolve Them

There are many potential points of friction between landlords and tenants. In the UK, deposit disputes are the biggest of these. End-of-tenancy deposit disputes have increased over the past year, indicating that a solution must be found to resolve the problem.

The TDS Insured and Custodial Tenancy Deposit Schemes issued over 31,000 adjudications in England and Wales in 2021-22. It was nearly 1500 cases more when compared to 20-21 figures. The increase is attributed to COVID-related reasons. The lockdown resulted in fewer tenancy contracts coming to a close. As of March 2022, only a few cases have resulted in disputes.

The Key Reasons For Deposit Disputes

The Key Reasons For Deposit Disputes

The causes of Deposit Disputes are nearly the same across the country, according to recent findings. Cleaning claims, damage to fixtures and fittings, and rent arrears are among the top reasons. Other key reasons are missing items, gardening-related issues, pending utilities/bills, etc.

Preventing Deposit Disputes

1 The Tenancy Agreement

1 The Tenancy Agreement

It is obvious that the terms of a tenancy agreement can be different for different properties. Drawing up unambiguous clauses and ensuring a clear understanding who is responsible for what is the best way to avoid disputes going ahead.

2 Take Time Out To Create An Inventory Report

2 Take Time Out To Create An Inventory Report

Both parties must invest time in inventory reporting. A comprehensive report will serves both parties best. An inventory report will provide a clear picture to the tenants and landlords as details are discussed when the tenant moves in. The state of the listed items must also be clearly noted in the description to prevent ambiguity at the end of the tenancy. Industry experts recommend using reliable inventory software that comes with a logical solution to decrease the instances of deposit disputes. Ringley's Quick Inventory is an example of this.

3 Inspections At Mid Tenancy & 4 Keep The Communication Going

3 Inspections At Mid Tenancy

Carrying out inspections at a scheduled time in the middle of the tenancy contract period is a good idea. Mid term inspections provide a landlord with a clear picture of how tenants are maintaining the property. It will also help raise red flags and address concerns before they flare up and become major issues. Results of the mid term tenancy inspection should be shared with the tenants to encourage behavior change if necessary.

4 Keep The Communication Going

If the concerned parties have dispute the proposed amount of deposit to be returned, this should be communicated and discussed to find an amicable solution. Clear communication channels between the landlord and tenant can prevent a case from going to adjudication. Many agents use Deposit return calculation templates to decide on an amount that must be deducted from the tenant's deposit to cover costs. These work by logging a proposed deduction along with supporting evidence such as photos, purchase invoices etc... This can help the parties reach an agreement before the issues flare up and go out of hand.

5 Understanding the Law

5 Understanding the Law

In the context of deposits, most tenants now know that all deposits must be placed in a Tenancy Deposit Scheme backed by the UK Government. The law also states that deductions must be clearly justified. The reasons for deduction must be very clear and must connect to the failure of the tenants to carry out their part of the responsibilities set down in the covenants or clauses of the tenancy agreement. Notably, the amount of the deduction must be proportional to the damage. The reasons for deduction must be provided in writing. If copies or bills justify the cost, the same must be filed and preserved.

Providing clear and undisputable evidence is the only way of settling a deposit dispute. Some commonly used evidence are tenancy agreements, inventory lists, communication between the tenant and owner, photos and videos gathered during mid-tenancy inspections, and receipts as proof of money spent to get the work done.