Landlord Deposit Rules: What You Must Know

It’s time to talk deposits…

These are a source of protection for landlords, ensuring they have a safety net should anything happen to their property.

But, this doesn’t mean they’re without their own complications!

Deposit disputes are common. If a landlord withholds money for any reason, this is an obvious conflict of interest between both parties.

Let’s ensure that doesn’t happen. Here are some important landlord deposit rules to remember.

The Government Approved Tenancy Deposit Scheme

All landlords must put deposits in a government-backed Tenancy Deposit Scheme. SafeDeposits is Scotland’s leading tenancy deposit scheme.

These ensure a deposit is protected, and that tenants receive the full amount back if they meet the terms of their tenancy agreement and maintain the property as agreed.

TDS disputes are very uncommon, as the deposit is looked after by an unbiased, regulated third party.

Some landlords can be confused by these schemes, as in England and Wales there are two options. So, let’s straighten it out:

Insured Scheme

The Insured Scheme is where the landlord or letting agent keeps hold of the deposit throughout the tenancy, while paying a fee to the TDS.

This fee operates on a ‘pay as you go’ basis, meaning you don’t pay after the tenancy has finished!

Custodial Scheme

With the Custodial Scheme, the landlord or letting agent doesn’t have to pay a fee, as the TDS looks after the deposit.

The TDS will then release the deposit at the end of the tenancy.

Both tenancy deposit protection schemes have their benefits, so it’s important to work out what works for you.

When are Tenancy Deposit Deductions Allowed?

There’s no hard and fast rule when tenants ask, ‘what can my landlord deduct from my deposit?’ as this varies depending on the individual circumstance.

However, there are some common reasons why deposits aren’t returned.

Reasons for these deductions must be stipulated in the tenancy agreement, for example cleaning deposits. If you require the property to be returned in a certain way, for example the carpets cleaned, ensure this is clearly communicated.

After the tenant leaves, landlords are allowed to make deposit deductions for the following reasons:

Unpaid Rent

There are numerous reasons why tenants may not be able to afford rent.

However, while some circumstances are out of their control, missed or withheld rent is a justifiable reason not to pay back some, or all, of their deposit.

Many landlords prefer to deduct money from the deposit rather than serve their tenant with a Section 21 eviction notice.

If your tenant owes more than the deposit amount, you can take legal action, and a court can order them to pay the full amount back. This will incur it’s own legal fees, so you’ll need to work out if it makes sense financially.

Serious Damage to the Property

Whether it’s to the property itself, such as smashed windows, or broken furniture, damaging the property contradicts the terms of the tenancy agreement.

Therefore, landlords are allowed to deduct the appropriate amount from the deposit.

Recklessness is something you can take seriously!

However, it’s important to remember that this mustn’t count as fair wear and tear.

For more information about Landlord Insurance.

Lost or Broken Items

One main reason for landlords not returning deposits is missing items. The cost of these can be deducted at the end of the tenancy!

The inventory will have set out what items were included with the property, and their condition. So, in the interest of reassurance for the landlord, a detailed inventory is essential.

Cleaning

In the world of tenancy deposit disputes, cleaning can be a huge source of disagreement between landlords and tenants, largely because we all have different definitions of what is ‘clean’.

However, it’s a common cause of deposit deductions. For example, if it was negotiated in the tenancy agreement that the tenant would pay for a professional carpet clean after keeping pets in the property, they must uphold this.

If they fail to do so, landlords can pay for the cost of the clean from the deposit. For a landlord, cleaning is the tenant’s responsibility!

General Maintenance

General maintenance can be difficult because it’s a vague term.

But, misuse can result in a deposit deduction. For example, if any appliances have been deliberately neglected, the landlord will have to pay to repair these before the start of the next tenancy.

Damage Caused By Pets

Landlords and pets have a strained relationship. However, with half the UK’s population owning a pet, and nearly 1 in 5 of us renting our home, landlords have had to make compromises.

Before the tenancy starts, those with pets often agree to pay a higher deposit or the cost of a professional clean. But, this doesn’t make any damage caused by pets acceptable!

Many tenants find it difficult to understand why their landlord has kept their deposit. But, when you consider the cost of repairing damage, it doesn’t seem so unreasonable.

Poor Redecoration

If a tenant takes it upon themselves to redecorate the property without asking you first, this may be in breach of their tenancy agreement. As a result, you might be able to deduct money from their deposit to get the room back to its prior condition.

Alternatively, if you allow a tenant to redecorate, but they do a poor job, you can claim for redecoration costs also.

When Can Tenants Dispute Deposit Deductions?

But, it’s important landlords understand what they can’t claim for. When can landlords keep deposits, and when can’t they?

Tenants have many responsibilities, such as keeping up with rent payments and taking care of the property. But, for landlords, unfair deposit deductions are simply unacceptable.

Tenants are always asking ‘can my landlord withhold my deposit?’ The answer is yes, but, within reason.

Let’s put the issue to rest. Landlords cannot refuse to return the deposit for:

General Wear and Tear

As mentioned previously, reasonable wear and tear isn’t a reason to withhold tenants’ money.

The definition of normal wear and tear is a difficult one, so it’s essential to consider the tenancy itself, such as the amount of tenants and the time of occupation.

For landlords, what is considered normal wear and tear can be a grey area. So, you’ll need to justify any deposit claims you make. Your property will have been lived in for a certain amount of time, so, while there are no rules for what is ‘reasonably acceptable’, you can’t expect it to be completely fresh at the end of the tenancy.

Redecorating the Property

You can’t charge outgoing tenants for the price of redecorating the property simply because you feel it needs a facelift.

If you’re only trying to give the place a freshen up in the hopes of charging higher rent, this must come out of your own pocket.

Preparation of the Dispute

If a deposit dispute has arisen, you can’t claim for the cost of any evidence gathered or legal paperwork drawn up.

Even if the dispute goes in the favour of the landlord, the tenant’s deposit doesn’t pay for it.

Cost of Re-Letting the Property

Costs involved with re-letting the property cannot be claimed for.

The end of an old tenancy and the start of a new one are completely separate!

Anything that Contradicts the Contract

If your property has failed to live up to the standards tenants expect and deserve, you can’t claim the cost of fixing this before the next tenancy.

For example, deposit deductions aren’t allowed for repairing appliances that have failed to work throughout the tenancy.

Just as the tenant has to keep to their contract, so do landlords!

Repair to the Structure of the Property

Structural damage, such as roof repairs, cannot be deducted from the deposit.

The tenant has a right to live in a structurally safe and well-built property, therefore any repairs are the responsibility of the landlord!

Claiming for More than the Deposit

You will have set the deposit amount at the start of the tenancy. At the end of this tenancy, it cannot be changed.

If you have grounds to ask for more money, you’ll need to go through the appropriate legal proceedings.

Giving Notice About a Tenancy Deposit Dispute

Feel you have grounds for a claim? You’ll need to provide notice of this.

So, when should a landlord return a deposit? A tenant cannot expect to receive their deposit back before the end of the tenancy. However, under normal circumstances, the landlord pays it back within 10 days.

When you need to make a claim, you must write to your tenant and explain why you’re not returning the full amount. Resolved deposit disputes don’t occur without your reasons in writing.

Previously, they’ll have needed evidence that you placed their deposit in a Tenancy Deposit Scheme within 30 days of the start of the tenancy. If you’ve failed to provide this, you may find it difficult to make a claim.

How to Make a Deposit Claim

If you’re making a claim, ensure you write to the tenant and explain exactly why. They’ll need to understand your reasons behind it. Tenancy disputes need to be clearly communicated between both parties.

If they agree with your reasoning, you won’t have to go through a dispute service. However, it’s likely that they’ll disagree.

A dispute service will be provided free of charge by the Tenancy Deposit Scheme you’ve used. It can often be difficult to find a dispute resolution, however, using a professional service ensures it will be fair.

Required Evidence for Deposit Claims

Feel you have the right to make a claim?

Evidence is key. Here’s a closer look at exactly what you’ll need:

Photographs

If you have evidence of any serious damage, ensure you have photographs to prove this.

Photos are also useful to back-up any points made in the inventory, showing the before and after state of the property and any particular items.

Inventory and Schedule of Condition

However, photographs aren’t the only piece of evidence you’ll need.

A detailed, comprehensive inventory will be invaluable when make a deposit claim against a tenant. Within this report should be photos, used to support the written details within.

Naturally, this will have needed to be compiled at the start of the tenancy. The more evidence, the better!

While many landlords choose to carry these out themselves, a professional inventory will provide more clarity than a DIY one. This is thanks to the independent, unbiased third party who compiles the report!

Tenancy Agreement

What was laid out in the tenancy agreement? How was it stated the property must be maintained?

One important landlord deposit rule to follow is to use the tenancy agreement as a piece of armour. It will protect you from any untrue claims made by the tenant, as they will have signed it.

Email Correspondence

Have you kept hold of any important emails between you and your tenant?

If you’ve visited the property during the tenancy and found it’s not being maintained as you’ve agreed, ensure you’ve followed this up in writing.

This will be valuable evidence when it comes to making your claim!

You’ll need to show you’ve communicated any issues you’ve had with your tenants, as this will prove whether or not they took action to fix them.

Original Invoices

Need to repair something, such as an appliance?

Ensure you’ve kept a receipt or invoice of its original cost, as you can use this when working out how much to deduct from the deposit.

Landlords withholding deposits isn’t a decision made lightly. But, if you feel you have grounds to make a claim, ensure you can support it with evidence.

How to Win a Dispute Between Landlord and Tenant

How can you ensure you’ll be granted your deposit deduction?

Don’t Be Unreasonable

A property will never be returned to you in a completely shiny and new condition. This needs to be allowed for.

It’s likely that, if you make an unreasonable claim, you’ll end up wasting the time and effort on the claim for no reward.

Don’t negate your claim by making unfair or ridiculous statements!

Keep Communication Open

Communication with your tenant is key.

When you inspect your rental property, keep an eye out for any damage and follow up with your tenant. This might be able to be fixed before the end of the tenancy.

However, if you do feel you need to make a claim, communication will be essential here also. Sitting down with your tenant and clearly explaining where the claim has come from will make it less likely that they’ll dispute it.

Here’s where your evidence will be vital. If you present all the facts in front of them, it will be difficult for them to dispute it.

Have a Detailed Inventory

When it comes to landlord disputes, a detailed inventory will be the most useful piece of evidence. Better still, it may even be able to prevent them completely!

Just as the tenancy protection scheme is in place to protect both parties, so are inventories. When landlords lose disputes, this often is down to a poorly put together, insufficient inventory.

The inventory should be used as comparative evidence, showing every detail of the condition of the property at the start of the tenancy. This is where detail will become so important, as it will provide clarity.

Claims from tenants such as ‘my landlord won’t return my deposit’ or accusations of unfair treatment will be stamped out with the help of an inventory.

Want to protect your investment? No Letting Go provide professionally compiled, unbiased inventories that will help to provide clarity throughout the tenancy. Interested in finding out how we can help you? Browse our full range of services here.