Deposit Dos and Don'ts - Part 2: Listen back here

Q.

My tenant has raised queries challenging all of the deductions I wish to take from his deposit, but I don't agree with any of his reasons. How long do I have to go back with negotiations like this before I tell him to raise a dispute via our deposit protection scheme?

A.

A tenant has three months, minus one day from the date they leave the property (or the deposit is unprotected – whichever is sooner) to raise a deposit dispute. In order to raise a dispute a tenant must have formally requested the dispute in writing/email and allowed the landlord/agent at least 10 days to respond. If they do not agree with the response or do not get a response at all they can raise a dispute. The quickest way to resolve a deposit dispute such as this is through negotiation and compromise, however if this is not possible the tenant should raise the dispute as soon as possible.

Q.

When the deposit cap comes in, I’m thinking of doing a £0 deposit and replacing it with an admin fee. This would solve a lot of my problems. Most of my tenants are happy with this. Is it a good idea?

A.

If the admin fee is refundable at the end of the tenancy it doesn’t matter what it is called as the courts will still interpret this to be a security deposit. If it is not refundable and is compulsory in order for a tenant to rent the property you must make sure it is highlighted in plain sight and is not excessive or unfair. As you are a private landlord the lettings fee ban will not affect you so you can put this type of clause in your tenancy agreement, however be aware that if you find yourself challenged on the clause it may not stand up in court. I’d strongly urge you to seek some independent legal advice.

Q.

Will I be able to charge a holding deposit when the fees ban comes into action?

A.

As it stands we are unsure as to whether holding deposits will be included in the ban. We’ll have to wait and see when the draft legislation comes out.

Q.

Do I have to use a specific form to return my tenants deposit?

A.

If the deposit is protected in a custodial scheme you’ll need to follow the scheme’s release process in order to distribute the deposit. If you prefer to use the insurance protection method by paying a protection fee and holding on to the deposit, you are in complete control of the deposit distribution at the end of the tenancy and how you return it is up to you. Best practice is to keep all records of any negotiation and agreement in writing so there is a paper trail. A robust process should avoid any issues further down the line.

Q.

Please explain how damage to contents is dealt with by the courts and /or dispute resolution as to fair wear and tear. Will it be addressed from a cost deduction point of view as betterment with a fair wear and tear allowance or as straight forward replacement cost?

A.

Fair wear and tear is calculated by taking into account various criteria which includes the age, quality, condition at the start and the expected lifespan of the item/area as well as the number and type of occupant e.g. student, family, professional couple.

The standard starting approach to lifespan from all the schemes would be 5 years, however this can differ from object to object and area to area, depending on the evidence. For example, if a three year old sofa is damaged and needs to be replaced it would be unreasonable to claim the full price of a sofa as this would be betterment as it will have had a certain amount of normal use up to the point of the claim. If the dispute was fairly straight forward you could imagine receiving around 2/5th of the replacement value – as long as the claim was on a like for like basis.

Q.
I fell foul of the Deposit system when I switched agents as the old agent ( who was ill unfortunately) took over 6 months to transfer the 3 tenants' deposits over. Is there any way I can avoid this happening if I ever need to switch agents again?

A.
The simplest thing to do is ensure you are the one that takes control of the deposit. If you are protecting the deposit there will never be an issue when switching agents as you will be on top of protecting them properly. However, if you do not want to do this then a diligent agent should know the urgency in arranging this. There isn’t an easy answer to this question as it is generally communication between each party that slows this down.

Q.

In case of dispute - At what stage should the tenant be given the inventory? Is the inventory created by the estate agent together with the tenant and landlord and then added to by the tenant within a week?

A.
There are varying business practices that work in relation to the check-in inventory. Best practice is to make sure the tenant is given the inventory at move in and allow them around 7 days to check over the property and agree or disagree with the assessment, which should always be done in writing. An inventory compiled by an independent third party may help to avoid any subconscious biases. However whoever compiles the inventory, it is important to receive a signature from all parties to confirm they agree with the inventory.

Q.

How to go after rogue agent ( independent ) who has run off with my tenant's deposit?

A.
This is a rare but very troubling scenario. If the deposit is protected in a custodial scheme the money will still be held by the scheme until the agent AND the tenant agree to the release. Where an agent is using the insurance scheme and the tenant has no opportunity to negotiate the deposit refund, the tenant can raise a dispute. The scheme will then proceed to adjudication if there is no response from the agent and return the deposit amount to the tenant. The scheme will then pursue the landlord through legal channels. This is why it is very important for tenants and landlords to do their due diligence on their agent – ensuring they are a member of a redress scheme and have adequate client money protection.

Q.

What would you describe as reasonable wear and tear particularly if tenants have been in for a long time, say over 3 years?

A.

This would depend on the item you refer to. A good place to start is the length of warranty the product has. If not, 5 years is usually a standard lifespan our adjudicators use.

Q.

Where we have students taking a house on a group tenancy are there any recommendations as to whether it is better to register their deposits separately or whether it's better to do it as a group, nominating one of them as lead tenant?

A.
This entirely depends on the contract you choose to give the students. If they are all named on one contract, the deposit should be protected as one lump. This will ensure the tenants are all jointly and severally liable for any damages.

If each tenant has an independent contract then the deposit should be protected individually. In this scenario each tenant is solely responsible for their own room so it is important to make it clear in the contract whose responsibility the common areas will be.

Q.

Where students return to the house for a second year on a new tenancy I have received conflicting advice from the DPS and the NLA as to whether the deposits need to be re-registered for the new tenancy. DPS says no need to re-register if there has been no break in occupation and the tenants are all the same individuals even though there is a new tenancy not just a rolling holdover. NLA advised deposits should be re-registered. Which is correct please?

A.
This will depend on which scheme operator you use, as well as whether it is a custodial or insurance protection which may explain why the advice you have received is conflicting. With our insurance scheme, as an example, we do require the protection to be renewed and recommend the Prescribed Information is issued again in order to reflect the new contract. If they are staying on a monthly rolling basis you can just update the protection rather than re-protect. With our custodial scheme best practice is for you to email us a copy of new contract so we can update it and reissue the information – however not doing so will not prejudice you. It is therefore best to check the process of the individual scheme that you use.

Q.

Under which grounds may tenants claim monies additional to a deposit sum back from a landlord after tenancy completion?

A.
The deposit schemes all have the same remit which is limited to the amount of the protected deposit. For a tenant to claim over and above this amount can only be done by seeking legal advice and if appropriate, through the courts.

Q.

Recently I had an issue with a tenant who left the property without cleaning. It took three days to clean the flat. When want to hold back the deposit, Deposit Scotland said we did not have a case because the inventory had not said flat was cleaned to professional standard on start date of tenancy. Photos were taken of the absolute mess left by tenant. Please can you clarify exactly what an inventory should state to ensure you are covered for issues like this?

A.
The inventory and check in report at the beginning of the tenancy should detail the condition and standard of cleanliness in the property so that a comparison can be made at the end. Photographs embedded into the inventory can be of great support to the written word, but no substitute.
The overriding obligation on the tenant is to leave the property as they found it and, without good evidence from both the start and end for comparison, adjudicators cannot make an informed decision. They will not make any assumptions so without establishing any deterioration a claim on the deposit is unlikely to succeed.

Q.

One particular question that I was wondering about is taking letting fees out of landlords deposits (on intro only) on the expectation that they make it up and lodge with TDS. Is that acceptable and/or allowed?

A.
Firstly, the deposit is legally the tenant’s money until proven otherwise. Therefore as the deposit would be classed as client money letting agents should not be taking fees from it. It is there to be held as security and should be treated as such.

Q.

What costs can you claim when tenants have let property get mouldy. My curtains and brand new blinds are now destroyed as well as having to re-decorate the whole house. What can I claim?

A.

Mould is a very tricky issue as the causes can result from either landlord or tenant actions and is very difficult to deduce. We have a handy guide that goes through the scenario here.

Q.

Where the tenancy agreement clearly states something and the tenant refuses to pay despite the clause, will mydeposits agree with the landlord e.g. my tenant installed a (2nd) Sky dish in the front garden and internal wiring when there was already a Sky dish on the roof. They didn’t ask for or receive permission, they are now refusing to pay for the cost of removing it and making good.
A.

It is important to know, when putting together a tenancy agreement (or any contract for that matter), that just by virtue of a clause being present does not make it fair and reasonable. There is lots of very specific legislation that protects consumers from unfair contract terms and therefore our adjudicators will have to abide by these and the decision will have to be made in the context of the dispute. If, as a landlord, you have very specific instructions for a tenant to do, or not do, something (for example, a specific method of cleaning an old table) it is important you include these as special clauses that have been negotiated outside of the standard terms.

In the scenario you have put forward, if the tenant has not sought, and been given permission to install a 2nd Sky dish, then he can be held responsible for making good any damage.

Q.

If the tenancy agreement states (in the special clauses section) that the tenant is to have the house professionally cleaned, windows cleaned and carpets cleaned at the end of the tenancy and provide a receipt and they don’t do this, will mydeposits uphold the full cost?

A.
This is very similar to the previous question and again it comes down to the reasonableness of the clauses. Even a special clause can now be subject to unfair contract terms in consumer law and challenged. In relation to cleaning, the fundamental obligation is for the tenant to return the property cleaned to the same ‘standard’ it was in at the start of the tenancy. It is not the tenant’s responsibility to leave the property cleaned to a better standard than it was as when they first rented the property and it is possible for a tenant to clean to a better standard than some ‘professional’ cleaning companies.

It follows that any award made by an adjudicator will be proportionate to any breach, and if, for example, the tenant has cleaned the whole property to a professional standard but missed one window the landlord would only be entitled to the cost of cleaning that one window.
Best practice is to have good evidence and record the standard of cleanliness when the tenant moves in and not expect costs to have been spent by the tenant at the end, if they can demonstrate the property has been cleaned to the same standard.

Q.

What is the situation where the check out report has missed something and their photographs are very small (20kb) and out of focus but the landlord has photographic evidence, will it be agreed?

A.

It is not an ideal situation for a landlord to provide photographs of damage which he has found on inspecting the property after the check-out inspection has been carried out. This is because the condition recorded in the check-out report is taken as a true reflection of the condition of the property when the tenant surrendered any access.

However, an adjudicator may take into consideration how soon after the inspection additional photographs were taken, their digital date and whether they support any other evidence which has been provided, such as the poor photos in the report you refer to.
It will also have some bearing if the damage should have been obvious to the check-out clerk and whether they have been given the opportunity to comment on any omission, or if a tenant has had the opportunity to see them and comment.
You can read more in our detailed “Using Photo & Video Evidence” guide.

Q.

Can mydeposits issue best practice guidelines for inventories, check in reports and check out reports, and even provide an example template. Please can they also recommend what size photographs should be and ask that the photographs are supplied on a disc instead of included in a pdf file. I really don’t see the point of inventory companies providing hundreds of pages of photographs in a pdf file which you can’t zoom in on and you can’t save individual photos to use as evidence in a complaint. I am having such trouble with inventory clerk at the moment!

A.
As you are aware, the inventory, check-in and check-out reports are integral pieces of evidence when avoid or resolve disputes. We always advise dated photos be embedded into the various checks and documents the inventory clerks put together in order to avoid tampering. I have put together a guidance document in the past for landlords. You can find that here.

At this stage we are unable to provide an example template

It is worth exploring inventory companies in your area and comparing the quality of their product. There are many national companies as well as local firms. If photographs are a problem for you, I suggest you ask for a demonstration as some will provide thumbnail size in the full report but can provide larger sizes where necessary for negotiation or adjudication purposes.

Q.

A deposit was paid by the boyfriend whilst a couple were cohabiting in a property, then they married. They move to a new property with transfer of the deposit to the new house ,still one of my properties. They have now split up and he has left the property. The wife has stayed in the property with their new baby. The husband now considers that the deposit is his. He was the lead tenant on the contract with the wife as the second tenant. To whom do I return the deposit to, or do I split it between them? Or should she have the deposit? There is also a deduction for some redecoration.

A.
In this sort of scenario it is really important to refer back to the tenancy agreement. Are they both on the contract? If they are and the agreement is, as is usually the case, an Assured Shorthold Tenancy the contract is joint and severally liable. This means both parties are equally liable. Your best solution is to return the deposit in the same way it was paid as it would be a civil matter between them. However, do not return the deposit if all parties have not left the property as you will be left without a security deposit but could still be held responsible for it for the duration of the tenancy. I’d certainly suggest seeking some independent legal advice.

Q.

I’ve got a tenant who is 4 months in rent arrears, and has damaged my property. The court case is coming up next month. If the tenant does get evicted, I want to know about the deposit, whether it can be used to pay for the damage, and how to deal with it.

A.
This is a very tough question to answer as it really depends on a lot of other pieces of information and therefore is not one I can adequately advise on. I’d suggest having a read on our guide on evictions, written by Paul Shamplina – founder of our sister company Landlord Action. They’re authorised by the Solicitors Regulation Authority and offer a free advice line - 0333 321 9415 – and should be able to answer this sort of query.

If you have any questions about deposit disputes, how they happen, how to protect yourself from them, or any of the issues relating to them, the NLA Advice Line is free for all members. For membership contact the NLA at 020 7840 8900.