Withholding a deposit - is it ever roses round the door?

It might be heartbreaking, but in some cases, you may find that you need to withhold some of your tenant’s deposit to cover damage to your property.

A notoriously unpleasant task at the end of any tenancy, but important to ensure that you are not left out of pocket should your tenant have left you with any maintenance issues or unpaid bills to tackle on their departure.

Unsurprisingly, 20% of tenants who have lost part or all of their deposit believe the deduction to be unfair, however as long as you take all the right steps, and work through the process thoroughly, there’s no need for it to be a tricky process.

What’s the normal process, if it all goes well?

  • The tenancy ends
  • You carry out the ‘check out’ of the property
  • Your tenant formally requests their deposit back
  • If there are no deductions required, the deposit is returned to the tenant- easy peasy
  • If you want to deduct money from the deposit, you must reply within 10 days and state this in writing
  • You must attach a list of deductions, and give reasons for each one.
  • At the same time, the non-disputed part of the deposit will be released and returned to the tenant. The rest will remain with the chosen tenancy deposit scheme until the dispute is resolved.

It would be ideal at this stage for your tenant to agree to the deductions. If you have had an inventory, there should be little chance of a dispute - the evidence is there in black and white. However, unless the tenant agrees, dispute resolution is in place or there has been a court order decreeing it, you cannot take deposit money, even if you believe it to be the correct thing to do.

And if it doesn’t go well?

That’s when your tenant would raise a deposit dispute.

This would be handled by your chosen tenancy deposit scheme, at no cost to you or the tenant. However, if a resolution can not be reached by the TDS adjudicator, the dispute can be transferred to county court for settlement, in which case any court fees or costs will have to be paid by the losing party.

You will have to provide evidence to the TDS adjudicator, along the lines of full inventory report – with images, a check in and check out report, and any receipts detailing work that has had to be carried out as a result of the tenant’s poor maintenance of the property, or replacement purchases that have had to be made following breakages or damage.

What are the sort of things I would have to be on the lookout for?

Before you confirm that you will hand back all of your tenant’s deposit, make sure you double check any elements which may leave you out of pocket.

There are obvious maintenance issues which should be easy to spot, but don’t forget to check the status of any unpaid bills or rent too, once you have handed back the deposit and the tenant has moved on it’s very tricky to get any of these costs back!

You can withhold part of a deposit for:

  • Unpaid rent at the end of the tenancy
  • Unpaid bills at the end of the tenancy
  • Stolen or missing belongings that are property of the landlord
  • Direct damage to the property and/or contents (owned by the landlord)
  • Indirect damage due to negligence and lack of maintenance
  • Lack of sufficient cleanliness at the end of tenancy
  • Lack of maintenance of agreed facilities, as per the tenancy agreement
  • Unwanted belongings left after keys are returned if collection has not been arranged)

However, you cannot withhold money for everything. You have to take into account ‘fair wear and tear’ and it is important to remember that as a landlord you do have some responsibility for the maintenance of the property, and you cannot expect the tenant to pay for this.

With this in mind, remember that unless the tenant has directly caused a malfunction, you cannot charge for:

  • Repair of boilers
  • Maintenance and repair of the structure and exterior of the building
  • Maintenance or repair to the structure of the property
  • Maintenance or repair to gutters, drains or external pipes
  • Maintenance or repair to wiring or electrics in the property

What is ‘fair wear and tear’?

Fair wear and tear is the term used to describe the deterioration of a property that you would expect to see following ‘reasonable use of the premises by the tenant and the ordinary operation of natural forces.’

This is particularly important to take in to account if the tenant has been in place for a long period of time – carpet is naturally going to wear, and appliances do wear out, so consider the realistic lifespan of the item you are concerned with before you judge too harshly.

Consider:

  • The type of item and its projected life span – could you expect a £99 sofa to look pristine after five years if you were using it at home every day?
  • The type of damage and the item’s material – could it have been caused from everyday use, or is this ‘accidental damage’?
  • The age of the item alongside the tenancy length – if you replaced the carpet four years into a five-year tenancy, you may have grounds to complain if it’s stained and torn.
  • Brand and manufacturer specifications – if the manufacturer recommends replacement every 12 months, and the item has been in place five years… there’s not much room for manouvere.
  • Documented state in the move in inventory – of any damage was pre-existing, it goes without saying you cannot expect your tenant to pay, you should have brought this up with your previous tenant!

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