As specialists in Hertfordshire rentals, our top priority is fostering positive relationships between landlords and tenants. Nevertheless, disputes can occasionally occur, and issues around tenant deposits can be a source of contention.
What is deposit protection?
In the UK, government-backed tenancy deposit protection (TDP) schemes aim to safeguard tenant deposits. By law, landlords must place tenant deposits in an approved protection scheme within 30 days of receiving them. At M A S O N S this is standard practice, completed as part of setting up a new tenancy agreement.
A TDP scheme ensures deposit funds are safely held until the tenancy agreement ends. At this point the deposit is returned to the tenant in full. Unless (and here-in lies the potential for dispute) any of the following apply:
- The terms of the tenancy agreement have been broken
- Tenants have damaged the property
- Tenants have failed to pay the rent or bills
Why do deposit disputes arise?
Returning a full deposit relies on a landlord being happy that none of the above issues apply. If one or more issues apply, then it’s very likely that a landlord will want to recoup any costs incurred, by withholding part or all of the tenant’s deposit.
To achieve this, landlords must make a claim to keep the deposit, via the relevant TDP scheme.
Are tenancy deposit protection schemes biased towards tenants?
The short answer: No.
TDP schemes are designed to prevent bias and ensure fairness to both tenants and landlords. When a landlord places a claim, it is mediated by an independent professional.
All evidence to support the claim must be considered before a fair decision is made. And, unfortunately, this process does take time.
In our experience, it’s quicker and easier to reach an amicable agreement with tenants independently, rather than escalating the dispute to the TDP scheme. However, in situations where no agreement is possible, using the TDP scheme’s system offers a fair option for dispute resolution.
When should landlords pursue deposit disputes?
Before launching a deposit dispute with a TDP scheme, we always advise landlords to ask themselves:
1.) Have I negotiated with my tenant?
Negotiating directly with tenants is usually the quickest, easiest route to dispute resolution.
In fact, even if you lodge your dispute with a TDP scheme, they expect you to make all reasonable efforts to resolve the issue directly first. Some companies, like TDS, offer free dispute mediation before moving to a formal resolution.
Given the lengthy dispute process, many landlords decide that on balance direct negotiation is the best approach. This is why only c.2% of disputes actually escalate to a formal resolution.
It’s really a matter of weighing up the situation and deciding what you are willing to compromise. For example, if a property needs professional cleaning, at a cost of £300 and a tenant agrees to pay £200, this may be the best outcome.
2.) Am I being reasonable?
Successful landlord claims must be viewed as reasonable.
All landlords are required to accept reasonable levels of wear and tear. For example, small marks on walls are classed as wear and tear damage. Larger marks could warrant a claim, but it is only reasonable to claim a % of redecoration costs from tenants.
Similarly, if you are seeking to recoup costs of replacing items – are they beyond repair? An independent mediator will want to see that landlords are seeking the most cost-effective solutions.
3.) Do I have time?
Unfortunately, the formal mediation process involved in resolving deposit disputes does take time. The back-and-forth nature of communicating with a TDP scheme can take months.
What about larger claims?
For higher value disputes, that exceed the full tenant deposit amount, friendly negotiation may not be sufficient.
In these cases, landlords can either claim the full deposit via the relevant TDP scheme and pursue additional costs in court. Or opt to pursue the total amount via the courts.
How we can help.
Firstly, it’s important to put in place measures which protect against the likelihood of any dispute arising. Prevention is the best policy! That’s why we set up and maintain tenancies in a way which enables us to tackle any issues as early as possible to avoid escalation.
If things do escalate – whether a landlord is negotiating via a TDP scheme or heading to court – evidence to support their claim is key. Again, our processes ensure we have rapid access to information such as professional inventories, up-to-date inspection reports and quotations for any repair work from reputable companies.
For M A S O N S landlords, we handle deposit disputes as part of our managed service.
We do have faith that TDP schemes are successful in preventing bias, and they represent fair outcomes for both tenants and landlords. However, in most cases, we’re pleased to report that with a little tactical negotiation on our part, most disputes can be resolved directly.
M A S O N S is a leading letting agent in Hitchin, covering rental and buy-to-let properties in Hertfordshire. Founded on award-winning lettings experience, we specialise in property management, buy-to-let in Hitchin, and residential lettings – drop us a line at [email protected] or call us on 01462 557477.
Please note: this article should not be interpreted as legal or financial advice.
