18th February 2017
Each week, we answer a reader’s rental property question, from first-time landlords needing pointers about contracts to experienced owners. Agony Agent, is here to help!
Q: Last week you wrote about how to ensure a smooth check-out at the end of a tenancy, but what happens if there’s a dispute with the deposit?
A: Deposit Protection Schemes (DPS) and the procedure of returning or keeping the money are in the hands of a third party – the Alternative Dispute Resolution (ADR) service. Here are a few things to keep in mind:
- The deposit belongs to the tenant until decided otherwise
The deposit is automatically the tenant’s. This means that you cannot make personal use of it throughout the tenancy, even if it’s in an insurance-based scheme, and especially not to jet off to the Bahamas. If a dispute arises, you must put the disputed amount into the scheme in the allotted time frame you are given by the administrator.
- Proving a case is the landlord’s responsibility
If there is a dispute, the burden of proof rests on the you because it is the tenant’s money. This is why an in-depth inventory should always be taken before the tenant moves in.
- Avoid the dispute in the first place
Arguing over deposit money often means going around in circles, particularly if the proper preliminary measures haven’t been taken. These include a well-planned tenancy agreement, a list of reasonable tenant instructions and a detailed inventory. The inventory is the most important document you can have when involved in a deposit dispute. If it is thorough, contains clear photographs and has been signed and dated by both parties then it will be able to prove whether or not the tenant has damaged something. If you can convince your tenant that they don’t have a leg to stand on (in the nicest way possible!), you may well avoid the extra hassle of the ADR. Also, remember that a landlord can’t claim for fair wear and tear – a deposit is not a general maintenance fund to spruce things up between tenancies – so try to be reasonably forgiving if it’s a borderline issue.
- Keep records
Communicate clearly with your tenant about the deposit and try to come to an agreement before going further. Try to do it by email so that you have proof of your interactions. Make notes of phone conversations. This will come in handy if the dispute makes it to the ADR. As well as the inventory, you’ll need any relevant invoices, receipts and quotes for repairs and/or replacements, bank statements, and bills.
- Dealing with a formal dispute
If you and your tenant are at odds over deposit money, your DPS provider will arrange an ADR. The precise details of the procedure will vary according to your particular scheme but there are some general rules. Neither party is required to meet with the adjudicator, nor will the adjudicator visit the property. The process is purely evidence-based. Before an ADR can go ahead, it requires both parties’ consent. The decision is binding, although it can be challenged in the Courts, always seek legal advice before proceeding with this final step.