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April 10

2018
by mydeposits
The Importance of Being Reasonable

Head of Dispute Resolution, Suzy Hershman, has been busy this year attending forums throughout the country helping to educate landlords, agents, and tenants on the importance of tenancy deposit protection and effective dispute resolution.

 

In the last two weeks I have delivered ‘Disputes and Evidence’ workshops and talks to over 50 property managers around the country, 130 landlords at the Newcastle Landlord Forum, and to an inventory provider at their AGM.

One area we touched on was that of ‘reasonableness’ and what this actually meant. Along with fairness, this term is contentious and difficult for people to get their heads around. It is, however, one of the key principles used in determining tenancy deposit deductions.In the last two weeks I have delivered ‘Disputes and Evidence’ workshops and talks to over 50 property managers around the country, 130 landlords at the Newcastle Landlord Forum, and to an inventory provider at their AGM.

I must first, reiterate that there are many good landlords in the marketplace who understand the “reasonable” concept and will never have a dispute or end up in court, simply because they are reasonable. Examples of good practice I’ve heard recently, from both landlords and agents, are ‘I’m happy to provide a mattress protector at the start of every tenancy’ or ‘Our landlords expect to have to clean their property at the end of the tenancy’; ‘Maintaining good relationships throughout the tenancy helps deal with things at the end’ and ‘Sorting out repairs quickly keeps the tenants happy’. That’s what I like to hear but not what the adjudicators get to see!

It is encouraging to know that many landlords, who have received all the rent payments from a tenant, who has looked after the landlords’ property well, are not in the habit of making an unreasonable claim and waiting another two months for it to be resolved by adjudication – delaying the time at which everyone can move on. However, it does not seem to matter which audience I am talking to, what I continue to hear is that some landlords have a real lack of knowledge regarding the principles of returning the deposit, with or without making a claim.

Compromise and Reasonable Deduction

Many of the agents I speak to find negotiating with their landlords and tenants challenging for many reasons but most commonly it’s due to the lack of willingness to compromise from either party and/or the ability to calculate a reasonable deduction. Landlords, albeit those with good intentions, still struggle with many concepts ranging from who the deposit actually belongs to, to why the tenant is not responsible for the full replacement cost after causing damage. This then extends to the meaning of ‘reasonableness’ or just wanting, simply, to keep as much of the deposit as possible.

It is also evident that there are situations where landlords and tenants fall out and just want to frustrate the other party, dragging things out as long as possible.  The most difficult group of landlords, for both agents and adjudicators, are often those who are emotionally attached to the property having once lived there themselves and view its condition, when let out, through rose tinted glasses.

My concern is that these various scenarios lead landlords and tenants to become so litigious with everyone wanting to fight their corner, to the bitter end, for a piece of the pie. There is so much consultation going on in the lettings market, with further changes ahead, that before the next round of compulsory new rules, it would be highly advantageous to get a good grasp on how to avoid a dispute at the end of your tenancies.

The key principle is understanding that the deposit, no matter who safeguards it for the duration of the tenancy, belongs to the tenant; that when a tenant causes some damage or deterioration to the property which is more than reasonable (that word again!) wear and tear, a landlord has to prove, with evidence, that the tenant caused the extent of damage being claimed. The fact is that the landlord is not entitled to claim the full cost of replacement at the tenant’s expense.

Quite simply, if an item is new at the start of the tenancy, it will not be new one week later or after six months, two years etc. If the item was-one year old at the start of the tenancy, it will depreciate in terms of value over the tenancy and this element of normal use of the item or area is for the landlord to absorb and is not the tenant’s responsibility.

Check Your Contracts

So, come on landlords – check your contracts (the one you and your tenants signed at the start of the tenancy)! There will be a clause under the tenant’s obligations making it clear that they are responsible for damage or deterioration to the property except for the fair wear and tear element. Even if your tenancy agreement does not contain this caveat, it is implied in residential tenancy law. Use the guidance, readily available on our website, defining ‘good evidence’ right from the start of the tenancy, reasonable wear and tear, and ‘proportionate’ calculations to use at the negotiation stage which will all help alleviate timely and costly delays in moving on.

Landlords should also be aware of their obligation to mitigate the tenant’s losses, minimise the costs of repairs, replacements and restorations and not exploit or capitalise on the situation. This means that if something can reasonably be repaired, rather than replaced, and the landlord chooses to replace a whole carpet or redecorate the whole room when the damage is confined to one corner, then they are not justified in charging the whole amount to the tenant. Yes, I have heard all the protests that the patch or paint does not match or the item to be replaced is now obsolete; however, unless there is clear evidence that the claim is proportionate to the detriment caused, the tenant can dispute this and stand a good chance of having the claim reduced.

Landlords, accept what your agents are suggesting at the end of tenancy. Understand and ask the question, what is the likely outcome if you delay the distribution of the deposit another two months while the case is adjudicated? And then ask yourself: it is really worth it?

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