Rules of claiming for deposit deductions

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Suzy Hershman, Resolution department lead

A foreword from the Resolution department Lead

While there are alternative products on the market, taking a security deposit from the tenant is still the most common practice. It encourages tenants to look after the property and protects landlords and letting agents from any action by the tenant that breaks the terms of the tenancy agreement.

By law, the deposit belongs to the tenant, who is entitled to a full refund unless the landlord has evidence to prove they are entitled to compensation. This may be due to the tenant not maintaining the property during the tenancy, causing damage or not paying all their rent.

If you need to propose settlements from the deposit and, despite your best efforts, negotiation is unsuccessful, you may need to use a formal resolution service.

This guide can help landlords and letting agents understand how to prepare for negotiation or a formal resolution, explaining the circumstances under which a settlement can be requested and what is required to support any proposed settlements at the end of the tenancy.

For more information see our ‘Conditions of resolution’ on our website.

About mydeposits

By law all landlords and letting agents must protect their tenant’s deposit with a government authorised tenancy deposit protection scheme, such as mydeposits. The options are the You can choose to protect your tenant’s deposits with our insurance or custodial based deposit protection products. If you can’t agree on any proposed deposit deductions when the tenant moves out, mydeposits offers a free and impartial dispute resolution service for our members and their tenants to resolve the issue.

Protect now »

Click to read our guide on ‘Rules of claiming for deposit deductions’

Negotiation is key

Negotiation should always start at the earliest opportunity after the tenancy ends and the check-out report is available. This is the quickest and most effective way for resolving any issues so that everyone can just move on and reduce the need to use the formal resolution service at the end of the tenancy.

Even when a tenant disagrees with a proposed settlement and the resolution process has started, it is never too late to negotiate. To be the most effective:

consider negotiating face-to-face. This has the highest success rate and will save time using the portal to negotiate
allow the tenant to have their say and show that you have listened and considered their reasons
be open and honest with your reasoning and see if there is room on either side for any concession
remember your claim must be on a like-for-like basis, having considered reasonable wear and tear, with no betterment

More advice on negotiation techniques can be found here.

When to use the formal resolution process

There may be times when you are unable to reach a mutually agreeable resolution on the deposit return and need to use our formal resolution process. An experienced adjudicator will consider the information and evidence provided by both parties to reach a reasoned and impartial decision on the return of the deposit. This may include:

when negotiation between you and the tenant has been unsuccessful
situations where either the landlord or tenant does not communicate or is uncontactable
scenarios where the relationship between the tenant and landlord has broken down and negotiation is not an option

What you can’t claim for

To make sure that the tenant is not at an unfair financial disadvantage, you will not be able to claim for the following through the ADR process:

More than the deposit amount
mydeposits is limited to the deposit amount. For larger claims, you would need to go through the court process
Costs related to preparing a deposit dispute
Each party is responsible for their own costs for preparing the claim and gathering evidence
Fair wear and tear
A landlord must understand that the condition of the property will deteriorate over time. Cost calculations must consider the length of the tenancy, the age and quality of the item/area as well as its condition at the start and the number and type of occupants
The House of Lords defines fair wear and tear as: ‘Reasonable use of the premises by the tenant and the ordinary operation of natural forces’
Betterment
Tenants are only responsible for costs on a like-for-like basis. Landlords can only deduct an amount from the tenant to put the property back in the same, condition than it would otherwise have been. Any higher standard would be betterment

NB: This is a general overview and not an exclusive list.

What you can claim for

Tenancy agreements should include the circumstances for all, or part, of the deposit being withheld by the landlord. It must also be referred to in the prescribed information which has been given to the tenant at the start of the tenancy.

This broadly covers:

outstanding rent
general repairs required to the property (including garen, if any), which is in excess of reasonable wear over the length of the tenancy

Evidence required to make a claim

Make sure you have all the necessary evidence you need to support any negotiations in a formal resolution.

Documents such as the tenancy agreement, gas safety certificate, Electrical Installation Condition Report (EICR), and check-in report are good examples of what will be available before the tenancy starts.

Make sure the documents are clear and detailed. If you need to provide information for a formal resolution case, please keep it relevant. Our evidence checklist offers more help and you can download it here.

Common issues and case study examples

When proposing a settlement, please provide as much relevant detail when uploading to the portal. This helps adjudicators to fully understand the issues and approach each one clearly.

Below are some case study examples and top tips for common issues we deal with

Cleaning
Typical example/analysis
A landlord claimed the property was left in a dirty condition and claimed for a full deep clean throughout. The tenant said they had paid to have it the property cleaned and it was left much cleaner than when they moved in.
From the evidence provided, the comparison of the check-in and check-out reports demonstrated that only some areas needed more cleaning and the adjudicator was satisfied the tenant was responsible for costs but not for the entire property.
Costs claimed by the landlord must be proportionate to the breach and not for a full clean where it is not required, so a percentage award here would be reasonable.
NB. Around 30% of all cases deal with an aspect of cleaning.
Top tips:
•The tenant is only responsible for returning the property cleaned to the same standard it was in at the start, e.g. domestic or professional ‘standard’
•Cleanliness and condition are two different things and your inventory should record both make notes on cleanliness separately
•Contractor’s invoices should breakdown the areas cleaned or e.g say ‘cleaned in line with the check-out report’
•If the comparison of the check-in and check-out inventories only show part of the property needs additional cleaning
Carpet cleaning
Typical example/analysis
A landlord claimed that carpets were professionally cleaned at the start of the term but were left with stains at the end and requested full replacement costs.
The tenant asserted said that the stains were fair wear and tear.
The comparison of the check-in and check-out reports showed the extent of stains and deterioration.
The landlord did not provide any explanation why the carpets could not be cleaned and why replacement was the only option.
While the tenant was found responsible for costs, only a percentage of the total claimed was awarded as the evidence did not support replacement costs.
Top tips:
•Fair wear and tear only applies to condition and does not extend to cleaning
•Detail/description and photographs in the check-in Inventory can be critical when assessing the extent of any deterioration to carpets
•Remember to take into account fair wear and tear, and betterment – as claiming 100% would be considered betterment
•Furniture indents, shading, fraying etc are all fair wear and tear,; however stains are ‘damage’
Redecoration
Typical example/analysis
A landlord claimed full redecoration costs for marks on the walls, which were recorded in good condition at the start of the tenancy.
The tenant said the marks are due to fair wear and tear over the 12-month tenancy.
When compared, the check-in and check-out reports showed light usage marks in some rooms and more extensive marks in others. Light usage marks are generally considered fair wear and tear while heavier marks are seen as more than reasonable wear and tear.
The contractor’s invoice was a single one line saying ‘supply m
aterials and redecorate 2 bed flat’.
The decision made an allowance for areas that the landlord was responsible for and those which the tenant was responsible for as well as reasonable wear and tear before awarding a proportionate amount.
Top tips:
•If the property was repainted at the start, make sure it is recorded in the check-in inventory and provide the invoice/estimates
•Invoices should clearly breakdown the areas and work carried out for the cost
•Remember to make an allowance for fair wear and tear as the tenant has had use of the property for the length of the tenancy and the décor would not be new by the end
Redecoration is usually split into 3 main areas:
•Light usage marks (fair wear and tear) = no breach
•Heavy marks/damage = breach
•Redecoration done without permission = breach
Repairs
Typical example/analysis
A landlord claimed the lounge ceiling was damaged by a leak from the bathroom above during the tenancy.
The tenant said he informed the landlord as soon as it happened and provided evidence to support this.
At the end of the tenancy the comparison of the check-in and check-out reports clearly demonstrated the result/impact of the water damage which had not been redecorated before the tenancy ended.
The contractor’s report confirmed the problem was caused by an old pipe and not due to any tenant negligence.
Top tips:
The tenant
•has a duty to report any damage that can affect the structure of the property as soon as they are aware of it
•is only responsible for negligent acts or allowing an issue to get worse by not reporting it when it is clearly there
The landlords are responsible for:
•taking the appropriate action in a reasonable time
•dealing with issues that arise during the tenancy as soon as practically possible
Garden maintenance
Typical example/analysis
A landlord claimed that the garden was in excellent condition at the start of the tenancy and returned overgrown at the end of the tenancy.
The tenant said that there was no record of the condition in the check-in inventory and the garden was returned in the same condition as at the start.
While the landlord provided the tenancy agreement which made it clear that the tenant was responsible for looking after the garden and there were, dated photographs and an invoice for the work done at the end of the tenancy, without any detail for the start, the tenant could not be found responsible for the proposed deduction.
No award could be made.
Top tips:
•Comparative reports are essential
•Bear in mind seasonal growth – what is the appropriate condition for the start and end of the tenancy especially if they are at different times of the year.
•Photographs of gardens make good supporting evidence for negotiating/ disputes.
Missing and replacement items
Typical example/analysis
A tenant disagreed with a landlord’s claim for missing and damaged items, including cutlery, vases, keys, fridge drawers and kitchen equipment.
The adjudicator had to decide whether the items were missing or damaged.
Inventory photographs show the quality of the missing and damaged items, which confirmed that:
•the tenant had removed some items and caused damage to others
•the damage was more than just fair wear and tear
Awards were made, taking into account the items’ condition at the start, their quality and the length of tenancy. As the landlord was claiming new for old, a percentage award was made to avoid betterment.
Top tips:
•The inventory should record exact numbers of items at the start - e.g. ‘six cushions’, so that accurate comparisons can be made at the end
•Photographs can be of great value showing quality and condition to support the written words
•Allowance for fair wear and tear must be made – age, condition at start, quality, length of tenancy, lifespan of such an item
•Invoices/estimates must be on a like for like basis

Tenancy deposit protection and you:

If you have taken a cash deposit, you must protect it in a government authorised scheme within 30 calendar days

Protect now »

Suzy’s tips – avoiding common errors

Sometimes, landlords and agents lose a resolution case due to a lack of clear and relevant detailed evidence.

Remember that you need to paint a clear picture for an adjudicator so that they can establish if the tenant has broken any terms of the tenancy agreement and that the costs being claimed are reasonable. To make a successful claim, try to avoid making the following common errors:

Inventories are poor quality or not sufficiently comparative
Invoices are too generic with insufficient detail. This is necessary to show what work is being carried out the cost and that it is what the tenant is responsible for
Always consider fair wear and tear, and betterment as no item or area will be new or in the same condition as it was at the start

Tenancy deposit protection

Have you protected your tenant’s deposit?

If you’re a residential landlord who takes a deposit from your tenant on an assured shorthold tenancy (AST) you are legally required to protect the deposit with a government authorised scheme.

Tenancy deposit protection (TDP)

What you have to do

To comply with the law you must complete these two actions within 30 calendar days of receiving the deposit from your tenant:

Protect the deposit in a government authorised scheme, such as mydeposits
Provide the tenant with key information (called the prescribed information) relating to the scheme you have used

Landlords who do not comply with their legal responsibilities can face substantial fines and could face problems if they want to repossess their property at any time.

There are different laws and timescales for landlords and letting agents in Scotland, Northern Ireland and Jersey

Your deposit protection options

mydeposits is a government authorised scheme which is there to help you comply with the law across the UK.

Simply visit the website and

join mydeposits to set up your membership
use your personal online account to protect each deposit you take from your tenant(s)

It takes less than five minutes to protect a deposit and your legal prescribed information documents are created ready for your tenant once the deposit is protected.

We offer a free, award winning resolution service to resolve any issues between you and your tenant over proposed deposit deductions.