What should I do when a tenant challenges the deposit deductions?
It's the perfect scenario for every private landlord. At the end of a tenancy the final inspection shows no damage, the rent is fully paid and the landlord returns the tenant’s deposit in full. Everyone is happy and the private landlord can quickly install the next tenant. As I said that's the perfect scenario. Unfortunately, it isn't always the case.
Often the landlord will discover damage. To cover the damage the landlord will deduct costs from the tenant’s deposit. And it is here problems can arise. Hopefully though the tenant will acknowledge they are at fault for any damage and accept they must pay.
But what happens when they dispute either causing the damage or the amount the landlord wishes to withhold from the deposit? If the tenant challenges the deductions what should you as the landlord do?
The first thing to do is to sit down with the tenant and explain why you believe the deductions are necessary. It’s important not to take an adversarial approach. Remind them of their obligations under the tenancy agreement. Show the tenant your evidence, the inventory for example, so they will understand your point of view. Hopefully, on seeing the facts the tenant will agree to the deductions. And this does happen on many occasions.
However, once again we are in 'perfect scenario' territory and your tenant may still disagree with you. In which case you need independent arbitration to resolve the dispute.
In the past this invariably meant court action. But thanks to the deposit protection scheme there is another option.
Alternative Dispute Resolution (ADR)
All the deposit protection scheme companies provide independent dispute resolution. An adjudicator will weigh the evidence and decide whether the costs claimed by the landlord are justified.
The arbitration service is free. The judgement is binding though both landlord and tenant must agree to this prior to the process. The dispute will have to be settled in court should they not do so. It is obviously less expensive and usually faster for a private landlord to use ADR than go through the courts.
As with the court system ADR begins from the standpoint that the deposit money belongs to the tenant. You, as the private landlord, must prove you are entitled to the whole or part of the money. You do this by presenting evidence to the adjudicator. You need to prove the tenant has broken the tenancy agreement.
Before you decide to use ADR
Be absolutely sure of your ground. When the tenant owes rent fault is very easy to establish. It's a simple matter of fact. However, when claiming for damage you do need to be certain you can prove your case.
Private landlords can run into difficulties when claiming costs for 'wear and tear'. What constitutes wear and tear is open to interpretation. Fixtures and fittings will deteriorate during a tenancy. You must allow for this.
Only claim for damage or replacement fittings when you can prove actual damage or that the item is unusable in its current condition. Don't try and claim new for old when the item has only suffered normal wear and tear. But as long as your claim is reasonable and you have the evidence to back it up you should have no problems.
Presenting your evidence
Before anything else you will need to present the tenancy agreement. This is required to establish that the tenant didn't comply with its terms and is therefore liable for costs.
It should be a simple matter to prove arrears. Bank statements and a payment schedule should suffice. But you should also include copies of communications with the tenant. Arrears notices, emails, text messages etc. Anything to prove you made the tenant aware of the arrears and did everything you could to give the tenant a chance to respond or make payments.
When claiming for damage three points of evidence are essential; inventory, photographs and invoices.
Your inventory is arguably the most compelling evidence you can present. You should always have an independent inventory clerk prepare your document for you. An independently compiled report provides more credibility in a dispute. But whoever draws up your inventory ensure the tenant signs and dates the document as being a true representation of the property.
Similarly you should ensure an independent clerk prepares the check-out documentation. Again this will provide additional credibility in the event of a dispute. You should also ensure the tenant has the opportunity to be present during the check-out inspection. Many won't attend but keep a record of the invitation. This will prove to the arbitrator you offered the tenant the chance to participate.
Before and after photographs are ideal evidence. Make sure they are date stamped and accompany each photo with a written description stating exactly what they are showing. If the photos aren't digitally stamped date and sign the reverse of the photo.
To support your claim for costs submit all relevant invoices, estimates or quotes. Make sure all items are clearly itemised. Your evidence must support any invoices submitted for costs.
Wear and tear
When claiming for wear and tear you must be careful not to claim excessive costs. As mentioned earlier wear and tear is difficult to quantify. The adjudicator will expect some wear and tear so you must be sure you can prove your case before submitting your claim.
One of the most common deposit deductions made by private landlords is for cleaning. It is also one of the most disputed charges by tenants.
Most tenants will clean the property to the best of their ability. And remember they are only obliged to return the property in the condition they found it with an allowance for wear and tear. If you intend to make a deduction for cleaning costs you must carefully record the condition of the property before and after the tenancy.
Remember you have to prove the tenant has left the property in a worse condition than they found it and you have incurred costs to bring it back to standard.
If you use a professional cleaning company submit their itemised invoice along with your photographic evidence. If you do the cleaning yourself ensure the hourly rate you claim for is a reasonable one.
But deductions for cleaning, unless the place was a real mess, are difficult to substantiate. You may take the viewpoint that claiming for cleaning costs is more hassle than it's worth.
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