Here at The Personal Property Shop, we choose to protect our deposits with the Deposit Protection Service. When you want to make deductions from your tenant’s deposit, it’s a good idea to look at the guidance provided by your deposit protection provider as they all have detailed guides on their websites. This article relates to the process that we follow here in line with the DPS but most of it is simply good practice so hopefully it will be useful nonetheless.
You’ve reached the end of the tenancy with your existing tenant and they tell you that they won’t be renewing and they give you notice. I have also written an article explaining what to do BEFORE the end of the tenancy and the guidance you should be giving your tenant, but this one relates purely to making deductions and the process you need to follow. Let’s assume that your tenant hasn’t followed all your helpful advice, and for the sake of this article let’s assume that they have left the property in a less than desirable condition….
Step 1 – Always carry out a professional check out inspection
Having a detailed, independent check out report is, in my opinion, invaluable and absolutely essential. We use a fantastic local provider called Herts and Essex Inventory who offer an extremely thorough and comprehensive report for us (likewise for their check in inventories). You end up with a lengthy document (often 20 pages plus) comparing the condition at the start of the tenancy to the current condition. Every blemish, every cleaning issue, every missing item will be picked up on and noted on the report. Of course, the hope is that your tenant leaves the property in as good as, or a better condition to when they moved in, but that can’t always be guaranteed. Thankfully, we don’t often have to deduct from deposits but it’s important to follow the correct process when you do. What benefit is there to having a report like this? Firstly, it’s professional and shows the tenant you’re taking it seriously. Secondly, it’s hard evidence that is near on impossible to argue with. The report is independent, so unbiased, and goes in to great detail and includes photographic dated evidence. A tenant is going to be far less likely to dispute your deductions if you have a proper check out report for starters. In the rare scenario that your tenant DOES decide to dispute your deductions, then a check out report provides you with valuable evidence to provide to your deposit protection company. When their adjudicator examines the evidence from both sides, the check out report is invaluable. You’re protecting yourself, and protecting your tenant too.
Step 2 – Discuss the issues with your tenant at the earliest possible opportunity
Being upfront, open and honest goes a long way to avoiding tenancy deposit disputes. I always provide my tenants with a copy of the check out report as soon as I receive it. Make sure you save a copy of the email correspondence as that can also be useful evidence in a dispute scenario. To show you’ve communicated well with your tenants and been open with them will go a long way. Highlight any issues to them and give them a chance to respond.
LANDLORDS BEWARE – you cannot make deductions based on “betterment”
You need to make allowances for “fair wear and tear” and cannot deduct your tenants for every blemish and mark in the property. You also need to take in to account the age of the item that has been “damaged”, i.e. you can’t replace old for new and claim the full amount, as you need to take in to account the fact that you would replace an item every few years anyway. For example, the rough lifespan of a washing machine is considered to be around six years. Therefore, if you have a seven year old washing machine in the property and the tenant damages it, then you can’t claim back for that item. If the item was only two years old, you would work out a fair % on the basis that you would likely replace it in around four years time. That may sound harsh, but the rules are very clear and the landlord can’t “better” the condition of the property, only compensate themselves for the actual loss.
Step 3 – Get 3 quotations per issue
If you have discovered a genuine piece of damage or a cleaning issue and you need to make deductions, then you need to obtain quotations and ideally from three different suppliers. The reason for this is to again, provide evidence in case there was a dispute over the deductions. When an adjudicator looks at the claim, they will want to see proof that what you’re charging for is fair. Equally, there’s no point getting three very inflated quotes as an adjudicator WILL make an adjustment if they feel it’s too high. It’s also fair to your tenants to provide them with the three quotes, showing you’ve taken this seriously and are trying to act fairly. Keep copies of these quotes as evidence in case you need it. Again, keep copies of your email correspondence to your tenant, showing you’ve shared the quotations with them.
Step 4 – Log the deductions with the DPS (or your other provider)
Once you’ve confirmed the price of the deductions and agreed these with your tenant, then you can then log these with your deposit provider. With the DPS, we have a fantastic online portal and I can log on, list any deductions and the amounts and then they contact the tenant directly. Make sure you have a clear breakdown as to what the deductions are for e.g. if it’s £400, make sure you breakdown as £100 – cleaning, £200 redecoration, £100 gardening…etc.
Step 5 – Tenant contact
At this point, the DPS will contact your tenant to ask them if they agree or disagree with your claim. Hopefully, by following the above process, you can avoid any disputes and this should go through with no issues. It’s far better to get your tenant’s agreement before logging the claim with the DPS. If the tenant agrees, they will then pay you within 3 to 5 working days, and pay the tenant the remaining share of the deposit (if there is one). If they disagree, they will ask the tenant for the reasons why and will ask them for a figure that they ARE willing to pay. The DPS will then contact me (or you if you use your DPS account) and ask if we are happy with what they have suggested. If you’re happy, they pay the money out accordingly to you and the tenant. If you disagree, then you would use the DPS’ Dispute Resolution Service. I’ll cover that more in future articles, or you can read more on the DPS’ website here – https://www.depositprotection.com/im-a-landlord/i-want-to-know-more-about-disputes/
If you have any questions relating to tenancy deposit deductions that this article hasn’t covered, then please feel free to get in touch with me. You can reach me on 01279 940840 or at angela@thepersonalpropertyshop.co.uk.
