Avoid common disputes over the return of a tenant’s deposit
Much of the friction caused by security deposits on a rental property is due to a lack of clear agreement between tenant and landlord about exactly what is covered by the payment, according to Fulham estate agent Lawsons & Daughters, and the grounds under which some or all of the money might be retained.
From a the point of view of the landlord there are several steps that need to be taken in order to ensure, legally, that you are in a position to be able to keep some or all of the deposit if you feel you have genuine grounds to do so.
In the vast majority of cases, the tenancy being offered within the private rented sector will be an assured shorthold tenancy. If this is the case, the deposit paid by the tenant has to be protected under the auspices of a government approved tenancy deposit scheme within 30 days of being paid. If this is not the case, the tenant will be able to claim a return of the deposit – or, if the tenancy has not yet ended, have a court order that it be placed in a protective scheme – and the landlord will have to pay a fine equivalent to up to three times the total deposit.
On top of this, central London estate and letting agent LDG advises that landlords who fail to use one of the schemes will lose the right to use a Section 21 Notice to evict a tenant.
Having placed the deposit in a protected scheme, the landlord must inform the tenant that they have done so, and provide them with the details of the scheme, known as Prescribed Information.
As with the rules set out above, penalties will be applied if this is not done within 30 days. Many landlords have fallen foul of this particular set of rules because of a failure to include details of tenancy protection within their standard tenancy agreement. This, along with the varied legislative changes which tend to be imposed upon the private rented sector on a regular basis, is just one reason why landlords should ensure that their tenancy agreement is updated, preferably upon professional advice, on a regular basis.
One of the key tools able to prevent disputes over the status of a deposit, particular with reference to the condition of the property, is the detailed inventory. This list should include information on the entire contents of the property and the condition of these contents, and it should be examined in the company of the tenants when the tenancy begins and when it ends.
In order to make sure that nothing is missing from the inventory, and that the condition of everything is recorded in a full and correct manner, it may be worth investing in the services of a professional inventory clerk, says Belgravia estate and letting agent Best Gapp.
When it comes time for the tenant to leave, you or your inventory clerk should take the time to go over the inventory with the tenant, in the property, and, if possible, agree to any repairs which need to be done (over and above reasonable wear and tear).
Keep a written account of any agreement drawn up, and have the tenant sign this agreement. Keep any invoices and receipts relating to the damage done to the property and the repairs which have to be carried out and, if an agreement can’t be reached, take dated photographs or videos and seek independent verification of the damage. This evidence may prove vital if you wish to claim the cost of repairs from the deposit.
A deposit is not a means via which landlords can pay to have the property returned to the exact condition it was in when the tenancy began. It is intended to cover any costs involved, including the costs of cleaning, in making sure the property is in the condition that could reasonably be expected following the tenancy. Complying with the legislative rules and taking the precautions set out above is the safest means of making sure that any deposit, or part of a deposit, will be available for precisely this purpose.