When it all goes wrong – what can I do with the deposit?

It’s a sad fact that a small minority of tenancies end in dispute. Maybe the tenant and landlord can’t agree on the definition of ‘clean’, or maybe one person’s ‘damage’ is another’s ‘fair wear-and-tear’. Regardless of the nature, any dispute is stressful for everyone because at the bottom of the issue is a big fat deposit, and everyone wants it.

It’s not possible to account for all situations, and I’ve even written about deposits before, but the questions keep piling up! So here are a few examples to help you understand what that deposit can – and cannot – be used for.

“My tenant is behind on rent. Can I use the deposit to cover my loss?”

Short version: Yes.

Long version: Be careful! I’ve had (well-meaning) tenants ask if we would just use the deposit to cover the final month’s rent before. It seems reasonable on the surface, but remember what that deposit is actually for. It is there to insure against the landlord’s loss in the event that the property is damaged at the point of moving out. If you accept the deposit, ahead of time, in lieu of rent, then what is protecting you during the last month of tenancy? Do you even know at that point if the property has any damage or not? Let’s say you agree to use the deposit in this way, only to find out that there is significant damage to the property after all. Because you have already used the deposit up, the tenancy deposit scheme you have registered with will be unable to help – leaving you facing a small court action to attempt a recovery of your losses. If, on the other hand, your tenant simply skips town without paying the final rent, and you have enough deposit to cover this, then you should have no issues reclaiming the cost from the deposit.

“I’ve been awarded part of the deposit in adjudication, after my tenants caused damage. Do I have to spend that award on making the repairs?”

Short version: No.

Long version: If you have been given £200 to cover damage to the carpets, then that is intended to remedy your loss. If you decide that the property can simply be let for a slightly lower rent, or that you’ll accept a longer void period as a result, then it is entirely your decision. However, if the damage is significant enough to warrant an award from the adjudicator, then you will probably want to put those issues right again.

“My tenant think’s they’ve done enough cleaning on move out – but I think the place is still a mess! What constitutes “clean”?

Short version: ……..there is no short version here…..

Long version: This is tricky. One person’s muck is another person’s treasure, as they say, so it is entirely possible both sides are being completely honest in their assessment. Add on top the stress of moving house, and the emotional insult of accusing someone of living in filth, and you’ve got a recipe for argument! This is one of those times where it can really pay dividend to have an agent between yourself and the tenant. We are used to dealing with confrontation, and we can keep (most) of the emotion out of it. One of the key ways we do this is by recommending that the landlord have the property professionally cleaned before the first tenant moves in. That way, all subjectivity is taken out of it, and the tenant can be shown the receipt for the first clean. We then insert a clause into the tenancy agreement that the tenant is responsible for having the property professionally cleaned on move-out, ensuring that you receive it back in the state you provided it to them.

As I say, there are too many examples to list them all, but a good agent will be able to keep you right, and ensure that any fair deductions can be proven. The key way we do this is by having a great quality inventory made that the start of any tenancy. I bang on about inventories for a reason - you need an inventory, and I’m not joking; if you skip this step then you are in for a world of hurt. Without one, an adjudicator will likely rule in favour of the tenant in any dispute. With a poor quality (or self-made) one, the adjudicator will probably rule in favour of the tenant!

If you have any questions you’d like answered, on this or any other topic, please contact me and the team on 0115 945 5179.

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