Claiming from a tenant's deposit - Part 3

Claiming from a tenant's deposit - Part 3

In the third and final part of our series ‘Claiming from a tenant’s deposit’, Part 1 - What a landlord can make a deduction for, and Part 2 - How much a landlord can claim, we will explore how a landlord can best prepare for potential deposit related disputes. We also look at the process of claiming from a tenant’s deposit if need be.

The tenancy deposit acts as a form of insurance - if a tenant meets the terms of their tenancy agreement and leaves the property in a similar condition to what it was let to them in, they can expect to have the deposit returned to them at the end of the tenancy. If not, the landlord can look to be reimbursed from the deposit, by making a deduction or claim from it.

Common deductions from the tenant’s deposit include where a tenant has caused damage, damaged or removed contents, returned the property in a worse condition than when it was let to them in save for wear and tear, left belongings behind at the end of the tenancy, or fallen into arrears.

The burden of proof is on the landlord to provide evidence for any claim they think they might have to the tenant’s deposit. The deposit is the tenant’s money which belongs to them until such time that the landlord successfully proves their claim. This is why it is so important for a landlord to monitor and keep appropriate records throughout the tenancy, in case a deposit deduction dispute comes about, because by the time such a dispute actually arises, it is generally too late to retrospectively put together the necessary evidence for a successful claim. Therefore, landlords should keep the following clear, comprehensive, and accurate records throughout every tenancy, to ensure that they are well equipped to evidence any claim to the tenant’s deposit should they need to make one:

• The completed tenancy agreement should be kept safe as this will set out contractual obligations of the landlord and tenant. It will detail the basic terms such as the amount of rent payable which will be relevant if arrears accrue. It will also detail what tenant can / cannot do at the property – so, if for instance the landlord wishes to claim from the tenant’s deposit because the tenant kept a pet which was not permitted and caused damage, the tenancy agreement will confirm that pets were not allowed;

• An up-to-date rent account statement for the property should be kept, to clearly set out payments made by the tenant and any arrears;

• Check-in inventory reports are valuable evidence of the condition of the property at the start of the tenancy. Ideally, the check-in inventory report should be carried out by a professional third party, contain dated photos, state if an item is brand new, and be signed by the tenant. Then, check-out inventory reports should be completed as soon as possible after the tenant vacates. Again, ideally the check-out inventory report should be carried out by a professional third party, contain dated photos, and be signed by the tenant. The check-in inventory report can later be compared to the condition of the property at the end of the tenancy when the tenant gives vacant possession, and compared to the check-out inventory report, to evidence / support a landlord’s claim to the tenant’s deposit, if required;

• Signed and dated reports of regular, periodic property inspections, with photographs, should also be produced and kept. Ideally, the reports would be signed by the tenant. Again, these reports create a timeline of the condition of the property and provide evidence of the same;

• Quotes, itemised invoices, and receipts should be kept to prove costs incurred by the landlord, for instance, if a landlord incurs costs of repairing a wall damaged by the tenant, the landlord should keep all evidence of the cost of that repair, and take photographs of before and after it for good measure;

• Copy correspondence between the landlord and tenant including letters, emails, texts, Whatsapp messages, social media messages etc. If the landlord and tenant communicate verbally, it would be sensible to make a dated note of that conversation as a record. If there are any concerns around there being a difference in opinion of what was discussed verbally, opt to communicate in writing, or follow up any verbal conversation in writing, to create physical record confirming what was agreed. These records create a clear timeline, demonstrating when any damage has been identified for instance and ensuring that any admissions of liability are recorded, so that the landlord can rely on these later if need be.

How to claim from a tenant’s deposit

If a landlord wishes to make any deductions or claim from their tenant’s deposit, then they should first try to agree this with the tenant. If an agreement cannot be reached as to who should receive the deposit or how it should be shared, then the landlord cannot just simply take what they believe they are owed – to do so would be a breach of the landlord/managing agent’s stakeholder responsibility. Instead, the landlord will have to look to make a court claim, or use the free dispute resolution service of the deposit protection scheme protecting that deposit.

Each of the three government approved deposit protection schemes (one of which a landlord must use whenever he grants a assured shorthold tenancy where a deposit is taken) offer a free service to impartially resolve deposit disputes by assessing the evidence, such as photos, videos, inventory and check-out reports. Either the landlord or tenant can refer the issue of deductions from the deposit to the deposit protection scheme, for them to them to adjudicate. The deposit protection scheme’s adjudicators will impartially assess the evidence provided by the parties – although as above, the burden of proof is on the landlord to justify any deduction they want to make, and the adjudicators will make a decision on the ‘balance of probabilities’ as to what should be awarded to who. The scheme’s decision is final.

In summary – what should landlords keep in mind?

Landlords should be alert to the fact that the tenant’s deposit belongs to the tenant, until such time that the landlord can justify a claim from it, and that the burden of proof is on them as the landlord to evidence their claim. It is not a given that the landlord will be able to make a deduction from the deposit - the tenant either needs to agree or the landlord needs to be able to provide the required evidence to the adjudicator for them to make a decision, or to the court. Knowing this, landlords should have a renewed sense of motivation to ensure that appropriate checks are undertaken before, throughout and after every tenancy, and that comprehensive records are kept. It is important that landlords take steps in advance and throughout the tenancy to prepare for a potential deposit deduction dispute because often issues are not discovered or discussed until the end of the tenancy when it is too late to retrospectively put together relevant evidence.

The landlord is not just entitled to the money because in their view it is reasonable. There needs to be a contractual basis of the amount and a justification of the losses suffered.

When giving comment and advice on a non-specific basis, Boyes Turner cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems it is recommended that professional advice be sought.

About Boyes Turner

Boyes Turner are a regional UK law firm with an impressive international reach. The expertise of their teams is considerable, spanning the corporate world, technology and private clients. Jazmin Perry is a solicitor working in the firm’s Property Disputes team. She advises on property disputes including landlord and tenant matters, boundary issues, adverse possession and contested leasehold enfranchisement claims. (jperry@boyesturner.com​)

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