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Avoid deposit disputes with your tenants

Aug
10
2015
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Property

deposit disputes

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Most tenancies end without any major problems, however occasionally some do end with a dispute over the amount of the deposit to be kept by the landlord.

The purpose of the rental security deposit is to pay for repairs in the event that there is damage to the property beyond wear and tear from normal use caused by the tenant during their stay.

Often landlords managing their own property do not keep a complete record of the state of the property when tenants first move in. Therefore when the tenant moves out, there is no way to quantify the extent of the deterioration and how much the landlord is justified in deducting should there be a dispute.

When a landlord takes a deposit from a tenant on an Assured Shorthold Tenancy (AST) in England and Wales, within 30 calendar days they are required by law to do the following:

  1. Protect the deposit with a government authorised scheme
  2. Provide the tenant(s) with the Prescribed Information

Whilst held in the scheme, the deposit remains the tenant's money until the tenancy completion. At the end of the tenancy, should the landlord be unhappy with the upkeep of the property and be able to display as such they may be entitled to keep an agreed amount of the deposited funds.

Landlords therefore need to maintain a coherent evidence trail from the beginning to the end of the tenancy. Failure to do so is often why they are unsatisfied with decisions made by independent adjudicators. Proof is often required for an adjudicator to be able to justify the returning of a reduced deposit to a tenant.

Be vigilant from the outset. Prepare for the end of the tenancy at the start:

  1. Agree the condition of the property in writing at the start by completing an extensive 'check-in' report comprising a full inventory and description of all aspects of the property.
  2. Spend time taking as many photographs as possible at the start of the tenancy. Both the tenant and the landlord should sign the backs of these photographs and also date them for maximum peace of mind for both parties.
  3. Make sure the tenancy agreement states what the deposit can be used for. This can be a very broad statement but an adjudicator can only make an award for things which have been agreed in advance.
  4. Keep an audit trail from the outset. Whether you're the landlord or the tenant, have a record of all communications, quotes, and requests for repairs or invoices for anything that might become an issue at the end of the tenancy.

At the end of the tenancy checks should again be carried out and outcomes noted either by the property managing agent or the landlord and tenants themselves.

If detailed accounts from outset are noted by both sides this will often lead to an amicable agreement and speedy resolve at the conclusion of the tenancy.

Should an independent adjudicator be required, it will also make it far easier for them to reach a fair decision.

Contact our team at Gladstone Morgan if you wish to know more about how this topic as well as countless other significant events may influence your financial position and savings.

We will be happy to assist: Email: Info@gladstonemorgan.com

Disclaimer:  All content provided on this page are for informational purposes only. Gladstone Morgan Limited makes no representations as to the accuracy or completeness of any information on this page or found by following any link on this page. Gladstone Morgan Limited will not be liable for any errors or omissions in this information nor for the availability of this information. Gladstone Morgan Limited will not be liable for any losses, injuries, or damages from the display or use of this information. This policy is subject to change at any time.

It should be noted the services available from Gladstone Morgan Limited will vary from country to country. Nothing in the comments above should be taken as offering investment advice or making an offer of any kind with regard to financial products or services. It is therefore important to reinforce that all comments above are designed to be general in nature and should not be relied upon for considering investment decisions without talking to licensed advisers in the country you reside or where your assets may located. Gladstone Morgan Ltd is not SFC authorized. Gladstone Morgan Ltd in Hong Kong is licensed with the Hong Kong Confederation of Insurance Brokers.

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