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:
- Protect the deposit with a government authorised scheme
- 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:
- 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.
- 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.
- 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.
- 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.
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