Making Deductions from a Deposit

Published: 19/07/2012 By Peter Barry

It’s always difficult to work out a reasonable amount to deduct from tenants when it comes time to hand back the keys and hand over the deposit.

With the introduction of the Tenancy Deposit Protection scheme in 2007, it became harder for unscrupulous landlords to retain part or all of a tenant’s deposit for repairs to the property, which is good news for tenants. In the past, landlords who regarded a deposit as a bonus fund for property upkeep could leave unwitting tenants seriously out of pocket. In effect, tenants were stung for nothing more than expected wear and tear and it could be very difficult to reclaim the money.

Damage limitation

Thankfully, things have changed but the deal should work both ways and landlords should be fairly compensated for genuine damage to the property. There is a tipping point at which regular scuffs become dents, and general maintenance turns into the wholesale replacement of fixtures and fittings, all of which can be very costly for the landlord.

The benefits of an inventory

Some landlords question the necessity of having a comprehensive inventory and schedule of condition of their property carried out before a tenant moves in, but if you think about it would you expect a car rental company to rent you a car without first making a thorough check of the condition of the paint work, upholstery etc. How would they know what if any new damage had been caused on its return? Who would be held responsible?

It is important that you protect your property, your major investment, against negligence and damage caused by tenants. Without an inventory and schedule of condition you will be unable to make a successful claim for compensation or reinstatement of damage through any of the recognised deposit protection schemes.

A professional check in with the tenant present ensures that both parties agree the true condition of the property at the start of the tenancy. This ensures that the tenants cannot avoid their responsibility for the condition of the property at the end of the tenancy and reinforces to the tenants their liability should they fail to keep the property well cared for.
 It is equally as important to have a formal check out at the end of the tenancy; failure to do this will undo all the good work at the beginning.  It is imperative that the check out reflects the condition of the property at the end of the tenancy.  The Check In and Check Out reports are the documents that any arbitrator or court will rely upon to assess the validity of any claim you as landlord are making against the tenant. Failure to produce either of these reports, together with the inventory may result in a failed application for compensation, which could leave you as the landlord seriously out of pocket.

With the help of a well-prepared inventory you can be sure that a true reflection of the condition of your property, fixtures and fittings is prepared, thus minimising the chances of a dispute at the end of the tenancy and thereby strengthening your ability to make a successful claim against the tenant should you need to.

Calculating the rebate

As a landlord, you are entitled to take money from the deposit for reasonable repairs or replacements. For example, if there has been damage to the property, or items are broken or missing. You could also legitimately claim for any rental arrears, or if the property has been left in such a bad state that you need to pay for professional cleaners. It’s always wise to keep receipts for any items that you have to replace, or any work that needs to be carried out, as your tenants are entitled to ask for proof of the costs.

At the end of the day, it’s wise to always keep in the back of your mind the fact that the deposit doesn’t belong to you; it’s your tenant’s money and can only be dipped into if the work is justified.

Request a Free Valuation

Please tell us about you