The latest figures from the Tenancy Deposit Scheme’s annual report for 2014/15 show that across the UK they are protecting 1.3 million tenant’s deposits. That represents a fairly large portion of the Private Rented Sector, which currently has an estimated five million households.
The reason you, as a landlord, should know about this report is that it gives a huge amount of detail on the number of deposit disputes the TDS settles – and the key causes of the disputes. If you know what these are, it gives you a far better chance of avoiding any problems at the end of your tenancies.
Of course, if you’re letting via a Belvoir agent and they’re managing the property for you, you won’t need to worry, as they’ll handle any disputes on your behalf. Talking to some of the Belvoir agents, the even better news is that the number of deposits that end up being disputed in their experience range from zero to just a few a year. And that’s the benefit of using a good agent, who takes the time to understand the potential problems between tenants and landlords and makes sure they have systems in place to avoid them. Some agents offer cheap deals to attract business but if someone’s cutting costs, it usually means the likelihood of them making mistakes goes up. And for landlords, mistakes can easily cost hundreds, if not thousands of pounds.
So are tenants or landlords winning the deposit dispute battle?
In the past, most disputes have been won by tenants, but in this latest report, landlords have edged ahead for the first time:
Number of disputes: 14,967 Almost half the disputes were raised by landlords and letting agents 61% of disputes ended up with payment ‘shared’ between landlord and tenant 8% of disputes resulted in a 100% award to landlords/agents 2% of disputes were settled 100% in favour of tenants.
These figures show that only around 1% of deposits end up being disputed, so the chances of you finding yourself in this situation are very low. The reason that figure is interesting is because when the scheme was originally proposed, back in 2003, Shelter stated: “although most tenancies end without dispute, around 20% of households say that part or all of the deposit from their most recent tenancy was unreasonably withheld.”* So, either the scheme has been an enormous success, or the number of deposit disputes is far lower than originally thought!
The report results are starting to suggest that landlords and letting agents are getting better at making sure they have evidence of a property’s condition at the start and end of a tenancy. Part of this care is because of the inventories that are carried out on check in and check out.
What are the disagreements about?
In the main, the biggest dispute is over cleaning the property, which accounts for a staggering 58% of issues. Next it’s damage to the fixtures or fittings, at 52%, with redecoration and gardening coming after – as far as disputes in England and Wales are concerned. Interestingly, just 10% of disputes are over rent arrears. That’s much lower than in Northern Ireland (13%) and Scotland (25%), where rent arrears jump up at number three on the list, while cleaning issues remain top of each country’s lists
What can be done to avoid ending up with a dispute?
The key is to be upfront with your tenant right at the start of the tenancy and make sure they understand what could affect the return of their deposit. Give them time to look over and sign the check-in inventory – with photographs – so that they know what condition the property should be in when they leave. Also, give them feedback from periodical inspections so that they have the chance to make good anything that’s in an unacceptable condition. Remember, checking the property is not just to see if the tenant is looking after it, but also to make sure you identify any problems that need fixing before they cause damage.
These periodic checks are absolutely in your interest, too, as it will save huge amounts of time and potentially money if you’re able to either approve giving them their full deposit back, or know there won’t be an argument at the end of the tenancy.
A good letting agency should do all this on your behalf as a matter of course, if you have engaged them for full management, so if you think you can cut costs by not having an inventory or not doing a full check in/check, think again, these are classic mistakes that often will end up costing you more than you would have originally saved!