How to Stop a Deposit Dispute Before It Starts

Deposits are a bane of landlord life as damage to a rented home becomes apparent at the end of a tenancy. 

But many buy-to-let disputes can be prevented, according to the Tenancy Deposit Scheme (TDS), which looks after deposits worth £4.5 billion across England and Wales. 

TDS research shows the number of disputed deposit retentions is rising but notes they are still relatively few. In 2021-22, TDS adjudicated 31,276 complaints - up 1,579 from the year before. 

The big three deposit dispute claims are over cleaning, damage to the home and rent arrears. They account for 0.7 per cent of all claims handled by TDS - numbering 2,189 disputes last year.

What triggers a deposit dispute?

Tenants raise three out of four adjudication claims, 18 per cent by letting agents and eight per cent by landlords. 

Disagreements over returning a deposit account for a small part of the total - just 0.7 per cent. However, the reasons behind a dispute are consistent across the country: Source: TDS 

TDS CEO Steve Harriott said: "We have known for many years that cleaning and damage are the main claims made in tenancy deposit disputes. These figures show remarkable consistency across the UK over time, the only oddity being that 71 per cent of disputes in Scotland involve cleaning claims. 

"It all points to the importance of landlords/agents having good inventory reports, as these will provide clear evidence to support any cleaning or damage claims."

Stopping a dispute

TDS has a plan to help landlords and tenants resolve deposit disputes without going to adjudication:

1. Share responsibility

Draft a clear and concise tenancy agreement explaining each side's responsibilities and how the property should be looked after.

2. Get an inventory

Inventories are essential documents for landlords and tenants, and they set the state of the property on the check-in and offer a comparison of the home's condition when the tenants leave. 

Inventory software is available from several sources, although TDS partners with Inventory Hive, which costs £300 plus VAT a year or £30 plus VAT monthly for a portfolio of 50 homes. 

Free add-ons include 360-degree video tours.

The Guild offers subscribers an inventory builder, which is under beta testing currently

3. Keep in touch with tenants

Carrying out regular inspections of a rented home has several benefits. Tenants understand landlords are keeping an eye on their investment, and checks encourage them to report faults so issues with the property are dealt with sooner. 

Dealing with problems as the tenancy ages means fewer issues grow into disputes.

4. Keep up with legal changes

The government regularly changes buy-to-let rules, which differ between England, Scotland and Wales. It's wise for landlords to keep up with the latest thinking and any law changes. 

TDS runs a course highlighting the evidence adjudicators seek in a deposit dispute. 

Other information is available from landlord groups and websites.

Deposit dispute FAQ

How does a deposit dispute start?

Once a tenant moves out, a property inspection takes place comparing the state of the home with that on the inventory at the start of the tenancy. 

If landlords feel property conditions go beyond normal wear and tear, they can ask the deposit protection firm to put a hold on returning the money to a tenant. Should the tenant disagree with the landlord's assessment, they can request an adjudicator to investigate the case.

What is normal wear and tear?

Normal wear and tear refer to the scuffs, scratches and marks anyone would expect to see in a property over time. Typical wear and tear would be worn carpets, fading curtains and marks on the paintwork.

Is wear and tear the same for each tenant?

No. The expected wear and tear amount depends on whether the tenant has a young family or keeps pets. In cases like this, wear and tear is expected to be greater than in a home where a retired single lives.

Why can a landlord keep a deposit?

Deposits were not scrapped under the tenant fee ban. Money can be deducted from the deposit for several reasons, including replacing lost keys, repairing damage to property or rent arrears.

How is the deposit deduction worked out?

Landlords should shop around for quotes to complete the work. Only costs supported by estimates or invoices can be deducted from a deposit.