Tenancy deposits have long been the cause of anxiety and argument amongst landlords, tenants and, of course, the agent in between.

They are absolutely necessary, but as rents have risen along with the costs of repair and replacement, the values – usually relative to six weeks’ rent or more – now represent a significant sum of the tenant’s money that is tied up – without interest – for the duration of the tenancy.

Countrywide’s latest research puts average rents in April 2014 at £873 across the UK, with the highest rents being in Central London, averaging £2496pcm and the lowest being in Wales at £636pcm.

In an ever-growing Private Rented Sector, this amounts to a very large pot of cash across England and Wales, the figure that the DCLG put on it in October 2013 was £2.964billion.

Tenants whose deposits are protected should have their money returned to them within 10 days of them leaving the property. This is quite fast but it also means that, for example, with a rent of £1000pcm, the tenant has to find another £1500 or more to pay his deposit on a new tenancy, or perhaps, wander the streets until he gets his first deposit back.

And this is assuming that he does get it back. The Tenancy Deposit Scheme (TDS) calculates that there is around 86 per cent compliance with deposit protection legislation, but in its last Annual report, Steve Harriott, Chief Executive, wrote that. “It is likely that there are tens of thousands of deposits where landlords are still not complying with the legislation to protect deposits.” Recent research by Spareroom. com found that:

• 53 per cent of tenants didn’t check if landlords put their deposits in tenancy deposit schemes

• 

47 per cent believe their landlord has not put their deposit in a scheme; 26 percent don’t know

• 34 per cent of tenants are not aware it’s mandatory for live-out landlords to protect tenants’ deposits in government-backed schemes

• 

16 per cent tenants said they haven’t heard of the tenancy deposit scheme.

Matt Hutchinson, director of SpareRoom.co.uk, says “The rogue element of the landlord community is far smaller than most people think.

“The wider problem is that the private rented sector is dominated by amateur and accidental landlords, who don’t always know their responsibilities.

“But the tenancy deposit protection scheme has certainly helped establish more trust – ensuring landlords cannot profit from deposits as an additional source of income, and mediating when disputes arise.”

RAGING DISPUTES

Out of those who do comply with the legislation, there will inevitably be landlords who are reluctant to return a deposit in full. Indeed, some housing charities and politicians make a great noise about the horrendous issues that tenants suffer when trying to get their deposit returned. In fact, TDS ata shows that just 0.92 percent of deposits where the subject of a dispute in the 12 months to March 2013. Of these, 62.4 per cent (2011-2012 latest figures available) related to monies held back because of damage or cleaning issues.

Christopher Hamer, The Property Ombudsman, (TPO), says, “Inventories are crucial for both landlords and tenants and therefore agents need to be diligent in arranging them. A properly prepared inventory at the start of a tenancy will act as a fair measure to assess the condition of a property at the end of a tenancy and in determining whether a deposit is to be refunded.

“TPO has received 87 complaints concerning inventories so far this year, many arising after the agent failed to either prepare an inventory before the start of the tenancy, or ensure a copy was shared with the tenant(s) so they had an opportunity to raise any discrepancies.

“The Code of Practice clearly outlines what steps agents need to take to avoid a complaint being upheld, including agents giving a tenant sufficient time to review the inventory before signing and returning a copy.”

The obvious thought is that if tenants kept a cleaner house and weren’t so clumsy, they would get their deposits back intact, but one person’s idea of clean and undamaged is always going to differ from another’s.

So the only way to be able to judge whether a property is in a worse state of repair at the end of a tenancy is to have a thorough inventory, check in and check out report, backed up with photos and videos and signed off by the tenant.

It is difficult to argue with a printed document that has been agreed and signed off by the tenant and, as the old song goes, every picture tells a story.

FOUR PROPERTYDRUM READERS ILLUSTRATE THE IMPORTANCE OF A PROPER INVENTORY:

SOUTHERN ENGLAND
Gemma Frith, Expert Services Manager, Chancellors: “We always recommend that clients have a professional inventory conducted prior to letting the property and that this is updated with each new tenancy.
A recent case we dealt with saw the check-out completed at the property only for the clerk to find that the white goods had disappeared from the kitchen. It turned out that the fridge, cooker and washing machine had all broken down during the course of the tenancy and instead of reporting the faults to the landlord, the tenant elected to buy their own appliances and dispose of the landlord’s goods.
Luckily the landlord had a professional inventory which showed that the landlord had provided these appliances as part of the tenancy and when the case went to the TDS for adjudication they awarded the landlord monies towards the replacement costs. Even with the original receipts, the landlord would have struggled to prove that these appliances were in place when the tenant moved in without the support of an inventory.”

HERTFORDSHIRE AND BUCKINGHAMSHIRE
Jane Gardner, Sewell & Gardner: An old-school Landlord believed he knew his lettings business inside out; he had been dealing with tenants for decades. He hadn’t needed to provide a professional inventory before; he didn’t care about new legislation; he could “still retain deposit money for dilapidations at the end of the tenancy”. Basically he didn’t care what our advice was and presented us with his (most inadequate) inventory list. Usually this would be an immediate sign for us to withdraw from the instruction, however, in this instance we made a judgement call to proceed, with file notes from both parties to confirm acceptance of the tenancy without any professional inventory paperwork.
So the tenancy continued, let-only, for a few years, then we received a call from
the landlord stating that he needed us to re-market the property because the tenants had disappeared… along with a few months’ rent, they had taken the central heating system, the internal doors and the white goods from the kitchen. Suffice to say, the next tenancy had a full professional inventory prepared – once the house had been put back to its former condition, paid for entirely by the landlord.

MANCHESTER
Ann Durrell, Operations Executive at Homes4U: One of our properties was left in a very bad condition by tenants, with holes in the walls from pictures being hung, ruined carpets, a broken shower screen and bathroom cabinet. A significant amount of cleaning was also necessary and even the feet had even mysteriously been removed from the sofa!
The deposit held was over £1400 but even this would not have covered the cost of the damage. After discussing with the landlord, we wrote to the tenants attaching copies of the inventories and photographs and detailed deductions from the deposit.

Unfortunately the tenants did not agree with the deductions suggesting a reasonable cost for the repairs was £600, the actual figure, even taking in to account wear and tear was closer to £2500.
The tenants raised a dispute with mydeposits and we submitted all of our evidence with pictures, invoices and email evidence. After examining all the evidence mydeposits ruled in the landlord’s favour and he was able to retain the whole deposit to cover the costs of works that had been undertaken.

NEWCASTLE
Richard Bradley, Head of Property Management at Walton Robinson: We dealt with a case last year where both the inventory and deposit registration played a vital part in the landlord successfully receiving deductions from the tenants’ deposit. The tenants were provided with a full inventory when they collected their keys and were given a seven day period to make any notes or query any points; they signed to confirm they agreed the points of the inventory and returned it to the agency. The deposit was registered with The Dispute Service.

A year later when the tenants moved out, the same inventory was used when the check-out inspection was completed. It was noted that there were several cleaning issues and that the tenants had left some of their belongings behind.

Photographs were taken of each issue as evidence.

The property supervisor who completed the check-out inspection then informed the tenants and landlords of the issues, obtained a quote from our contractors to complete the cleaning issues and forwarded the proposed charges to the tenants.

The tenants disputed the proposed deductions and refused to accept them so the case was referred to be independently adjudicated by The Dispute Service. Due to the comprehensive inventory and check-out reports, as well as photographs and contractor invoices, The Dispute Service awarded the full amount disputed over cleaning costs to the landlord and also awarded compensation for removal of the tenants’ belongings.

TENANCY DEPOSIT PROVIDERS:

TDS: The Dispute Service www.tds.gb.com 
DPS: www.depositprotection.com
My Deposits: www.mydeposits.com
INVENTORY SERVICES:
AIIC: www.theaiic.co.uk
APIP: www.apip.org.uk
No Letting Go: www.nolettinggo.co.uk 
Oakley Jane Independent Inventories: www.oakleyjane.co.uk