Deposits and inventories are an ever-present facet in lettings but in a sector where we’re still relying on a 1950s court case to settle maintenance disputes – and still waiting for the Renters’ Reform Bill to radically change the way agents work – new statistics and fresh approaches are most welcome.

The DPS (The Deposit Protection Service) notes there are shifting themes when it comes to disagreements and deductions. “We have seen an increase in claims around arrears (17 per cent of total disputes), either when a tenant fell behind with the rent or left the property before the end of their fixed term, to go back to their families – perhaps due to furlough, changes to their employment or working remotely during the pandemic,” says the organisation’s Alexandra Coghlan-Forbes.

Less than three per cent of all of the tenancies we support end in dispute – currently 23% of disagreements relate to cleaning and 19% to damage. Alexandra Coghlan-Forbes, DPS.

“It’s also worth remembering that less than three per cent of all of the tenancies we support end in dispute, but within that small group, currently 23 per cent of disagreements relate to cleaning and 19 per cent to damage.”

Cut time with custodial schemes

There are also changing themes when it comes to time-frame resolutions in the traditional cash deposit sector, and a good snapshot comes from Mydeposits. “On average, the time for resolving end of tenancy disputes is 43 per cent quicker with our custodial scheme compared to our insurance scheme,” says CEO, Eddie Hooker.

It takes three days, on average, to receive payment of the disputed amount with our custodial scheme, and four days with our insurance scheme. Eddie Hooker, Mydeposits.

If the case does proceed to an adjudicator, the current average time taken to make a decision is 12 days on Mydeposits’ custodial scheme, and 15 days on its insurance scheme, with a prescribed time of 28 days allowed. “In addition, it takes three days, on average, for the parties to receive payment of the disputed amount with our custodial scheme, and four days with our insurance scheme,” adds Eddie.

Delegating the deductions headache

While traditional deposits still hold tangible appeal among landlords and letting agents, deposit replacement schemes are gaining ground. One of the stubborn question marks hanging over cash alternatives has concerned deductions and deposit disputes. Providers such as Reposit and Flatfair have, however, finely honed the process to such a degree that they can absolve letting agents of dispute hassles.

If a tenant refuses to pay deductions, there is no extra work for the agent as Flatfair takes care of the whole process. We will purchase up to 10 weeks of debt. Gary Wright, Flatfair.

“Flatfair’s easy-to-use, innovative technology platform makes the end of tenancy and compensation process very straightforward,” says the company’s Gary Wright. When using Flatfair, agents, landlords and tenants are able to negotiate, dispute, accept and pay charges relating to deductions on its platform for transparency and speed. And when parties fall out, says Gary, Flatfair steps in. “If a tenant refuses to pay deductions, there is no extra work for the agent as Flatfair takes care of the whole process. We will purchase up to 10 weeks’ worth of debt, thereby reimbursing the landlord within 10 days of the charges being agreed and providing debt recovery on any additional monies owed beyond the initial 10 weeks. There is no additional cost for this service to either the agent or landlord.”

Impartial eyes at the inventory stage

We all know inventories are a crucial aspect of deposit recovery and many agents will be firmly in one camp or another: in-house or external company. Alexandra at the DPS recommends using a third party in order to help prevent disputes – a sentiment with which Sián Hemming-Metcalfe, the Chair of ARLA Inventories, agrees.

Outsourcing inventories carries considerably less risk of ‘unconscious bias’ creeping in, as the provider is solely focused on the evidence. Sian Hemming-Metcalfe, ARLA Inventories.

“Outsourcing inventories carries considerably less risk of ‘unconscious bias’ creeping in, as the provider is solely focused on the evidence, without judgement being clouded by issues often associated with managing properties,” comments Sián. “Professional clerks are capable of delivering a consistent report that is more likely to result in a reduction in disputes as well as win cases that do arise. This minimises the risks to the landlord and secures the reputational status of the agent.”

That doesn’t mean to say a letting agent should always be totally hands off, as Alexandra explains: “We had a recent dispute case where a letting agent and a tenant filed contradictory evidence about whether the tenant had pets at the property, which were not allowed under the terms of the tenancy agreement. The tenant said they could not have a pet because they were allergic to animals.”

“One day, the agent was driving past the house and spotted an animal inside the front window. The agent submitted their WhatsApp exchange with the tenant as evidence that they did, in fact, have a pet.”

Switch between in-house and outsource

Next up, a warning – an industry buzzword is about to be used but reserve rolling your eyes. How about the hybrid approach to inventories? It’s a way of thinking that’s important to Richard Abbots at Inventory Hive. He’s keen to stress that agents should easily be able to switch between conducting inventories in-house and choosing to outsource. This enables for reactive property management that can be tailored to an agent’s current time and financial resources.

If an agent owns the licence to their inventory software, they’re free to conduct inventories, mid-term inspections and check-outs themselves. Richard Abbots, Inventory Hive.

It’s all to do with owning software and staying in control of data, comments Richard: “If an agent owns the licence to their inventory software, they’re free to conduct inventories, mid-term inspections and check-outs themselves or invite outsourced clerks into their system to complete inventories on their behalf.

Inventory Hive allows agents to adopt a flexible, hybrid approach with far less risk. “Agents are not exposed to the possibility of suppliers leaving the market and taking their data with them,” says Richard. “In addition, they also have far greater GDPR control, which is increasingly becoming a more complex area within agency.”

Richard is keen to stress that Inventory Hive offers a holistic, paperless tenancy solution that integrates with numerous software partners, including Reapit, Propco, Jupix, Fixflo and The Depositary. The product also offers 360° camera integration, image recognition AI technology and TDSapproved dispute avoidance templates.

Save time… send someone else

As highlighted, agents don’t have to commit to outsourcing every inventory or check. Of course, there will be times when staff need to be hands-on and manage sensitive tenancies from end-to-end but agents also need a contingency plan for times when an agent’s resources are spread thin or unbiased invention is required.

It is during these periods that Inventory Base’s Steve Rad says many of its clients rely on a professional inventory clerk. “The time spent travelling to and from a property – plus the describing, noting, photographing, recording conditions – can mean an agent is stuck at a property for several hours, and compiling inventories can quickly turn into a full-time job,” says Steve.

Inventories can turn into a full time job. Using third-party clerks… returns that time to the office, enabling staff to concentrate on revenue-generating tasks. Steve Rad, Inventory Base.

Other benefits of inventory outsourcing include greater flexibility for scaling up during busy periods (or dialling down during quieter months), together with refocusing resources. “Getting third-party clerks to carry out reports returns that time to the office, enabling staff to concentrate on revenue generating tasks,” adds Steve.

Inventory’s Bases integrations are part of the wider time- and admin-saving digital ecosystem that many outsource suppliers are part of, with its API working with property management CRMs including Reapit Foundations, The Depositary, Fixflo, Gnomen and AgentOS, among others.

Also enjoying excellent synergies are The Lettings Hub and Reposit, teaming up to offer tenants, landlords and letting agents more choice without conflict. Both brands are moving in the deposit-free sphere but have found a way to co-exist harmoniously.

Earn extra with deposit alternatives

The Letting Hub offers agents a deposit replacement insurance product that can be fully white labelled. Used as either a stand-alone service or part of the company’s successful BOX platform, the crucial aspect for agents is the ability to mark up the insurance product for extra income.

“Each letting agent can determine their own charge for tenants wishing to use their branded deposit replacement insurance product, which they collect from the tenant directly,” says Heidi Shackell at The Lettings Hub. “It gives the agent more control and means they immediately receive remuneration, rather than waiting to receive commission from a third party.”

It gives the agent more control and means they immediately receive remuneration, rather than waiting to receive commission from a third party. Heidi Shackell ,The Lettings Hub.

Agents who are looking for a commission-backed partnership over a self-administered, marked-up product have an alternative. The Lettings Hub’s BOX platform also features Reposit – a deposit replacement scheme where the tenant makes a payment directly to the supplier.

Feedback from Reposit’s partners says the product reduces void periods, improves the overall speed of tenancy completions and helps to attract landlords due to the additional protection they receive. And when there are charges to settle, Reposit handles everything from start to finish, including disputes, which it turns around in a maximum of 14 days. As well as enabling letting agents to earn up to £15,000 per branch in additional revenue, the Reposit team is determined to assist agents in changing the perception of cash-free deposits so they attract even more business.

Reposit provides a full digital and physical marketing pack to all of our partners, containing everything they need to get up and running with Reposit. Ben Grech, Reposit.

“Reposit provides a full digital and physical marketing pack to all of our partners, containing everything they need to get up and running with Reposit, says Ben Grech. “This including flyers for tenants and landlords and a comprehensive guide for landlords, plus suggested clauses to be added into their terms of business and any AST that is using Reposit.”

TOP TEN TIPS TO AVOID DEPOSIT DISPUTE,
by Debbie Davies,
Tenancy Deposit Scheme

1 Ask the tenant to carefully read the tenancy agreement Ensure all the named tenants understand all the rules and their responsibilities.

2 Ensure the tenant double-checks the inventory Let the tenant know they have 7 days to challenge missing items or damage not listed.

3 Check in/check out with everyone present Invite the tenant and the landlord to be present at check in and check out. This way, issues can be resolved before moving in and problems rectified before moving out.

4 Protect the deposit Ensure the deposit is lodged with an approved scheme and the prescribed information sent to the tenant within 30 days of payment.

5 State that all new or worsening maintenance issues must be reported Tenants should report issues, such as leaking pipes or mould, to the agent immediately. Don’t forget, the TDS offers a mid-tenancy mediation service, TDS Resolution, for unresolved mid-tenancy issues like this.

Ask the tenant to read the tenancy agreement. Ensure all the tenants understand their responsibilities.

6 Encourage the tenant to reverse any changes Outgoing tenants should be prompted to return the property to its original state, especially if this requires DIY, a professional trade or the replacement of damaged goods.

7 Set out cleaning expectations Be clear with the tenant that the property should be handed back as it was found, not forgetting outside spaces and other frequently missed areas, such as extractor fans.

8 Get the tenant to read the meters Ask the tenant to take meter readings on the day their tenancy ends, emailing these to you as they depart.

9 Be available for a key drop off When the keys are returned, ensure they’re all present (including window, storage and meter cabinet keys) and issue a receipt to show they were received.

10 Keep communication channels open Involve the landlord and tenant in dispute discussions as soon as possible, working towards an amicable resolution. If not possible, the TDS offers a free end-of-tenancy dispute resolution service, if needed.