What is tenancy deposit deduction?
Tenancy deposit is usually a 5 weeks worth of rent secured via a deposit scheme on behalf of the tenant , paid prior to her move in date.
The landlord is able to claim deductions against this lump sum at the tenancy end if there is evidence for tenancy agreement breach.
Deposit deduction is the amount of the money claimed from the deposited sum.
Who suggests & negotiates tenancy deposit deductions?
Usually deposit deductions are suggested by the landlord or letting / managing agent on behalf of the landlord.
These are than negotiated between the landlord / agent and the tenant.
The extent of the tenancy deposit deductions
- Rent and bills arrears are the number one grounds for deposit deductions.
- The second most relevant base for the deductions is a comprehensive tenancy Check Out Report. The report is a direct comparison between the state of the property at the beginning of the tenancy and at the tenancy end.
Changes noted in the report which don’t qualify as fair wear & tear (expected depreciation via normal use over time) will become the ground for suggested compensation charge.
The total of tenancy deposit deductions can not be higher than the deposit itself. If the arrears and the damages / excessive wear exceeds the total of the deposit amount, the landlord is advised to open a litigation process.
Who can deduct from the tenancy deposit?
After a successful deduction negotiation between the parties, landlord or the letting / managing agent deducts the agreed amounts from the deposit and returns the remaining amount to the tenant.
If the deduction negotiation fails and parties are unwilling to reach an agreement, one of them raises a tenancy deposit dispute with the deposit scheme guarding the deposit.
An appointed adjudicator will review the case and decide how the deposit is apportioned to the parties in dispute.
The role of the Property Inventory in claiming deposit deductions.
Any deposit claim needs to be presented with satisfactory evidence for the deduction to take place. A detailed and fair inventory reports compiled by an independent party present the evidence of the changes in the tenancy duration.
All parties are presented with the photographs and comments capturing the changes which often leads to reaching an agreement in contrast to raising a dispute.
The types of Check Out Reports and responsibility appointment
Property inventory providers are presenting clients with various styles of Check Out reports:
- Some will produce simply a list of new issues accompanied by photographs
- Others will capture changes more comprehensively, indicating wear & tear as well as other inconsistencies.
While some companies will appoint responsibility for the reported changes , others will not.
How to recognise a robust Check Out Report?
- Side by side written comparisons of the condition at check In with the condition at Check Out on item per item basis
- Photographs demonstrating the changes
- Appointment of responsibilities
- Check out Checklist identifying length & type of tenancy, indicating if signs odours or pets were detected during the inspection
- A good Check Out report will also bring into landlords attention maintenance issues
Types of deposit deductions
- Deductions for rental and utility arrears
- Deductions for cleaning
- Deductions for damages
- Deductions for items removals ( redundant items left behind by tenants)
- Deductions for item replacement (missing item)
- Deductions for removal ( & made good) of unauthorised instalments
- Deductions for maintenance if caused by ill treating property goods (e.g clogged dishwasher)
- Deductions for neglected garden maintenance
Types of damages
- Damage due negligence ( e.g. neglected leak, burn marks to carpet )
- Excessive wear & tear ( e.g. grubby walls)
- Aesthetic damage (e.g. light chips, light dents)
- Functional damage (e.g. broken drawer, broken lock)
- Damage caused by a pet ( e.g. pulled threats to carpet, tear to curtain)
- Damage caused by using inappropriate cleaning products ( e.g. stained chrome fittings, bleach marks)
- Damage caused by inappropriate life style (e.g mildew caused by lack of ventilation)
- Accidental damage cause by other party ( e.g. leak from other property, damage by maintenance works). When damage is discovered, photos should be taken and the landlord or managing agent should be informed ASAP.
- Damage due a crime ( this type of damage should by not by charged to the tenant )
What is a reasonable compensation charge?
The compensation charge should be concluded with respect to the following:
- What can be cleaned should be cleaned ( including upholstery)
- What can be repaired should be repaired
- What is irreparably damaged or missing should be replaced or compensated for by an amount reflecting the remaining life span of the item
- The quality of the replacement item should match the quality of item being replaced
- Cleaning charges
- Deductions for light or deep cleaning if property wasn’t returned as clean as received.
- Deductions for stained upholstery steam clean or dry clean. This could be curtains, furnishings, mattresses, carpets, rugs or linen, cushions, throws etc.
- Deductions for a cleaning of an appliance such as professional oven clean.
- Gardening charges
- Deductions for maintenance of areas such as lawn, shrubs, patios – issues such as mowing, weeding, overgrown drainpipes, blocked drainpipes to be made good. Tenancy agreement should contain a clause on tenant responsibility for the garden maintenance.
- Redecoration charges
Deductions for plastering & redecorating of a wall where damage has occurred
- Damage charges
Deductions for damage are calculated according to the following formula considering multiple factors:
Example: Heavily stained natural fibre rug placed in lounge.
- The rug was purchased for £400 ( the cost of the item as new, reflecting its quality)
- The life span of the rug is 8 years ( expected use)
- The rug was in use for past 4 years ( age of the carpet)
- The tenancy lasted 3 years ( length of the tenancy )
- Number of tenants and type of tenancy should be considered, family with dependent children will present higher wear & tear
- Area of damage – high traffic areas such as hallway or kitchen show higher wear & tear
The property was occupied by a couple over the period of 3 years. . The compensation charge is £200.
The Grey Area of Aesthetic Damage
Property inventory professionals are trained that any dents, chips or unremovable stains are classified as damage.
The compensation charge formula suggest that the damage occurred is rather extensive as the deduction amount compensates for all the remaining years of the expected use of the item.
But most of damages inventory clerks encounter are not that severe. What about dents to appliance doors, chips to kitchen worktop, scratches to furniture, light chips to basin etc? The functionality of the item is not impaired but the aesthetic injury is obvious.
What is fair to deduct for aesthetic damage?
It seem that this is left to the negotiation between the landlords and tenants themselves. Tenancy deposit disputes raised on this ground are treated on a case by case basis and there is currently no calculation formula targeting this kind of compensation.
We recognise that such damage is frustrating for landlords and deserves attention. We also recognise that charges calculated from the damage compensation formula may be in many cases misproportionate.
A good Check Out Report will note such changes and suggest that they should be “made good” by the tenant . Most of the tenants accept the responsibility if the evidence is there and suggestions for compensation are reasonable. Therefore it is up to the landlord to make a fair judgment and communicate well her suggestion for the deduction to the tenant. An objective approach and fair negotiation will likely prevent a deposit dispute.
Life span of items
Life span of an item is the expected time for the item to serve its functions to a satisfactory standard.
It is important to keep receipts of newly purchased items as this is the one reliable way to prove the age of your item.
If you purchased an item some time ago and you are putting it in use to your tenant later, make sure you exchange up to date written briefing about this with your tenant and agent. Asking the tenant to inspect the item for any scratches or bruises after the installation and requesting them to make few pictures of it before it’s been used can provide you with important evidence in case of need later in the future.
There are many life span guides online and they are not fully consistent in data they present.
You can find below the life span guide by the Tenancy Deposit Scheme, who handles a significant proportion of UK tenancy deposit disputes.
Manufacturers are another reliable source of confirming the life spans of their products.
Tenancy Deposit Scheme (TDS) Product Life Span Guide
Deposit Protection Guide to Deposits Disputes and Damages
MyDeposits Landlord Lifecycle Handbook