How can landlords improve negotiations around end of tenancy deposit deductions?
Justine Tomlinson, Head of Operations at NRLA partner No Letting Go explains more about inventories, end-of-tenancy disputes and ten pieces of best practice advice for landlords.
The TDS (Tenancy Deposit Scheme) annual review 2022, indicates that deposit disputes have risen slightly but remain low over the last year, at around 1%. This is great news for the industry, demonstrating professional standards are being upheld for both landlords and tenants. Good quality inventory management is pivotal in ensuring disputes remain low, but these figures only illustrate part of the work that goes into this part of the tenancy process. Many landlords dedicate time to communicate clearly with tenants both at the start and end of the tenancy about the end of tenancy process, to avoid them having a poor experience at the end of their tenancy journey.
No Letting Go conduct thousands of inventory management reports a month, so inevitably we get involved in some areas of end-of-tenancy disputes. Our complaints run at less than 1% and the majority of these are fairly easy to resolve. However, there are some complaints that take up a lot of time, and this can be due to a lack of understanding about the deposit process from both tenants and landlords.
The main cause of protracted disputes, often arise from the assumption that the deposit is like an insurance policy – it is designed to put the landlord in the same or similar position they were in at the start of the tenancy, and inventory management is the tool to ensure this happens.
It is difficult to find another service/industry that resembles rental property deposits, so let’s look through the lens of a new landlord, or a landlord who has not experienced many dilapidations in a property previously:-
• You cannot claim for fair wear and tear, but there are lots of variables that determine “fair” – such as, number of tenants, length of tenancy, where abouts wear and tear has occurred in the house, 3cm scratch v 6cm etc.
• Everything in the house has a different lifespan from cookers to carpets, so you must first grade the quality and then factor this into an apportionment calculation.
• You can claim for damage to a carpet, but just the isolated area of damage, not the whole carpet, so probably cannot be satisfactorily fixed – which doesn’t make a lot of sense to many landlords
• Landlords may report “but it was disgusting/filthy”, but it is against industry best practice to use such terms, so we sanitize it to “poorly cleaned” – it can feel emotional when faced with a ruined property.
I can add a much longer list but the point is the rules of engagement for deposit claims are not always easy to decipher. So, I do sympathise with landlords who are trying to negotiate satisfactorily for their tenants.
The number of complaints that take days to resolve is thankfully small. However, there are additional tools that can be used to smooth the way of a potential dispute arising, and ensure tenants are adequately informed:-
10 Tips and Tools that will assist with Deposit Deductions
1. Grading Cleanliness – Rather than just saying “clean condition” have a comprehensive glossary of terms. No Letting Go has 6 within its glossary, as it is the most disputed item.
2. Proof of pre tenancy cleaning – Adjudication data indicates that landlords often do not provide evidence that show properties were professionally cleaned at the start – particularly for ovens and carpets.
3. A thorough check in inventory and check out – This is the main evidence for adjudication as it shows the condition of the property at the start and end of the tenancy.
4. Mid term visits – Really helpful for landlord’s to prove they have taken steps to look after their properties and where appropriate given tenants advice on their tenancy obligations.
5. Copies of all communications – Are crucial to show that tenants’ maintenance requests have been acted upon and/or to advise tenants of theirs – keep copies of all text/WhatsApp messages as well as emails.
6. Evidence that the Inventory was sent to tenants - landlords must be able to evidence the Inventory was sent to the tenants together with follow up emails if they do not sign/return it
7. Deposit Deduction Template – Deposit providers offer this to be used for both landlord and tenant, it provides an excellent structure so both parties can understand how the process works by viewing and adding comments (and will form the basis of a claim if all else fails).
8. A Guide to Product Lifespans – This is an excellent aid particularly with a longer than average tenancy, or where the property was in “average” or below condition at the start of the tenancy.
9. A Guide to Fair Wear and Tear – Useful for landlords and tenants to understand what is fair and what is excessive – I have attached the No Letting Go Guide but A Guide to Deposits, Disputes & Damages is also very useful which can be found with the deposit providers.
10. Pre check out report – Will highlight what items the tenant needs to address ahead of the end of tenancy, useful for some tenants.
