Tenancy Deposits – what tenants need to know

The fundamental rule that is applied by all Judges and Adjudicators when making decisions regarding tenancy deposits is

It is the tenants money

Not the landlords. So if the landlord wants to make a deduction from your deposit money they have to prove, by way of evidence, that they are entitled to do so.

This is why landlords have such a poor record at adjudication.

Preliminary point

The tenancy deposit rules I am about to discuss only apply to assured shorthold tenancies. However as most rented properties are ASTs this won’t help many landlords.

The rest of this article is written on the basis that the tenancy is an AST.

Lets take a look at what landlords need to do before they can make a deduction from your money.

1 They need to protect it with one of the authorised tenancy deposit schemes

If they don’t do this, then they are in a very difficult place. They have put themselves outside the law and you are entitled to bring a claim against them for a penalty of up to 3x the deposit sum.

If you leave having caused a lot of damage to the property, landlords are not entirely without rights. However any claim they bring against you for damage will be subject to your right to claim the penalty – which the Judge cannot refuse to make if the landlords have failed to protect the deposit.

Landlords will also be unable to serve a valid section 21 notice on you until either a claim for the penalty has been concluded or they have refunded the  deposit money back to you – and they cannot offset rent arrears or other money due to them unless you agree to this.

2. They also need to serve ‘prescribed information’ on you

This is as important as protecting the deposit and similar penalties apply. You can find out what the prescribed information needs to contain from the regulations here.

All the prescribed information must be provided. If they leave any part of it out this could affect (for example) their right to evict you under section 21. See here.

Note that the prescribed information can give the agents details instead of the landlords, if the agents are dealing with the deposit protection and/or the management of the property.

3. They need to have a proper tenancy agreement clause

This is a clause authorising them to make deductions from your money if you break the terms of the tenancy agreement. If this is not there – they can’t make deductions and any claim at adjudication will fail.

Most standard tenancy agreements will have such a clause as a matter of course. However its worth checking.

4. They have to prove the condition of the property when the tenancy starts

This is an essential part of proving their case. If they cannot prove what the property was like when you moved in – how can they show that you have caused any damage?

This is why all landlords and agents will (or should) now have a ‘check in’ report, often prepared by an independent firm of inventory clerks, setting out in detail the condition of the property.

It is at this stage that you need to take care. If the property shows that, for example, the lounge carpet is unblemished at check in but the checkout report shows a serious burn mark – you will be blamed (and charged) for this.

Which will be unfair if actually the mark was there when you moved in.

So you need to check the ‘check in’ report VERY carefully and make sure that any damage is shown there. If after you move in you find something else – email the agents or landlord and tell them. This will help you if you later get blamed for this and charged for repair or replacement.

5. They have to prove that any damage or loss was caused by you

There are two points to consider here:

• The timing of the checkout report – if it was done some time after you moved out, how can they prove that the damage was done by you?
• Fair wear and tear – if the damage was caused simply by the normal use of the item or property, it cannot be charged to you.

6. They have to prove loss

Realistically this means they need to have receipts to prove that the work was actually done or the item has been replaced. If they can’t show that the damage has actually cost them anything, they cannot claim any money from your deposit.

Note that if the landlord does not replace or repair as he wants to sell the property but when he tries to sell the property its value is reduced because of the damage done by you, he may be able to make a claim for this – see here.

7. If you have made deductions from the rent, don’t use adjudication

There are several situations where tenants are entitled to make deductions from their rent. The most important perhaps being when they have carried out essential repairs where the landlord has failed to do this after being asked (see here for more information on the procedure).

However, if you have done this note that it is not something Adjudicators can rule on – they will just award the money to the landlord as you have not paid your rent.

So if you are in this position you need to go to the small claims court and refuse adjudication. The Judge will also have the power to award you compensation if this is appropriate.

And finally

Tenants are actually in rather a strong position so far as deposits are concerned.

Landlords often complain that tenants ‘get away with it’ after being forced to repay deposits after the tenants have caused damage, normally because they did not have sufficient evidence to prove it.

However, you do need to protect your position and make sure that you do not get blamed for damage that you have not done.