If a landlord believes they have suffered financial loss due to a tenant they can make deductions to the rental deposit held within a government-authorised deposit protection scheme. While the vast majority of deductions are agreed between tenants and landlords themselves, those that are disputed will be judged by an adjudicator based on the deposit use clause.
This outlines, for example, if the deposit can be held to cover the cost of cleaning, missing items, outstanding rent or unpaid utilities.
At an average of £1,005 per tenancy, the cost of a deposit may have fallen by 1.2 per cent year on year, but it is still a considerable sum and so tenants are well within their rights to challenge any deductions made if they feel they are unfair.
The latest figures show that over 4.5m tenancy deposits are protected across the UK rental market, up 2.3 per cent on the previous year alone. This means a huge £4.6 billion is held in deposit protection schemes, again up 1.1 per cent on the previous year.
The good news is that the number of challenges being made and the sum that is being challenged have both shown an annual decline.
The average amount disputed fell from £793 to £784 in 2021, while the total number of disputes also declined by 12 per cent to 34,444 last year. This means that the number of disputes as a percentage of all deposits held has dropped as well, down from 0.9 per cent to 0.8per cent.
But despite such a small number of tenants disputing the deductions made to their tenancy deposit, mydeposits estimates that the total value of rental deposit disputes sat at almost £27 million in 2021.
The most common reasons?
Cleaning was by far the most contentious issue between landlords and tenants when it comes to deposit disputes, with damages to the property, redecoration costs, gardening and rent arrears also ranking high.
Eddie Hooker, CEO of mydeposits and the Hamilton Fraser Group, says: “It’s only natural that a certain number of landlords and tenants won’t see eye to eye when it comes to rental deposit deductions. On the one hand, the deposit held is a considerable sum of money for the average tenant. At the same time, landlords will understandably expect their property to be returned in the same condition as it was let and to be paid the rent owed in full.
"The good news is that deposit deduction disputes are actually few and far between and account for less than one per cent of all deposits held within authorised protection schemes.
"We’ve also seen a reduction in total disputes lodged, which suggest the rental sector has become a more harmonious place over the last year, or that tenancies post-pandemic are increasing in length, resulting in fewer end of tenancy issues. Either way, it looks as though the sector is heading in the right direction where tenant-landlord relationships are concerned.”
