As all Landlords should be aware, in April 2007
it became Law that all Assured Shorthold Tenancy
deposits must be protected in a Government authorised
tenancy deposit scheme. There are three schemes
to choose from; the most used probably being the
free custodial scheme; the DPS (Deposit Protection
Scheme).
Whilst
it is important to remember the key elements when
protecting the deposit, such as making sure it is
protected within the set time frames and ensuring
tenants are given copies of the Prescribed Information,
what is more important is ensuring that you have
put the processes in place to ensure that if there
is a reason to utilise the deposit at the end of
the Tenancy you are able to.
A
deposit logged with the DPS cannot be released unless
both the landlord/agent parties agree on the amount
that should be repaid. If the amount cannot be agreed
you need to be sure you have enough evidence to
support your costs. This means precautions have
to be put in place before the tenants even move
in. The most important thing to remember about a
deposit is that it belongs to the tenant unless
it is proven otherwise and therefore it is down
to the Landlord/ Agent to prove why any deductions
should be made.
If
a deposit is disputed, the case will be passed over
to the ADR Service (Alternative Dispute Resolution)
and relevant evidence will be used by the Adjudicator
to assess what percentage of the Deposit will be
distributed to which party. It is therefore really
important that you know what evidence to send in
order to stand the fairest chance of winning the
case.
Pre-
Dispute
Before a deposit is sent to the Adjudicator it is
worthwhile trying to solve the deposit first-hand
as this is much quicker and compromise is possible.
Only after irreconcilably different points of view
should the deposit is passed over to the DPS. The
benefits of trying to agree to the charges with
the tenant beforehand is that a surprisingly large
amount of times we NGU Homelettings have been able
to come to an agreement with the tenant and funds
have been agreed by the tenant. The other reason
is that if the tenants do still oppose any charges
assigned to them you are aware what their argument
will be and will know what evidence to have ready
in preparation for a dispute.
I
have provided a short breakdown of the types of
evidence and how they can be used as supporting
evidence.
Tenancy
Agreement
The Tenancy Agreement is the most important document
on a two-fold level. The Tenancy Agreement is written
proof of the Landlords expectations and rules which
are legally expected to be followed by a tenant
entering the Tenancy and the Tenant’s agreement
to abide by those same rules. The Tenancy Agreement
sets out the foundation for what the Landlord expects
and the consequences for failure to abide by the
rules.
The
DPS Definition of a deposit is: ‘Any single
amount of money paid by the Tenant or a Third Party
in relation to a particular Tenancy agreement as
security against the performance of the Tenant’s
obligations under the Tenancy Agreement, the discharge
of any liabilities, any damage to the property and/
or non-payment of rent during the Tenancy.’
Therefore if there is not a clause in the Tenancy
Agreement no deposit can be taken for failure to
meet that obligation. Equally, if the Tenancy Agreement
does not outline what the consequence of failing
to meet responsibilities are they cannot add charges
or costs from the deposit. In short, if there is
not a “breach” the tenant will be refunded
the deposit.
Inventory
An Inventory is the best tool to support any costs
relating to damages. Taken at the start of the Tenancy
and signed by the tenant the Inventory proves the
condition of both the property and its contents
in specific detail at the start.
NGU
Homelettings complete the inventory in the presence
of the Tenant to ensure that both the item/ condition
grading is agreed as well as any specific points.
The inventory should be dated and carried out no
later than the Move In date, to ensure it is as
accurate as possible. This also proves to the potential
DPS Adjudicator that we provided sufficient support
and opportunity for the tenant to add any existing
damages at the start of the tenancy. When the tenant
leaves, the Inventory can be cross-referenced against
the final condition of the property to provide an
infallible comparison of ‘before’ and
‘after’.
Dated
Photos
Dated photos compliment and visualise all documented
evidence, from the Inventory throughout periodic
inspections of the property, to monitor specific
maintenance issues work or upgrades to the property
and finally to verify the property condition at
the Move Out.
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NGU Homelettings always ensure that the camera
we use displays the date/ time the pictures
were taken. It is important to take photographs
inside cupboards, of walls, carpets, floors,
the outside space (if applicable), working
light bulbs, sinks, behind toilets, doorframes,
plug sockets etc. areas that tenants often
forget or don’t realise they have to
clean when moving out. The highest percentage
of deposit deductions (38%) are made for insufficient
cleaning. So ensuring you have pictures of
the ‘typically’ missed areas can
prove that they were clean to start with.
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Invoices
It can be useful to include invoices from
both before, during and after the Tenancy. Invoices
proving work was completed prior to the Tenants
moving in can eradicate any doubt for example of
the age of a carpet or how quickly you reacted to
a maintenance issue they reported etc. They are
also used by the Adjudicator to prove the cost of
the work you are asking the Tenant to pay for out
of their bond. Therefore itemised Invoices can clearly
demonstrate justification for the cost you are asking
for. Of course if the work is not completed in time
to supply the DPS then written Quotations can be
substituted to provide an indication of price and
if provided by the same Tradesmen/ Contractors carrying
out the work but these will not be given the same
weight as actual Invoices.
Maintenance
Log
This can be used to provide proof of how quickly
work was completed during the tenancy, what work
was done and can also prove whether the tenants
failed to report maintenance. For example a leak
left unreported could cause far more damage which
potentially could be the tenants fault for being
negligent. This is especially useful if the tenant
is disputing the bond based on failure from the
Landlord/ Agent to fulfil their duties and obligations
in respect maintenance being completed within suitable
timescales. Tenants often do this when trying to
deflect attention from costs which they are liable
for by trying to claim the Landlord/ Agent breached
the Tenancy Agreement. However; dates; proof of
communication; Estimates; Reports and Invoices are
a concrete method of demonstrating that Landlord
obligations were taken seriously and performed in
line with regulations and thus can re-vert attention
back to the significant point: what you are charging
the tenant(s) for.
Inspection
Logs/ Photos
Inspection Logs are excellent back up when supplying
evidence for most issues. They log in detail a running
commentary of the property condition, any issues
the tenant has raised and had fixed and how the
tenant has kept the property. Combined with pictures;
Inspection Logs are a continuing timeline of the
property and tenancy history; this is especially
helpful in proving damage that has been caused over
a period of time; for example Condensation caused
by the tenant not ventilating the property, hanging
clothes on the radiators etc.
Correspondence
Log
Any correspondence relating to the issue in question
should be provided; whether it is between contractors,
the tenants, the guarantor or any other relevant
party, as this can show the tone and intentions
of the parties involved.
Rental
Account
Rent arrears can only be proven by providing a complete
Rental Statement. The statement should clearly show
the rent amount due and the rent paid with corresponding
dates. It is also useful to include any pre-tenancy
fees such as Admin/ Deposit/ Credit Check etc. The
reason for this being that the DPS Adjudicator will
calculate how much should have been paid in full
and then cross reference this against the amount
the tenant has paid. Therefore, if Pre-Tenancy Fees
are not included in this total figure the decision
could fall into the tenants favour as it may seem
they have paid all monies due. Any Late Fees or
Charges incurred throughout the Tenancy should also
be made clear. The Office of Fair Trading’s
Unfair Contract Terms Act 1977 is taken into consideration
when linking charges to the clause in the tenancy
that it relates to; if the clause is deemed ‘unfair’
then the Adjudicator may dismiss the charge as unreasonable.
It is useful to provide proof that the rent arrears/
charges have been brought to the tenant’s
attention by supplying proof of any communication
between Landlord and Tenant. It is also worthwhile
explaining in a concise manner why charges have
been applied and what loss the Landlord/ Agent suffered
causing the charge to be added.
Pre-Move
Out Inspection / Photos
NGU Homelettings carry out a ‘First Meet Inspection’
with all tenants once they have handed in their
Notice. This appointment is key to solving Deposit
dispute before they happen. In addition to our Review
Inspections this appointment is treated similarly
to a Final Move Out. We remind the tenants of their
responsibilities as outlined in the Tenancy Agreement
and draw attention to the condition of the property
as listed in the Inventory. Condition that deviates
from these points of reference are listed to the
tenant both verbally and in writing and they are
told the approximate costs of reinstating these
issues. The tenant then has until the date they
move out to rectify any issues and know what the
financial implications of them failing to carry
out these instructions will be. The majority of
tenants appreciate this forewarning and advice and
respond favourably to it. In cases where they don’t;
they are less likely to object as they know deductions
are being made as a result of their failure to heed
advice. Evidence of this forewarning can also be
provided to the DPS to show the Landlord/ Agents
due diligence; which is favoured when Adjudicators
make a decision on entitlement.
Move
Out inspection report/ Move Out Photographs
The Move Out documentation should include a final
report on the property condition. NGU Homelettings
complete a 792 Point Checklist; which includes everything
from cleanliness, whether light bulbs are working
and an exterior visual check which involves checking
whether drains and gutters are clear as well as
whether all refuge has been removed. We also take
comprehensive photographs of all areas inside and
out of the property that match with the original
Inventory photographs. This
allows a fair and precise methodology of comparing
condition and completes the timeline of records
for the full Tenancy; meaning that when referred
to in a deposit you can rest assured the evidence
you need, will support your argument.
The
evidence sent over should always relate specifically
to the cost of the damage / rent arrears that you
are wanting to deduct. However any issues or counterargument
listed by the tenant should also be addressed whether
you consider it relevant to the charge or not; as
failure to acknowledge these statements could result
in the decision being waived unfavourably against
you if tenants points are considered relevant by
the adjudicator.
If you would like to find out more please get in
contact with us.
