Disputes over deductions made from tenants’ deposits by landlords are one of the most contentious issues in the private rental market today.

Because, despite a supposedly bullet-proof dispute resolution service being available, things often go spectacularly and expensively wrong.

One in six of all tenants have experienced money being deducted ‘unfairly’ from their deposit, it was claimed recently.

So how should it work? Firstly, let’s look at the basics. Legislation currently requires all landlords or letting agents who take a tenant’s deposit to protect it. If your deposit has not been protected, your landlord is BREAKING THE LAW.

In 2007 the government brought in a compulsory scheme that requires landlords to protect a tenant’s deposit by either transferring it to one of the three government-approved deposit protection schemes, or taking out an insurance policy to protect the tenant should the landlord (or letting agent) disappear or go bust.

When a tenant moves out, the landlord can deduct money for three things. These are damage caused to the property; the cost of cleaning the property if it’s left in a mess; and any unpaid rent.

If the tenant disagrees with this then, unless it can be solved amicably, the problem can be referred to the deposit protection scheme involved whose adjudicator will then mediate between the two parties, look at all the evidence and then make a judgement.

Here’s our more detailed guide to deductions that ARE justified, and those which are NOT. Please note though that, as we'll flag up as you read the article, some things are very much up for debate and considered to be grey areas created by the legislation being too vague.

Damage

If a tenant has damaged the fabric of a house or any of the furniture or appliances, then the cost of repairing holes in walls, rips in sofas or cracked windows can legitimately be taken from a deposit.

If the items are so badly damaged that replacement is the only option, then a ‘like for like’ replacement cost is allowed. If a tenant drops the microwave that came with the property on the floor while moving it, then the landlord can deduct the cost of buying a similarly-aged used one, and not a new one.

But what does ‘wear and tear’ mean? Here's an example to illustrate the answer. If a tenant gouges a hole in the lounge wall during a party then they must pay for the wall to be reinstated. But the kind of little scuffs and coffee stain spots you see on most walls are considered legitimate ‘wear and tear’ and the cost of painting the wall, therefore, cannot be deducted from the deposit.

This is a grey area - one person's 'wear and tear' is another's 'deliberate damage' and therefore such disagreements may have to be referred to a dispute resolution adjudicator to be sorted out.

Unpaid rent

If you leave a home at the end of a tenancy and you still owe the landlord rent then the outstanding unpaid rent can be deducted from the rental deposit.

Missing items

This is straightforward; if for example your garden included four sun loungers and one mysteriously disappears during a BBQ with friends then it will be your responsibility to either replace it, or have the cost of it deducted from your deposit.

Pet odours

If your landlord has given you permission to keep a cat or dog at your property then chances are your rental contract will require the property to be deep cleaned when you move out to remove any canine or feline odours. This is a grey area - one person’s spring-clean fresh home is another’s pongy pooch palace, and it’s hard to prove one way or the other. It’s the reason why many landlords are reluctant to allow pets. Fees charged to tenants for having pets are soon to become illegal under the tenant fees ban

What is fair 'wear and tear'

Many landlords incorrectly believe that a property must be returned to them by a tenant in the same pristine state as the day the tenant moved in. This is not correct - living in a home invariably causes the kind of scuffs, scrapes, scratches, small spillages and stains you see in any house that’s been lived in for a while. The law says landlords must 'allow' for wear and tear when a tenant moves out of a property and they are deciding whether to deduct money from a deposit.

Also, the costs of getting rid of these signs of wear and tear should not be deducted from the deposit.

The regulations are also clear about the difference between replacement and repair/cleaning/refurbishment costs.

For example, a landlord cannot use a coffee stain on a carpet as an excuse to replace it. Instead, only the cost of having it professionally steam-cleaned can be deducted from the deposit.

Evidence

The best way a tenant can protect themselves from unfair or incorrect deposit deductions is to ensure a check-in and check-out inventory is completed, detailing in words and pictures the state of the property. Since June 2019 it is the landlord who has had to pay for these, as tenant fees after that day were banned.

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.