Tenants empowered in disputes over deposits

Landlords are soon to be held to account for deductions, writes Esther Shaw

If you've ever rented a property, you may know the feeling: the deposit you put up when you moved in is returned only in part, or perhaps not all, when you move out.

If you've ever rented a property, you may know the feeling: the deposit you put up when you moved in is returned only in part, or perhaps not all, when you move out.

A deduction for genuine damage or breakages is one thing; losing out because of a highly contestable claim such as wear and tear or lack of cleanliness is quite another.

One in five tenants say they have suffered from landlords withholding their deposit without good reason, government figures reveal.

Most property owners ask new tenants for a deposit when they move in as security in case they damage the home or fail to pay rent. Typically, this sum is equivalent to one month's rent, although some landlords will ask for up to twice this amount.

But if problems crop up when you move out, things won't be made any easier by a lack of protection. There are no rules on how a landlord should repay a deposit, how much you should hand over in the first place or how the money is held while you're a tenant.

Now, however, this predicament for tenants looks set to change. The Housing Bill passed in November last year included provision for a compulsory scheme to safeguard tenants' deposits. This will make it unlawful for landlords to charge a deposit unless they do so via the proposed scheme.

While details are still being finalised, it is likely to ape a programme already up and running: the Tenancy Deposit Scheme for Regulated Agents (TDSRA). This voluntary, independent arbitration initiative, which is backed by industry bodies including the Association of Residential Letting Agents (Arla), allows a third party to hold tenants' money and aims to ensure deposit disputes are swiftly resolved.

Unfortunately, tenants can't volunteer their own landlord as a member; it's up to the latter to apply, and they can do so only via a regulated letting agent, with a joining fee on top.

Malcolm Harrison of Arla says around 650 agencies have so far joined the scheme, and that landlords are showing a willingness to take part.

Short of finding a property whose landlord belongs to this body, there are steps you can take to protect yourself until the government scheme takes off.

An inventory check when you move in is a must, says Judienne Wood, lettings director of estate agent Kinleigh Folkard & Hayward. "This should list the condition of all the contents for which you are responsible."

Scrutinise this inventory, agree it with your landlord and then sign and date it. Then, once you've handed over the deposit, make sure you get a receipt.

It is also important to formalise your financial arrangement with the landlord. "Deposits are not regulated; all you've got to go on is what is agreed by the two parties," says Robert Horsey, a partner in the property litigation department at solicitors Ashfords. He recommends drafting a written agreement for the deposit at the outset - stating how much you are paying and where the money is to be held.

When your tenancy is up, make sure the landlord reviews the property while you are present. He or she can make reasonable deductions from the deposit for damage, unpaid rent, missing items and cleaning, says a spokeswoman for Shelter. "The amount your landlord can keep is only the value of repairing or replacing any damaged items 'like for like' - not the cost of the item brand new," she explains.

"You are only required to put right any damage or clean any items soiled above normal wear and tear."

Some people choose to withhold their last month's rent to cover any potential loss - but this is not a legal right and your landlord could take you to court to recover it.

If you think your money is being kept back unfairly, you should write a letter demanding its return and asking why the cash is being withheld. You are entitled to a full financial breakdown from the landlord, including details of any rent owed and receipts for the cost of repairing damaged items.

If you're not happy with your landlord's response, contact the Citizens Advice Bureau, which will help you decide what course of action to take to try to reach a settlement.

Be prepared for a long - and potentially expensive - case if you go to the small claims court as a last resort.

CUSHION COVER STORY

Denis Davies, 25, and his house-mate paid a high price for falling foul of a tenancy agreement.

A visitor to their property broke a no-smoking clause agreed beforehand and left a tiny cigarette burn in a sofa cushion.

At the end of their six-month tenancy, a large part of their £900 deposit was withheld.

Instead of replacing the cushion cover, their money bought a more expensive sofa and paid for cleaners who, Mr Davies says, brought the property up to a higher standard than it had been when they moved in. The two ended up with just £320.