6 top tips to help your agency navigate deposit disputes [+ podcast]
Suzy Hershman, Dispute Resolution Lead at HFIS, shares advice on how agents and landlords can help make the deposit dispute process easier for all parties involved.
Less than 2% of all tenancies reach the dispute stage - yet negotiating between all parties to reach a fair resolution can be a drawn out process, involving detective work to establish the key details.
Landlords and agents need to fully understand the role of communication, evidence, and "fair wear and tear" to navigate deposit negotiations in the best way - or avoid them entirely.
1. Make sure that the tenancy agreement is explicit
Tenancy agreements are valuable for negotiation and adjudication, reminding both landlords and tenants of their responsibilities.
Most tenancy agreements will remind tenants that they can't alter the property without permission, which the landlord can't reasonably withhold.
The addition to this is that, once permission has been given, the landlord needs to consider stating in writing a condition on how to return the property.
Landlords just need to be aware that, if they don't give permission without a condition to return it, the tenant will not have to return the property to that original state.
2. Keep an ongoing record of the state of the property
A good inventory will help you start as you mean to go on. It needs to be detailed, and to differentiate between cleanliness and condition, because they're two very different things.
Not having an inventory will weaken any case, and you're unlikely to succeed at an adjudication - unless the tenant admits to causing the problem, or you have an invoice to show whatever you're claiming was new when the tenancy started.
The inventory isn't the only opportunity to record evidence on the property’s condition. Mid-term inspection reports with updates on how the property is being maintained - including the state of appliances, decoration, or other fittings - paint a really good picture of how things have progressed during a tenancy.
3. Embed photos in the inventory report to provide extra clarity
From an adjudication perspective, we always need to verify the evidence. If you take pictures of the property to support the inventory, they need to be embedded in the report.
This verifies the date they were taken and will be good evidence as long as the tenant had a copy sent to them, and had the chance to accept or amend that report.
We, as adjudicators, prefer the written word in conjunction with photos, as photos are often only part of the whole story.
You can't photograph every inch of the property, so, if you've got something in writing to support it - especially relating to any marks, damage, or lack of cleanliness - it solidifies the point.
4. Record condition and quality in detail
As part of fair wear and tear, we look at the age of each item raised in a dispute - do we know how long it's been since it was redecorated? Do we know how old the fridge was when the tenant moved in? Do we have any invoices to confirm an item or area’s age?
We'll look at the quality. Is the brand name visible in the inventory photo and are the make and model number recorded in the inventory?
Something like a sink in a bathroom or a toilet will have a longer lifespan than the decoration. When it comes to decor or carpets, we start at a five-year lifespan, but that can be extended, based on the inventory and other evidence.
A carpet might be five years old, but if it was in really good condition a year ago, you've already extended its lifespan.
Recording this detail will make calculating any fair wear and tear and negotiation or adjudication for any damage at the end of the tenancy so much easier.
5. Maintain good relations with your tenants
If you build and maintain a good relationship with your tenants right from the beginning and allow them the quiet enjoyment of your landlord's property, that should help to encourage them to report any defects and prevent damage getting worse, which would cost more to put right.
Good communication will make any negotiation during or at the end of a tenancy much easier - or can help you avoid them altogether.
6. Manage your expectations on the results of any claim
Your tenants are only responsible for putting something back into the position it would have been in if they hadn't caused excessive deterioration.
The landlord is responsible for the proportion of any cost that would improve this position. This is where fair wear and tear must be considered, and the cost that’s being looked at must be reasonable.
Wear and tear only applies to condition and not cleaning. Tenants can be informed that, if they've been living in a property for six years and it was given to them cleaned to a professional standard, it needs to be returned clean to a professional standard.
However, if it wasn't, the tenant is only responsible for returning it cleaned to the same standard. Landlords and agents can't then have a professional clean and charge the tenant the whole amount. It's always a question of degree, balance, and understanding.