Tenancy Deposits – Negotiating Dilapidations

So….you paid your deposit when you moved into your rental property.  You’ve been living there, paying rent and been a decent tenant upholding all of your obligations in line with your tenancy agreement.  Now you’ve moved out, you quite rightly want your deposit back.  What amount is the landlord entitled to deduct from your deposit before he returns it to you, and for what?

I get calls all the time from clients who, after they’ve moved out, suddenly find themselves with the landlord from hell.  Some landlords seem to think it’s standard practice to deduct money from the deposit for redecorating, or upgrading their property in preparation for new tenants.  It is not.  If you get into a dispute, the following information might help when fighting your corner:

Fair wear and tear

First of all, whether it’s redecoration required or a new table to replace a damaged one, there must be allowances made for fair wear and tear.  This includes:

1. The original age, quality and condition of the item at commencement of the tenancy
2. The average useful lifespan to value ratio (depreciation) of the item
3. The reasonable expected usage of such an item
4. The number and type of occupants in the property
5. The length of the tenancy

It follows therefore (and is an established legal tenet) that a landlord is not entitled to charge his tenants the full cost for having any part of his property, or any fixture or fitting, returnedto the condition it was at the start of the tenancy.

Avoiding Betterment & Considering Apportionment

A deposit cannot be treated like a “new for old” insurance policy. If landlords could replace items like that, it would be betterment at the tenants’ expense, which is considered unreasonable.

To avoid betterment, the allocation or apportionment of any costs, charges or compensation for damage must take into account all the factors relating to:

1. fair wear and tear,
2. the most appropriate remedy
3. that the landlord should not end up either financially or materially in a better position than he was in at commencement of the tenancy or as he would expect to be at the end of the tenancy having considered (1) and exercised (2).  This would otherwise be considered betterment.

The principles of some very general examples might include:

• A small to medium stain or mark on a carpet or mattress – perhaps £15 – £35 e.g. the cost of a “spot” clean or, this amount as the tenants’ contribution to a full clean of the whole item, or as compensation for the diminution. A small to medium size chip or mark, scratch or burn on a kitchen worktop – perhaps £5 – £25. A landlord could of course decide to have a new carpet put down or a new kitchen worktop installed if they wished, but, they cannot lawfully charge the tenant for that full cost. The costs should be apportioned and shared between landlord and tenant on the principles given above; e.g. Cost of new carpet £500 – apportioned £465 to landlord, £35 to tenant.
• In the rare circumstances where damage (to the worktop/carpet/mattress) is so extensive or severe to the item so as to affect the achievable rent level/let-ability or quality of the property, the most appropriate remedy might be to apportion costs according to the age and useful lifespan of the item. An example of how this might be calculated is below:-

(a) Cost of similar replacement carpet £500

(b) Actual age of existing carpet 2 years

(c) Average useful lifespan of that type of carpet 10 years

(d) Residual lifespan of carpet calculated as (c) less (b) 8 years

(e) Depreciation of value rate of carpet calculated as (a) divided by (c) £50per year

(f) Reasonable apportionment cost to tenant calculated as (d) times (e) £400

This method of calculation could, (with a minor downwards adjustment to (c) to take account of the existence of more than average use of the carpet/item e.g. its useful lifespan had already been shortened prior to the tenancy in question), be used to apportion costs of a carpet/item which had already or previously suffered excessive deterioration.

What happens if I disagree with the proposed deductions?

With each of the Tenancy Deposit Schemes, there are dispute resolution or adjudication processes in case you and the landlord/agent cannot agree on the amount of money he/she is proposing to deduct and/or his reasons for these deductions.  The rules vary slightly for each, but they are in place to ensure that everything ends up fair and above board – you get your deposit back, minus any reasonable deductions – the landlord gets his property back and is compensated for any damages which are considered beyond fair wear and tear.

One of the deposit schemes; the Tenancy Deposit Scheme, (TDS), has heard it all, and published some of the stories behind deposit disputes in a new set of case studies. These are to show how independent adjudicators approach a deposit dispute when landlords and tenants cannot reach an amicable agreement between themselves. It is part of a continuing campaign to make deposit resolution open and easy to understand.  Here’s a link to these case studies – it will help you understand the types of things their adjudication process deals with, and the likely outcome:

http://www.tds.gb.com/resources/files/270411-Case%20studies-cleaning.pdf

Case studies and explanations about the adjudication process already published by the Tenancy Deposit Scheme include the most common of all disputes, cleaning. There is also a monthly Adjudication Digest. The full anonymised studies can be found here:

http://tds.gb.com/adjudication-digest.html

One of the things I am often asked to do, is to assist our clients with departure services – which includes the negotiation of dilapidations.  I’m often able to negotiate the proposed deductions down, sometimes by hundreds of pounds; not all landlords are as informed about their entitlements as you would expect – and some simply push their luck to get as much as they possibly can out of every tenancy. Especially a corporate tenancy.  Don’t just accept what the landlord suggests at the outset, be aware of your rights and negotiate!  Make sure you’ve got proper detailed quotes so you can work out the cost of making good that tiny little hole in the wall made by a picture hook, instead of redecorating the whole room.