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  • Deposit Protection

    Pre-tenancy deposit responsibility - tips



    Welcome to Day 2 of "Lifecycle of a Deposit" Week, powered by TDS, with content supplied by the TDS team.  Over the next few days, we are charting the lifecycle of a tenant's deposit - from pre-tenancy to end of tenancy.

    Today, Debbie Davies, Assistant Director of Business Development at Tenancy Deposit Scheme (TDS), outlines what steps landlords and agents could take at the beginning of a tenancy to reduce costly disputes arising when it ends. 

    When a tenancy begins, the landlord/letting agent is obliged to protect their tenants’ deposit in a government-backed protection scheme (read more about how to correctly protect tenancy deposits in tomorrow’s article) - however, there are important steps to take before reaching that stage.

    The outset of a tenancy is paper-work intensive and can be frustrating for landlords, but taking the time to prepare the key documents thoroughly, before the tenancy starts, will keep disputes to a minimum and make them easier to resolve.

    ‘Deposit Use’ Clause

    The Tenancy Agreement is a key document in any Assured Shorthold Tenancy (AST) as it outlines the details of the agreement, made between both landlord and tenant, as to the rights and responsibilities of both parties in relation to that tenancy and the property itself. 

    If you want to ensure you have the right to claim from tenant’s deposit against costs incurred through damage, uncleanliness or redecoration of your property, as a result of the tenancy, the tenancy agreement should explicitly say so and a ‘deposit use’ clause is a must.

    Failure to include what the tenant is responsible for and what deductions from the deposit can be claimed for could ultimately cost a landlord dearly at the end of a tenancy, if the property is not returned to a sufficient standard.

    Should a tenancy end in a dispute over a deposit deduction for dilapidations, a TDS adjudicator will rely on a ‘deposit use’ clause, to guide them as to which items can be considered as claims against the tenants deposit.

    Five Top Tips

    • Outline what the deposit can be used for
    • Put a clause in your tenancy agreements obtaining consent to adjudication by all joint tenants for new tenancies
    • Include unpaid utilities like unpaid council tax or water charges under what the deposit covers
    • The clause should include whether tenants’ deposits are joint or severally liable
    • Use clear, concise language that tenants and adjudicators will understand – avoiding jargon

    Inventories

    Across the industry, inventories are completed to varying standards and our dispute resolution teams and adjudicators regularly have to decipher unclear inventories to assess deductions fairly.

    A good inventory should be an accurate snapshot in time of the contents, condition and cleanliness of the property before the tenancy starts. The inventory should then be supplied to the tenant for them to agree it as an accurate record. The inventory should be honest and accurate to avoid potentially lengthy disagreements.

    It is best practice for the signature of both parties to be on the inventory to demonstrate that both parties have seen and agreed to its contents. That, however, may not always be possible, in which case an evidence trail confirming receipt and agreement of the inventory, including the opportunity to comment or disagree with its contents, should be supplied.

    While inventories will outline the condition of a property and its contents, acting as a yard-stick for how the property should be returned, adjudicators will take into account the fair wear and tear to be expected over the duration of the tenancy.

    Five Top Tips

    • Include a glossary of terms if you are using technical terms or abbreviations
    • Dated photos can help bring the words to life, but shouldn’t replace an inventory
    • Evidence your tenant agreed with your assessment of the property by having them sign the report
    • Inventories should be updated for every new tenancy
    • Pay attention to detail – the majority of awards that adjudicators make for deposit deductions are based on the content of the inventory report

    Preparation is better than cure when it comes to tenancy deposits, so ensuring you have your ducks in a row before the tenancy begins is paramount to ensuring a successful tenancy.

    _______________________________________

    Content review:

    Monday - Launch of "Lifecycle of a Deposit" Week!

    Wednesday - 3 steps to protect a deposit correctly

    Thursday - How changes to a tenancy affect the deposit

    Friday -  Managing the deposit at the end of the tenancy

    Saturday - How to think like an Adjudicator to solve disputes

    Tune in daily for fresh content about how to protect a tenant's deposit correctly at the start of the tenancy, right through to the return of the deposit at the end of the tenancy.

    Thank you to TDS for supporting landlord education and Property Tribes.

    If you would like to take advantage of the off-line training offered by TDS, you can find a list of workshops >>> here.

    SEE ALSO  -       Maximum deposit landlord allowed to take?

    UP NEXT -           Tenancy Deposit Scheme: Custodial or insured?

    DON'T MISS -      Existing tenant with no deposit

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