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Avoiding tenancy deposit disputes

publication date: Mar 5, 2010
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Unrecovered cash from deposit disputesTenant deposits have been an important element of residential letting since time immemorial. They protect agencies and their landlord clients, provide no benefit to tenants and, before recent legislation made greed and fraud more difficult, were the cause of much injustice.

Many tenants were unable to recover deposits wrongly withheld unless they had the courage, funds and skill to have recourse to the courts.

The trade bodies did not initiate legal protection of deposits. It took years of lobbying and protest from Shelter, Citizens Advice Bureaux and the support of local authority housing departments and tenant relations officers to persuade the government to tack legislation onto the Housing Act.

Seasoned property managers will remember landlords who made excessive claims at the end of each tenancy. When pressed for estimates to justify costs of cleaning, repair and redecoration many quoted their own time and materials in place of professional competitive quotations.

Agents who cared were between a rock and a hard place because they are required to follow the instructions of the principal – the landlord. It took courage to resign instructions or to advise a tenant that a landlord’s claim was unjustified and they should sue for recovery of their money. There were few such cases, only those sponsored by Citizens Advice or neighbourhood law centres ran the course, usually with victory for the tenant.

The need to protect deposits has given birth to a bureaucracy; slow, cumbersome costly, inefficient and unjust. Contact between agents and their landlords and tenants has been lost and much goodwill lost with it.

Is it really reasonable to expect a claims handler looking only at pieces of paper and photographs to come to a sensible conclusion every time – or at all?

Disputes do not arise at the end of a tenancy. They are almost always caused by problems that are evident before a tenancy even begins. Short cuts to save time, instructions that would have been better refused, and poor back office administration all cost money in the long run and lead to loss of reputation.

It takes little skill to recognise a property in poor condition. Harder, perhaps, to recognise a greedy landlord who insists on a rental level that will result in voids and a waste of showing time and travel. It is always less costly to refuse such instructions even in difficult times when the property stock is low.

There is an art in presenting even the humblest property – extra work for the inventory clerk perhaps, or a negotiator visiting to get a feel for the rented home. Apart from cleanliness, do the other essentials check out? Light bulbs, curtains dressed, furniture set out to look like a home, locks that work – all with keys – and no unwanted mail left on the door mat. It’s all common sense.

Practical steps need to be supported by good administration. Once a tenancy has been approved, tenants, often renting for the first time, need a faultless service and a thorough understanding of what they need to do on the day of settlement and signature of the agreement.

A simple folder of information helps. Page 1 deals with completion, how to pay, and what forms need to be signed in addition to the tenancy agreement. The inside pages are a tenant’s guide to housekeeping – how to avoid condensation, stain removal tips – with space for hand written entries that deal with local quirks: rubbish collection days, which bins to use, parking regulations, etc. The back page gives contact details of the agent’s management department with useful phone numbers (hospitals, chemists, takeaways that deliver). The print cost is more than covered by a reduction in tenant phone calls and emails. Other ideas include supplying an ironing board even in unfurnished property – no more iron scorch damage to carpets!

A poor or late response to repair requests can waste all of the goodwill won by the careful first steps. Selecting repair contractors who clean up behind them before leaving, even if the job takes more than one visit to complete, win brownie points for property managers and reduces the incidence of disputes and problems at the end of the tenancy.

Management or landlord visits every 3 months or so are a must for catching problems early. A tenant may not notice a blocked gutter or damaged downspout until damp stains on an inside wall are obvious. Visits are not an excuse to criticise minor housekeeping faults, working couples may not have time to wash up before leaving for work, but should be gently but firmly advised if more serious problems are evident.

Mature field staff with experience of bringing up a family and coping with the multitude of household tasks are a real asset for the agent, while landlords letting their own home who visit can be a positive danger since their enduring memory is of the house when they left having cleaned everything as never before.

The last positive step in avoiding disputes is to help tenants plan their move out well in advance. Few people realise that the Post Office cannot cope with instructions to redirect mail in much less than three weeks, or that BT and some other telephone and broadband suppliers require 5-7 days notice.

Tenants should be reminded to cancel standing orders, advise bankers, credit card companies, and mail or email suppliers of change of address. Issuing a comprehensive cleaning schedule avoids silly errors such as ‘forgetting’ to clean windows or remove oil stains from parking spaces and garage floors.

A high level of customer care, given to both tenants and landlords, generates a level of trust that will assist agents to settle disputes when they do arise. RESIDENTIALlettings A CLAIM IS NOT A DISPUTE Remember, a claim does not equal a dispute. Handled sensitively but firmly, reasonable claims can be settled and agreed through prompt action by the agent or landlord. Speed is essential, landlords who manage their own properties should be offered immediate assistance at minimal cost.

Dispute guideUnless trusted inventory clerks are employed, an immediate inspection of the property is vital to decide whether or not a claim is justified. If not justified, say so, firmly and quickly in friendly reasonable terms by telephone if possible, followed up by email or by letter.

Even difficult landlords find it difficult to pursue claims or excessive claims when confronted by a competent agent. Equally, tenants who hope to get away with damage, lost or broken items can be prevented from avoiding their responsibilities when firmly addressed. Reference to a well prepared inventory stops a lot of argument.

Skilled property managers must want to avoid a dispute, but not at the cost of an unfair decision. Clear action on the lines of, “I want to help you settle this matter without the cost and delay of the Dispute Resolution Service who know neither you nor the property,” is an opening line that often works.

Reluctant tenants are best reminded that a claim for loss of rent will follow if necessary works or repairs are delayed by a dispute that takes time to resolve.

Keep hard copy and computer files in order so that documents can be delivered for third party dispute resolution quickly if necessary. Digging into a bulky file that contains all of the paperwork for multiple tenancies of the same property is a horrible task. One file for long term matters relating to the landlord such as instructions, copies of service agreements and guarantees should be distinguished by file cover colour. A separate folder of a different colour should relate to one tenancy only. Organisation is the key.

Finally, remember that you always have legal recourse and the courts are the final arbiters if matters go seriously awry.