Deposit Arbitration

Many landlords believe that the property should be returned to them in the same condition as at the start of the tenancy. Deductions are often claimed from the deposit for minor damage that should be expected in any normal use of the property. Similarly, some landlords might want to replace items in the property which are coming to the end of their natural life, such as an old washing machine where the door handle has broken during the tenancy.

The House of Lords defined fair wear and tear as “reasonable use of the premises by the tenant and the ordinary operation of natural forces”. The word ‘reasonable’ can be interpreted differently, depending on the type of property and who occupies it.

In addition, it is an established legal principle that a landlord is not entitled to charge their tenants the full cost for having any part of their property, or any fixture or fitting, “…put back to the condition it was at the start of the tenancy.” Landlords should therefore keep in mind that the tenant’s deposit is not to be used like an insurance policy where you might get “full replacement value” or “new for old”.

The landlord also has a duty to act reasonably and not claim more than is necessary to make good any loss.

So, for example…

› Replacement of a damaged item may be justified where it is either severely damaged beyond economic repair or, its condition makes it unusable

› Repair or cleaning is a more likely award where replacement cannot be justified

› In cases where an item has had its value reduced or its lifespan shortened, for example by damage, an award of compensation may be appropriate

Put in simple terms, if a carpet was brand new at the start of the tenancy, and the tenancy lasted for 2 years, it would be a 2 year old carpet at the end of the tenancy. If it was damaged beyond repair and the landlord was claiming the full cost of replacing the carpet, this would lead to betterment.

In addition to seeking the most appropriate remedy, the landlord should not end up, either financially or materially, in a better position than they were at start of the tenancy, or than they would have otherwise been at the end of the tenancy after having allowed for fair wear and tear.

In order to avoid allegations of betterment by the tenant, when making any award for damages, the adjudicator must take into account:

› Fair wear and tear

› The most appropriate remedy (ie repair, replacement, cleaning, compensatory award)

› Betterment

It’s very difficult for tenancy deposit protection schemes to provide strict guidance on the value of deductions landlords and agents should claim from the deposit. Because there are so many varying factors for each dispute, such as the size of the property, the number of occupants, the quality and lifespan of the property and contents, each case must be considered on its own merits and no two cases are ever the same.

However, adjudicators are likely to consider the following common factors when coming to a particular decision:

› Length of tenancy

The longer the tenancy, the more natural wear and tear there will be. The adjudicators will also consider how long the items have been in the property and if they have seen a few tenancies come and go.

› Number and age of occupiers

The more bedrooms and occupants, the higher the wear and tear that should be expected. If you are letting to a family with children, factor that in too. Scuffs and scrapes are unavoidable in normal family life. A property occupied by a single person should see far less wear than a family of four, so bear this in mind when it’s time for tenants to check out.

› Wear and tear vs. actual damage

When is it no longer normal wear? Damage (for example, breaking something) is not wear and tear, as the item will either have to be replaced or repaired. Light marks on a carpet might have to be viewed as unavoidable. On the other hand, damage such as nail varnish spills on the floor or iron burns that have occurred due to negligence could see the tenant liable for repair. Consider whether the item has been damaged or worn out through natural use versus negligence when making a judgement call.

› Quality and condition

Consider the original quality of the item at the start of the tenancy and what it originally cost to provide. It would unreasonable for a landlord to provide a cheap and flimsy set of bedroom furniture and then blame the tenant if the items are damaged through normal usage.

Adjudicators may expect to see receipts or other evidence to confirm an item’s age, or its cost and quality when new. Another consideration is the quality or fabric of the property itself.

Many new builds tend not to be quite as robust as older properties or conversions. Walls, partitions and internal painted surfaces tend to be thinner and therefore likely to suffer more stress, particularly in higher footfall areas of the property. This inevitably means that there is a greater need for redecoration at the end of the tenancy period.

An adjudicator may therefore consider more than a simple contribution to the cost of redecoration from the tenant to be unreasonable.


Source: Deposit Protection Service

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