#AskTDS: The importance of understanding deposit use clauses in deposit disputes RSS feed
At the beginning of a tenancy, your landlord or letting agent should have provided a tenancy agreement for you to read and sign. The agreement is a contract between you and your landlord which spells out where the parties responsibilities lie. For example, it will say how much rent is due and the condition the property should be returned in at the end of the tenancy.
The tenancy agreement establishes the liability for a claim on the deposit and, having met this requirement, other forms of evidence will be needed to support claims for deterioration of the property, cleanliness or rent arrears. Typically, the adjudicator will require supporting evidence such as comprehensive signed inventory, check-in and check-out reports, dated photographic/video evidence, invoices, rent statements; as well as any other documented correspondence between the parties that supports the claims being made.
Crucially, if you have paid a tenancy deposit, the tenancy agreement should contain what is known as a ‘deposit use clause’. The purpose of these clauses is to outline what your tenancy deposit can be used for and this can be useful in the event of deposit disputes. For example, it should state whether a landlord can request deductions from the tenancy deposit to cover repairing any damages cause during your tenancy.
One landlord recently got a fright when they made claims against the tenant’s deposit for cleaning, damage and redecoration; the landlord had good evidence including a well-prepared check-in and check-out report, estimates for the cost of making good and invoices to show the age, cost and quality of affected items. Having accepted all the claims were entirely justified, the adjudicator was still unable to award any of the deposit to the landlord.
The reason? The tenancy agreement referred to the tenant having paid a £1,000 tenancy deposit but did not have a clause setting out what it could be used for at the end of the tenancy. As the tenancy agreement did not say that the deposit could be used to pay for cleaning etc, it had to be returned to the tenant.
The fundamental principle is that the deposit belongs to the tenant until the landlord establishes a valid claim to it; and the burden of proof is always on the landlord/agent to prove they are entitled to some or all of the deposit money.
Whenever deposit disputes occur, the role of the adjudicator is to make an award on the basis of the evidence presented by both parties. In all deposit disputes, the first piece of evidence which an adjudicator will require is the tenancy agreement. Forget this, and your claim will most likely fail at the first hurdle. To support a landlord’s claim, the adjudicator will expect to see a clause within the tenancy agreement which relates specifically to the deposit, detailing the reasons why it may be retained. It is therefore very important that customers review their tenancy agreements on a regular basis to satisfy themselves that they have covered everything they might wish to claim for.
Please refer to our information booklet “A Guide to the Tenancy Deposit Scheme Regulations” which contains a section on dealing with disputes and explaining the importance of the types of evidence expected.
Tenancy Deposit Scheme (TDS) is a government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.
We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.
TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.
TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.
TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.
TDS Northern Ireland: TDS is Northern Ireland's leading and only not for profit tenancy deposit protection scheme.
TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.
These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.