Guide on Releasing a Deposit
When Should Tenants Receive Their Deposit Following the End of a Tenancy?
Whether a deposit is protected by a custodial or insurance scheme, landlords must return the deposit in full to tenants within 10 days if both parties agree on the amount to be refunded. A custodial scheme may return a deposit following the end of a tenancy if the landlord does not respond to a written request for the return of a deposit within 14 to 30 days (depending on the scheme).
Initiating Repayment – Who and How?
In a custodial deposit protection scheme, either the tenant or the landlord can begin the repayment process. All three government-backed schemes release deposits via an online refund process. Landlords (or the agent acting on their half) are required to let you know how to apply for a deposit refund within 30 days of initial receipt of the deposit. It is important to note that protection schemes won’t release funds without the agreement of both parties. Though tenants can initiate the repayment process themselves, it is always advisable to speak with the landlord prior to making any such request. Clear and open communication between both parties is the surest way to avoid any potential disputes.
In an insured protection scheme, tenants must write to the landlord or letting agent managing the property to request the deposit back. If the landlord does not respond to the written request within 10 days, the tenant should notify the relevant scheme.
When and How can Landlords Make Reductions?
A landlord is entitled to make deductions from a deposit for the following reasons:
- Changes to the condition of the property during the tenancy beyond reasonable wear and tear.
- Any other breaches of the tenancy agreement, e.g evidence of pets or rent arrears.
At the end of the tenancy, the landlord will receive or conduct a check-out report. This report details the condition of the property and lists any remedial work required to restore the property to its state prior to commencement of the tenancy. This includes any cleaning, gardening, decoration, and any damaged or missing items. The landlord must then obtain price quotations for the necessary work and calculate any deductions based on estimated cost. The tenant should then receive a copy of the check-out report and details regarding any deductions that the landlord proposes to make. If the deposit is held in a custodial scheme, the landlord must write to the relevant provider explaining the deductions they intend to make.
It is vital to remember that a deposit is the tenant’s money held in security against their contractual obligations under the tenancy agreement. The landlord cannot make deductions for their own personal gain. When deductions are proposed, it is advisable to have a conversation directly with the tenants prior to sending details in writing. A personal approach demonstrates good faith, and it is much easier to answer questions and resolve misunderstandings over the phone than it is via a letter or email.
Managing a Dispute
In the event of a dispute, it is always better in the first instance for the tenant and landlord to resolve matters amicably between themselves. However, if clear and open communication between parties fails to conclude in an agreement, the next step is to refer the matter to your protection scheme’s dispute resolution service. Dispute services are provided free of charge by all three government-backed protection schemes.
If a dispute is referred to such a service for adjudication, the disputed amount will be held by the scheme while the adjudicator reviews evidence submitted by the landlord and the tenant. We always recommend that landlords use an inventory services company to produce check-in and check-out reports, as evidence produced by an independent third party carries more legitimacy in the process of adjudication. Any conclusions reached by your protection scheme will be final, and should any party wish to challenge the verdict they must do so through the courts.