Rental brifing: how to avoid deposit disputes

The deposit belongs to the tenant and should therefore be refunded if terms in the tenancy agreement have been met.

If this hasn’t happened, and terms have been broken, then the landlord and tenant will try to agree on any deductions made.

If they can’t agree then the dispute should be referred to the tenancy deposit scheme.

If best practice is followed by landlords, tenants and agents throughout the tenancy period and everything is correctly documented then disputes are less likely to happen when the tenancy ends.

As much as a letting agent has a responsibility when providing a service to both a landlord and tenant, they too each have an important role to play and need to know and understand their own obligations.

The Property Ombudsman (TPO) member agents should be following the codes of practice for residential letting agents in Scotland.

These codes, which have been approved by the Chartered Trading Standards Institute, require member agents to provide the highest level of customer service and protection that goes beyond that required by law.

Agents must take care when preparing an appropriate written tenancy agreement ensuring that all information is clearly presented. Part of the agreement should include how the deposit will be dealt with at the end of a tenancy and the circumstance by which it will be refunded.

Providing such information has been detailed, it’s the responsibility of the landlord and tenant to check the document carefully and raise queries if necessary.

Undertaking a thorough inventory at the start of the tenancy is also a necessary measure in helping to avoid disputes.

The complaints that come into my office often concern deposit disputes where complainants claim that their agent has unfairly deducted repair, maintenance or cleaning costs.

Undertaking work during the tenancy without the landlord’s permission, such as redecorating or buying new appliances have also resulting in a number of disputes and complaints so far this year.

In one example, the complainants, who were the tenants, alleged that they had agreed with the agent that their deposit would be offset against the rental arrears at the end of the tenancy.

They said that they were later pursued by the landlord for the full balance of the arrears when it was claimed that the deposit had been used for dilapidations.

The complainants were advised that the agent could not be held accountable for the actions of the landlord in this regard, but the agent was criticised for failing to communicate with the complainants regarding the disbursement of the deposit in accordance with the TPO code of practice.

In another case, the tenants claimed that the agent unfairly deducted some repair costs from a rent overpayment they had made, instead of making a claim against their deposit.

This complaint was supported. The agent, on the landlord’s behalf, should have made a claim against the complainants’ deposit, which would have allowed the tenants the opportunity to dispute the proposed deductions for repairs through the appropriate deposit adjudication scheme.

The agent was also unable to substantiate their claim that they forewarned the complainant before the tenancy ended that their rent overpayment would be not be returned in full unless the property was left in a satisfactory condition.

The complainants were entitled to be compensated for the agent’s failure to return all of the overpaid rent, rather than attempting to make deductions from the deposit in the usual way and going through the appropriate deposit adjudication scheme.

It was taken into account that the deposit was returned to the complainants, and so ultimately the deductions were a matter between the landlords and complainants.

Katrine Sporle is the Property Ombudsman for Scotland.