What can a landlord deduct from a tenancy deposit?

Don’t make a schoolboy error and lose out in court

Recently, a DIY buy-to-let landlord asked us a question about a tenant’s deposit. The landlord wanted to know what deductions if any, she could claim from the deposit. She had requested money be withheld from the deposit to cover damage and cleaning. The tenant disputed this, went to court, and won. Before we examine why the landlord lost her case, let’s examine what she should have been able to deduct if she hadn’t made what turned out to be a costly mistake.

Deductions you can make from the deposit

There are four items for which you can deduct from the tenancy deposit. These are:

  • Unpaid rent
  • Damage to the property
  • Missing items
  • Cleaning costs

You should state these in the tenancy agreement, and talk your tenant through them when they sign the agreement. However, even if these items are not detailed explicitly, you can still make the deductions if you include more general wording such as, “Deductions from the tenancy deposit may be made to cover costs associated with any breach of the tenancy agreement”.

If you do wish to make deductions, you must tell the tenant (in writing) what those deductions are for and how much they are.

The landlord who asked us the question did all of this. So far, so good. Let’s continue.

Costs that you cannot deduct from the deposit

There are some items for which you cannot make deductions. These include:

  • Any costs associated with re-letting the property
  • Unpaid utilities, if the tenant’s name is on the bill

You also cannot make any deductions for what might be considered normal wear and tear. Read our article “Do you know your wear and tear from your damage?” for more information about this.

A landlord can’t make deductions if no damage is caused; for example, just because a tenant had a noisy party. This applies even if your tenancy agreement said they couldn’t.

Now, let’s look at each of the items for which you can make deductions in a little more detail.

·      Unpaid rent

This should be easy to evidence. If the tenant hasn’t paid some of the rent they should have done, you can deduct this from the tenant’s deposit. If the amount owed is more than the deposit held, you can take the tenant to court for the balance.

·      Damage to the property

The tenant should leave the property in the same condition it was in when they started their tenancy. If there has been any damage caused – over and above what would be considered normal wear and tear – you can make deductions for the cost of repair or replacement.

You might make deductions for damage such as:

  • Burn holes in furniture
  • Damaged walls – such as holes caused by hanging pictures up
  • Ripped curtains and damaged carpets
  • Missing doors from cupboards and cabinets

Remember, normal wear and tear – such as scuffed floors and minor scrapes to the paintwork – would not be classed as damage.

When replacing damaged property, you can only do so on a like-for-like basis. You cannot replace a 10-year-old carpet with a new carpet and expect the tenant to pay the full cost.

·      Missing items

OK, so you’ve checked the property and you notice that the dishwasher has been removed. It was there when your tenant moved in. Now it isn’t. You can withhold money from the deposit to replace any missing item – again, on a like-for-like basis.

·      Cleaning costs

Your tenant should leave the property clean and tidy when the tenancy ends. It is quite acceptable that you deduct the cost of professional cleaning to bring the property back to the state of cleanliness it was in at the start of the tenancy. You should state this in the tenancy agreement, though you may also include a clause that states the tenant must have the curtains and carpets cleaned professionally before they move out.

The mistake the landlord made

The landlord who asked us about the tenant’s deposit did almost everything right. Her tenancy agreement included the cleaning clause and wording that confirmed that deductions could be made for the above items.

The tenant was not behind with the rent. In fact, the tenant had been exemplary in this regard, paying rent two weeks in advance every month.

However, there was some damage to carpets and curtains, and some damage to furniture that had been supplied, as well as a cat flap that had been installed in the rear door, for which the landlord wanted to claim against the deposit. She also wanted to claim for professional cleaning. The tenant disputed these costs, went to court, and won, because of a schoolboy error that she had made. She hadn’t presented a professional inventory.

You cannot afford to screw up a property inventory

When the tenant moved in, the landlord had presented a property inventory to be signed. It was a single sheet of paper, hand-written, with each item in the property and the condition of that property noted. One line per item, with one of two remarks: ‘good condition’ or ‘fair condition’. The rear door wasn’t mentioned. The cleanliness of the house was noted as fair. There was no supporting evidence, such as photos or video. And the inventory hadn’t been signed.

In court, the tenant claimed that they left the property in the same condition it had been in at the start of the tenancy. They provided photographic evidence that they claimed they had taken at the beginning of the tenancy period. While the landlord refuted this, she could not produce counterevidence. The judge found in favour of the tenants.

The moral of the story is to ensure that you provide a professional property inventory and that you have the tenant sign it. When we described our services to the landlord and showed how we would have prevented her tenant from keeping the whole deposit despite the damage caused, she signed up as a client.

In my next article, I’ll discuss how to be professional with your property inventory. For now, to learn how we help to protect your buy-to-let business and your sanity, contact Ezytrac today at +44 0 1522 503 717.

Live with passion

Brett Alegre-Wood

By |2019-09-04T09:39:53+00:00September 13th, 2019|Deposit Protection, Landlord lessons, Property Management|0 Comments

About the Author:

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Ezytrac. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.