What happens if a landlord and tenant enter into a dispute over the deposit?


As a prospective tenant, it is customary to send the landlord a financial deposit as security against the shorthold tenancy agreement. Once the contract comes to an end and all financial obligations towards rent and utilities are complete, the landlord then returns the deposit if he or she is satisfied with the state of the property. Consequently, the tenant and landlord can go their separate ways without a fuss.

However, there are times when a landlord and tenant can enter a dispute over the deposit.

Deposit protection

First of all, it is essential that landlords place the deposit in a tenancy deposit protection (TDP) scheme at the start of the tenancy. These schemes, which are backed by the government, help protect a deposit should a dispute arise. In addition, they also ensure that tenants will receive their money should they meet the terms of a tenancy agreement, don't damage the property and pay their rent/bills.

At the end of the tenancy, the landlord and tenant will have to agree how much of the deposit is to be paid back. If the tenant has broken the terms of the tenancy then the two parties will have to agree how much of the deposit should be returned minus deductions.

This is where a dispute may arise. If the two parties cannot see eye to eye regarding the deposit amount, or if the landlord refuses to engage in the process, the tenant can raise a dispute via their chosen TDP scheme.

Alternative dispute resolution

Instead of going through the Courts, which can be costly for both parties regardless of outcome, there is another route that can be taken. The Deposit Protection Service (DPS) uses a process called Alternative Dispute Resolution (ADR), which employs an impartial adjudicator to decide the outcome of a dispute based on the initial tenancy agreement and evidence provided by both parties.

As the deposit remains the tenant's property at all time, it is the onus of the landlord to prove his or hers argument to the adjudicator. Once a decision has been made, it cannot be challenged by either the landlord or the tenant. However, the result can be challenged through a Court of Law.

Court of Law

As ADR requires both parties to participate in the process, a Court of Law may be an appropriate option for a party that cannot get the other to respond.

However before heading to court, it is preferable to send a 'letter before action' in order to warn the other party that legal avenues will be taken should one not comply. Once the opposing part sees a 'letter before action' form drop through the letterbox, it is usually enough to get them to pay what they owe before the dispute ends up in court.

County courts generally deal with disputes about tenancy deposits will require a fee to start the claim. Consequently, it is advisable to only go to court if you have a claim that you feel is watertight otherwise, if the claim fails, you will lose the court fee. However if you win, you will be able to claim back the fee from the losing party.

As in the ADR procedure, provide the court with all important documents and evidence to back up a claim. This could include the initial tenancy agreement, a record of rent payments, the inventory, photographs of the property and any other documents that may help your case.

Once a decision has been made, the court will order either the tenant to pay the landlord of the landlord to pay the tenant. Appeals can be made through the court of a party feels the judge has not fully considered all of the evidence.

Author: Properties ABC