Deposits from assured shorthold tenancies need to be protected in the UK with one of the 3 authorised deposit protection services. Every year, The Dispute Service prepares a statistical briefing which provides data on the work of the tenancy deposit schemes. The data from the report is useful for understanding the key trends of the private and social rented sector and how landlords and tenants can protect themselves from the most common deposit disputes. The report is introduced by high level renting statistics from the Housing Review which are useful for providing context to the dispute statistics. This article summarises the key insights from the 2020-21 statistical briefing and shares guidance on the deposit dispute process.
What is the Dispute Service?
The Dispute Service is a Government approved, not-for-profit company that provides Insured and Custodial tenancy deposit protection (TDP) in the private rented sector. The Dispute service will provide adjudication services in the event of a deposit dispute by a landlord or tenant.
How many people rent a property in the UK?
According to the Housing review:
- In England, just under 9 million homes are rented, of which 4.1 million are social rentals,
- In Wales just under half a million homes are rented, of which 230 thousand are social rentals.
- In Northern Ireland, 250 thousand homes are rented, of which just over half are social rentals.
- In Scotland, 800 thousand homes are rented, of which 600 thousand are social rentals.
How many deposits are protected in the UK?
According to TDS:
- In England and Wales, 4.3 million deposits are protected and the average deposit is just over £1,000.
- In Northern Ireland, 63 thousand deposits are protected and the average deposit is just over £600
- In Scotland, 220 thousand deposits are protected and the average deposit is just over £700
The gap between the number of homes in the private rented sector and the number of deposits protected can partially be explained by properties which do not take a deposit or which are not covered by tenancy deposit regulations. However, many deposits are still not protected which is illegal and risky. Landlords will owe 1 to 3 times the deposit amount if they did not protect the deposit within 30 days of receipt or provide the prescribed information at the start of the tenancy.
How many deposits are disputed?
In England, Wales and Northern Ireland, the percentage of deposits disputed is under 1% whereas 3% of deposits are disputed in Scotland. Across all regions, the number one dispute is cleaning followed closely by damage claims. Cleaning disputes are likely to continue dominating following the ban on cleaning fees in the Tenant Fees act 2019 and the rise of pets in rentals. The least claimed dispute is rent arrears which accounts for 15% of claims.
Who is most likely to raise the dispute?
A dispute will arise when neither the landlord, letting agent or tenant can agree on the amount to be repaid at the end of the tenancy. In England and Wales, 75% of disputes are raised by the Tenant for insured deposits.
How is a dispute raised?
A dispute can be raised by either the landlord, letting agent or tenant by accessing their online portal on the TDS website. A deposit can be located using the deposit protection certificate provided at the start of the tenancy or alternatively with the deposit locator which asks for key information such as the rent amount, deposit, start date and postcode of the rental address. Once a dispute is raised, a resolution process will be initiated.
What happens if a deposit deduction is disputed?
The landlord and tenant will need to submit evidence to TDS in the event of a deduction being disputed. If the deposit is held by the landlord or letting agent (insured TDS deposit), they will need to transfer it to TDS as soon as the dispute is raised. Custodial TDS deposits are already held by TDS and will not be paid out until the dispute has been resolved.
When can a deposit dispute be raised?
Disputes can be raised up to 3 months from the end of the tenancy for the insured service whereas the custodial service has no deadline for starting the payment dispute process. If the TDS determines it can adjudicate the dispute, it will refer the dispute to an impartial adjudicator who will examine the evidence and decide how the deposit should be paid out within 28 days. TDS will then issue the examiner’s report and pay the deposit accordingly.
Curious about automated data extraction from documents?
What evidence will be considered by TDS in the event of a Deposit dispute?
The adjudicator works on the basis that the deposit is the tenant’s money, and will only award money to landlords and letting agents if the evidence provided justifies that claim. Essential evidence to be provided to support a claim include:
- Tenancy agreement
- Check-in report and or inventory
- Check-out report and photographs or videos used in conjunction with an inventory to support the condition of items in the property.
- Rent statement to show what rent has been paid and what might be owed.
- Estimates to show the approximate cost of carrying out work/replacing things.
- Quotes to show the quoted cost of carrying out work or replacing things.
- Invoices to show the cost paid/to be paid for carrying out work/replacing things.
- Receipts to show the cost that the landlord or agent has paid out.
How does a tenant get their deposit back?
A TDS insured deposit is held by the landlord or letting agent whereas a TDS custodial deposit is held by TDS. For TDS insured, unless a dispute has been raised, the tenant should contact the landlord or letting agent to request their deposit and they will have 10 days to pay the deposit from the moment the deposit deductions are agreed between the landlord and tenant. For TDS custodial, if no claim has been made, the tenant can request the deposit payment from their TDS portal. In the event of a deposit dispute, the payment will occur 28 days from the adjudicator’s decision.
Legislate is an early stage legal technology startup which allows large landlords, letting agents and small businesses to easily create, sign and manage contracts that are prudent and fair. Legislate’s platform is built on its patented knowledge graph which streamlines the contracting process and aggregates contract statistics to quickly unlock valuable insights. Legislate’s team marries technical and legal expertise to create a painless, smart contracting experience for its users. Legislate is backed by Parkwalk Advisors, Perivoli Innovations and angel investors.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.