Since the introduction of tenancy deposit protection legislation in 2007, millions of deposits totalling billions of pounds have been protected. At its core are three government approved tenancy deposit protection (TDP) schemes.
Underpinning them is a robust method of Alternative Dispute Resolution (ADR) used to resolve any disputes about the amount of deposit that should be returned to the tenant at the end of the tenancy.
How do these schemes work?
The tenant pays the landlord or letting agent their deposit. According to The Housing Act 2014, the landlord or agent is legally required to secure the deposit in one of the schemes within 30 days of receiving it. On doing so, a receipt is sent confirming the deposit is protected. This, along with prescribed information, scheme leaflet and terms and conditions, are provided to the tenant by the landlord or agent.
At the end of the tenancy, the landlord or agent and the tenant agree repayment of the deposit and inform the scheme administrators. If there is a dispute about the return of the deposit, the scheme administrators will hold the disputed amount until a resolution is found.
The tenancy deposit protection schemes use adjudication to deal with deposit disputes. This is an evidence based process where the outcome is decided by an impartial and qualified adjudicator. Unlike mediation, arbitration, or counselling, the parties will never be required to meet with the adjudicator. Nor will the adjudicator visit the property that is the subject of the deposit dispute. All evidence must be submitted to the adjudicator within the timescales specified in the terms of the scheme. The evidence is analysed by the adjudicator and a binding decision made on how the dispute will be resolved and deposit proportioned.
The ADR process of adjudication requires the participation and consent of both parties, so the final decision of the adjudicator is binding. It can only be challenged in a Court of Law.
Unlike formal court proceedings, schemes are not governed by ‘precedent’. Adjudicators decisions are made solely on the evidence submitted by both parties. The types of evidence that may be used include:
- A tenancy agreement
- Inventory reports and check-in/check-out inspections
- Photographic and/or video evidence
- Utility and Council Tax bills
- Invoices, receipts, estimates ,quotations
- Cleaning charges
- Rent account statements
- Standard agency charges
- Witness statements and other evidence
Types of Tenancy Deposit Dispute
The tenancy deposit protection schemes ensure tenants get their deposit back if they:
- meet the terms of their tenancy agreement
- don’t damage the property
- pay the rent and bills
The types of tenancy deposit disputes that commonly arise are related to:
- late or missed rental payments
- wear and tear
- damage to the Property
- cleaning costs
- unpaid bills
All of these are contentious and one party is likely to feel aggrieved at the end of the process. Adjudicators – as independent third parties – are looking to find a fair and reasonable outcome.
ADR in Tenancy Deposit Disputes
Alternative dispute resolution, by its very nature, is unique to each and every case. When the Tenant Deposit Protection Scheme was introduced, the feeling amongst landlords at the time was that disputes were going to be frequent and time consuming. But that hasn’t proven to be true. Most tenants are decent people and want to look after their home and protect their deposit. Similarly most landlords want to provide a safe, secure home for their tenants. Relatively few tenancies end up with a returned deposit in dispute but in cases where they do, ADR – and more specifically adjudication – provides an definitive outcome that avoids the lengthy and costly process of going to court.