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Negotiating Deposit Returns

Sykes Anderson Perry, explains the value of maintaining a good relationship with your tenant through better negotiations with the aim of avoiding a formal dispute over deposit deductions.

Why negotiate?

If your tenant breaches the tenancy agreement and you need to propose deductions to their deposit to remedy any issues which have occurred as a result, your tenant may feel that the deductions are unfair or unwarranted. The deposit belongs to the tenant unless you can prove your claim to the deposit money and show a loss but if an agreement cannot be reached your tenant is statutorily entitled to raise a formal dispute.
The key timeframes for dispute resolution are set by the legislation, which means there will be a delay in returning the deposit whilst the adjudicator reviews the case. Therefore it is always beneficial for both parties to resolve their differences before they escalate to needing adjudication or court.

How to approach negotiations

Start early

You should aim to begin your negotiations at the earliest opportunity from when your tenant disputes the amount you wish to deduct, as this is the best opportunity to reduce the likelihood of using a formal dispute resolution service. Six monthly inspections may give landlords the opportunity to identify likely issues before well before checkout day.

Arrange a meeting

The best way to negotiate is face to face. The tone, or intended meaning of the written word can often be misinterpreted. It’s also far easier for people to frustrate the process when using emails and letters, and often can delay the process so a face to face meeting can be beneficial for both parties.

Document your negotiations

You should always ensure that every part of the process is clearly documented and shared with your tenant. This may be used as evidence to support your claim if negotiations break down and you end up in a formal dispute.

Establish the tenant’s claim

The tenant’s position should be sought as soon as possible, allow them to explain why they feel that the deductions you have proposed are unfair, or not justified. Once their position has been established, clearly explain the deductions to the deposit and why you are making them.

As an additional note, you must include fair wear and tear into your calculations and it’s worth remembering that you are entitled to compensation but not betterment. Standard costs are potentially unfair so be prepared to make concessions if the circumstance dictates. Unfortunately the concept

Use evidence to support your claim

As we have already stated, the deposit remains the tenant’s money, and at the end of the tenancy the default position is for the tenant to receive the deposit back, in full. To be successful in a formal deposit dispute you must provide evidence to back up your claim, however using robust evidence to highlight your reasoning could be a persuasive enough reason to avoid using an Alternative Dispute Resolution service. Highlight relevant clauses in the tenancy agreement, photographs, invoices, receipts and anything else you can to show your tenants how you have come to your proposed amount.

If you need help negotiating deposit returns or resolving a connected dispute, please contact Chris Sykes to discuss whether litigation is the best next step.