Costs to rise for Mandatory Tenancy Deposit Cover

 

The TDS annual report was released a few weeks back and it highlighted some interesting stats as well as an underlying warning that costs may go up.

The report states that TDS (The Tenancy Deposit Scheme run by ARLA for ARLA agents and the largest of the 3 deposit schemes) has had massive increases in both the number of tenancies registered (470,323 in 2007-2008 to 786,405 in 2008-2009) and the total value of deposits registered is now close to £1 billion. This represents approx. 1.2 million tenants and the report goes on to state that the number of deposits have also dramatically risen (although not unexpectedly of course). What is noted however is that the number of disputes has risen quicker than expected and therefore the impact on the scheme has subsequently seen costs rise.

It is not a coincidence that disputes are rising or that they are down to a sudden change in our national habits of looking after property, more, it is the availability of information. It is obvious is that tenants are getting wiser and smarter, they are reading up on their rights through the internet and with the help of charitable advice centres such as the citizens advice bureau they are being advised that should the landlord not have certain criteria in place –then they should challenge the landlord as their chances of winning are very high.

From a landlord perspective it seems you are being hit from all sides. The deposit scheme is here to stay and it makes the whole process fairer. What landlords have to do is to minimise their risks by making sure that all of the paperwork is in order at the start of the tenancy, that interim property visits are carried out during the tenancy and that at the end of the tenancy tenants are checked out properly (preferably by an independent party) in order to gain agreement from both parties to avoid a deposit dispute. The additional down side of a dispute is the added aggravation and work involved in building your case, especially if the paperwork was not in order at the start of the tenancy or kept on top of during it.

My check list for a landlord to ensure that they minimise the chance of going to dispute is as follows:

1.      Prepare or buy good and robust AST (Assured Shorthold Tenancy Agreement). There are numerous places to get these from but the recognised main landlord sites (www.lettingzone and www.landlordzone.co.uk are good starts), a good lettings lawyer (eg. Dutton Gregory) or through the various landlord or lettings organisations such as NLA, ARLA etc.

2.      A detailed inventory carried out by an external company, with full contents per room and a full schedule of condition

3.      A fully completed and signed (this is important) check in report. This is one of the largest causes of ambiguity leading to disputes at the end of a tenancy.

4.      Property Visits –don’t forget to do these preferably by using an external inventory company. There is a big psychological impact on tenants when an external company visits your property and checks it through for you. A good property visit will tell you whether or not there will be cause for concern at the end –crucial to know and to take appropriate measures early.

5.      Check Out –This is the most contentious area to deal with and carried out well you will get an agreement in place quickly and minimise the chance of a tenant taking you to arbitration. Using an external inventory company is by far the best way to handle a check out as the emotion is taken away and the facts are dealt with in an impartial manner. An independent professional check out report is given more credence than one prepared by the landlord, particularly if the tenant is not present for the check out.

6.      Once the check out is completed and signed by the tenants, if there are dilapidations the landlord will need to provide proof of costs. It is advisable to get 3 quotes for work to be carried out and then when you discuss the costs with your tenant the facts are clear and the chance of disagreement greatly reduced.

My advice is to build a strong team of experts around you and use their expertise to your advantage. Life will be simpler and your costs in the long run will be greatly minimised and let’s hope that the cost of managing the deposit schemes does not increase too much in the future.

Written by:

Nick Lyons 

Managing Director

No Letting Go Inventory Management

The UK’s largest provider of Inventory Services

Related posts:

  1. How can a landlord increase your chance of winning at disputes and getting all of your money back at the end of the tenancy?
  2. Cleaning main cause of landlord-tenant deposit disputes
  3. Tenancy deposit scheme debated
  4. Many renters ‘unaware’of tenancy deposit scheme
  5. Tenancy Deposit Solutions and Inventories

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