Everything you need to know about Tenancy Deposit Claims

Today, almost five million people in Britain rent out their homes privately.

It is of vital importance that those who rent privately know their rights as tenants.

If you are currently renting a property, or you plan on renting down the line, you should know how the tenancy deposit works.

Renters should also be aware of the government schemes that are used to protect tenants. Plus, if your landlord fails to protect your deposit, what can you do, and how much compensation are you entitled to?

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What is a Security Deposit?

If you are moving into a rented property, you can expect your landlord to ask for a security deposit.

Landlords ask tenants to pay a deposit to cover unforeseen costs.

The amount of money a tenant will have to pay for the security deposit varies.

In the United Kingdom, landlords were known to charge anywhere from 4 to 8 weeks’ rent as a deposit. However, a new law was introduced in the UK in 2019 that states that tenants should only pay a maximum of five weeks’ rent for the deposit. If you paid your deposit before the beginning of June 2019, your landlord could have charged you more because there wasn’t any legal limit in place.

Nowadays, if your rent is less than £50,000 annually, your landlord is not allowed to charge you more than five months’ rent for the security deposit.

Before moving in, your landlord is likely to collect the security deposit and provide you with the terms in a written contract. If they don’t give you the terms in a written contract, don’t forget to ask them for it.

It’s likely your landlord will collect the deposit for the rental before you move into the property.

What can your Landlord do with your Security Deposit?

If you find yourself in financial difficulty and you are unable to pay the rent, or you cause extensive damage to the property, the landlord is allowed to use the security deposit to cover the rent that hasn’t been paid or use it to cover the cost of the repairs.

However, your landlord is unable to deduct money from your deposit for general wear and tear. If you have been living in the same rental for a long period of time, it’s inevitable there will be some minor damage. Here are a few examples of what is considered normal wear and tear that your landlord is not allowed to take from your deposit.

  • Damaged carpets: Small stains and shoe markings on the carpets in the rental might start to appear over time.
  • Markings on the walls
  • Sometimes, tiles get damaged over time.

When can your Landlord use your Security Deposit?

Here are a few examples of when your landlord can legally deduct money from your security:

  • Damage caused by pets: Most tenants notify their landlord before moving in that they have a pet. Landlords in the UK often provide the tenant with a pet agreement. If you have a pet, don’t be surprised if your landlord charges you a higher deposit. Your landlord can deduct money from your deposit if your pet has caused damage to the property such as urine stains, chew marks, etc.
  • Major property damage: If you have broken a window, kitchen appliances, furniture, etc. you can expect your landlord to pay for the repairs with your deposit.
  • Messy property: In the UK, the most common reason why landlords deduct money from their tenant’s deposits is that the tenant left the property in a bad condition.
  • Leaving items behind: If the tenant leaves items behind, the landlord will be charged to remove these items.
  • Rent in arrears: If you leave the property without paying all of the rent you owe, your landlord is likely to deduct what is owed from your deposit. Also, if you leave the property without paying all of the utility bills, your landlord can use the deposit to pay the outstanding bills.

Tenancy Deposit Schemes

Landlords in England with an assured shorthold tenancy (AST) who collect a deposit from the people who are renting their property have to protect the security deposit by law.

Currently, there are three tenancy deposit schemes in England and Wales that are government-backed:

  • Tenancy deposit scheme
  • MyDeposits
  • Deposit protection service

These schemes are in place to protect and hold the security deposit while the tenant is renting the property.

The government introduced these tenancy deposit schemes to prevent people from using their tenant’s deposits as income. If the landlords fail to protect their tenant’s deposits under any of these government-backed schemes, then the tenants can make tenancy deposit protection claims.

What is an AST agreement?

An assured shorthold tenancy agreement is used to protect the landlord and the tenant. It is a list of terms that allows the tenant to legally live in the landlord’s private rented property.

The agreement will outline what the tenant is responsible for, plus the responsibilities of the landlord. You can expect the following in the AST agreement:

  • The date the rent is due
  • How much rent does the tenant have to pay
  • The name and address of the tenant and the landlord
  • A list of the bills that the tenant is responsible for
  • The date the rent can be reviewed
  • The scheme the landlord is using to protect the security deposit
  • The address of the rental

Both the landlord and the tenant will receive a copy of the agreement, and both parties must sign it. Both parties are advised to read through the terms before signing it. Tenants should keep a copy of the AST agreement to avoid complications down the line.

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How Tenants can make a Tenancy Deposit Claim

A lot of tenants in England and Wales are entitled to compensation, but many of them don’t know the process works.

If the tenant’s landlord broke the tenancy security deposit rules, they might be entitled to compensation.

Tenants are encouraged to seek legal advice. Although lots of tenants received compensation without hiring a solicitor, hiring a reputable legal team often proves beneficial.

Tenants should gather as much evidence as possible before they ask for compensation. They should have a copy of their AST agreement, records of the rent that has been paid, evidence that the security deposit has been paid in full, and any other written communication with the landlord.

The tenant should provide their landlord with a ‘letter before action’ before they begin a court claim for compensation.

Click Here to download a free ‘letter before action’ template.

Once the ‘letter before action’ has been sent, either the solicitor or the tenant should make an application to the court. When the tenant or solicitor is sending the application to the court, they should include the evidence they have gathered, including a copy of the AST agreement.

The landlord will then receive a copy of the completed claim form. They might decide to pay the claim, or they might want to make an offer to settle instead.

Go to Court

If you are not satisfied with your landlord’s attempt to settle out of court, or your landlord doesn’t respond to the court within a certain timeframe, then you will have to prepare for court.

If the tenant succeeds with their case, the court will tell the landlord how much they need to pay in compensation. However, if the tenant loses the case, the court is likely to ask the tenant to cover the landlord’s legal costs.