Reducing the risk of a dispute at the end of a tenancy – the agent’s role

With the tenant fee ban now in full swing in England and coming into force on 1 September in Wales, it's more important than ever that agents do all they can to reduce the risk of a costly and time consuming dispute at the end of a tenancy, says Suzy Hershman, Head of Dispute Resolution at mydeposits.

As letting agents and landlords increasingly pick up more of the tenancy set-up costs than they did before the tenant fee ban came into force in England on 1 June 2019, it is important to take all possible precautions to reduce the risk of a costly dispute at the end of a tenancy. Gathering quality evidence and keeping robust written records from the outset of a tenancy remain key to preventing any deposit related issues from eating into profits at the end of the tenancy.

Suzy Hershman offers the following advice to help you avoid the stress and financial impact of any deposit related disputes at the end of tenancies:

1. Make sure your tenancy agreements are updated to reflect the tenant fee ban.

It is vital that tenancy agreements do not include any of the prohibited fees. Remember, charging a tenant for a prohibited payment carries a £5000 penalty ‘per fee’. And, the enforcement authority can impose a financial penalty of up to £30,000 for repeat offenders within five years. If convicted of two financial penalties within a 12 month period, a landlord or agent may be entered into the Database of Rogue Landlords and Letting Agents.

To recap, the only permitted fees under the ban are:

  • A capped refundable holding deposit
  • A tenancy deposit
  • Rent
  • Payments for council tax, utilities, television licence, communication services and Green Deal charge
  • Default fees for interest on late rent payments and for loss of keys or security devices
  • For a variation, assignment or novation of a tenancy
  • For the early termination (surrender) of a tenancy

It is worth remembering that, if you do accidentally take a fee for a prohibited payment, don’t panic. So long as it is returned to the tenant within 28 days you can avoid a penalty.

2. While the tenant fee ban stipulates that tenancy deposits are capped, the legislation does not have any impact on how deposit deductions currently operate.

In other words, deductions need to be dealt with as before, with supporting evidence. Evidence and negotiation are also key if there is a deposit alternative product in place.

3. Good quality inventories are particularly critical now that the tenant fee ban is in full force.

Inventories should include clear photographic evidence as well as a detailed written description about not only the condition but also the cleanliness of the property, as the majority of disputes involve cleaning. The combination of photographic and written evidence allows you to make an accurate comparison of the property from the beginning to the end of the tenancy, so that you can negotiate with the tenant on any proposed deductions or responsibility for costs.

If you have opted to take inventory reports in-house to reduce costs, rather than relying on an independent inventory company to complete your reports, it is important that that you make sure your reports contain the level of detail you need so that you can approach the end of the tenancy with confidence.

4. Be sure to keep written records of any conversations, emails and contractors’ reports.

These will provide additional information to that contained in the inventory report, which will help with the negotiation at the end of a tenancy.

5. Make sure that invoices and estimates from contractors give a clear breakdown of costs, for transparency.

This will help in the event that you need to calculate and negotiate with your tenant at the end of the tenancy.

6. Remember, a tenant isn’t responsible for fair wear and tear, which is inevitable over the course of a tenancy.

When calculating and negotiating costs, you will need to take into account criteria such as age, quality, condition at the start, reasonable lifespan and the length of the tenancy in relation to the item, or area. The number and type of tenants that live in your property may also affect how much wear and tear you should expect. Any amount you negotiate on with the tenant should be reasonable and reflective of the landlord or agent’s actual loss, taking into account fair wear and tear. You can find out more in our guide, What is fair wear and tear?

7. For more information on the impact of the tenant fee ban on the deposit cap, read our guide, The tenancy deposit cap – what you need to know.

As long as you manage your landlord’s expectations and are realistic, reasonable and clear about your responsibilities and those of your tenant, there should be no reason for a deposit dispute at the end of a tenancy.

Suzy Hershman, Head of Dispute Resolution at mydeposits, concludes:

“In the interests of time and everyone involved being able to move on from the tenancy, agents should be willing to negotiate and compromise on costs at the end of tenancy if necessary. In the post-tenant fee ban world however, ensuring that you follow a quality, evidence based approach throughout the tenancy, will be more vital than ever to reduce the risk of deposit related disputes and associated financial losses.”

About the author

Suzy Hershman

Suzy’s background is legal with over seven years’ experience as an adjudicator having qualified with the Chartered Institute of Arbitration. Her primary tasks now involve identifying adjudication best practice, overseeing the complaints department and providing educational materials to the industry as well as presenting at mydeposits workshops on all things deposit related.

Suzy Hershman