You’ll be pleased to learn that the majority of tenancies end without any issues over the return of the deposit, but it’s important to know that if your tenant disagrees with your deposit deductions they could raise a formal dispute.
The law states that the deposit remains the property of the tenant and that they are entitled to receive the entire amount back at the end of the tenancy unless you're able to prove otherwise
The dispute process – all about the evidence
If your tenant doesn’t agree with your deposit deductions and they raise a formal dispute you will have access to the alternative dispute resolution (ADR) service offered by my|deposits Scotland, and an impartial adjudicator will be appointed to make a decision about the return of the deposit.
Only 1% of tenancies actually result in a formal deposit dispute but if it does it means that you must provide evidence in order to prove you have suffered a financial loss as a result of the tenant breaking the terms of the tenancy agreement.
The adjudicator assigned to your case is only able to consider the evidence you submit, so the outcome depends entirely on this. In some cases landlords and agents unfortunately lose a dispute simply because of poor quality evidence, or because the amount claimed is unreasonable.
However, there are steps you can take throughout the tenancy in order to dispute-proof yourself.
Some useful tips
Preparing for a dispute starts at the beginning of the tenancy. That’s our mantra. And when it comes to disputes, it’s worth heeding the risk and taking more of a ‘belt and braces’ approach – it’s likely to pay off.
So follow this to the letter and see the tips below to make sure you’re fully prepared and have all the evidence you may need to rely on should you face a dispute.
At the beginning
- Tenancy agreement – make sure this is fair, clear, concise and well worded. Poorly worded tenancy agreements are a main reason for landlords and agents losing disputes.
- Deposit clauses - Ensure that any clauses for deductions to the deposit are clearly explained.
- Inventory reports – undertake a comprehensive inventory which lists the fixtures, fittings and decor of the property. This will then allow you to compare the standard of the property when your tenant moves out.
- Check-in meeting – it’s best practice to carry out a check-in meeting so you and your tenants can meet and discuss any issues. It's also chance to get the relationship off to a flyer.
- Invoices and receipts – what have you bought for the rpoperty before your tenant moves in? It’s advisable to keep any receipts for proof of purchase.
During the tenancy
It’s not just the end that matters, the journey counts too…
- Rent Account Statements – keep accurate records of rent received from tenants and any unpaid rent. It's good practice to have an arrears procedure for informing the tenant in writing of any lapses.
- Invoices, receipts, utility bills – again, document payments such as cleaning charges, damages, repairs etc with invoices and receipts. Keep bank statements as evidence of costs incurred.
- Other evidence – it’s also advisable to keep copies of all correspondence such as emails and letters between you and your tenant as it could be useful evidence to prove a deposit claim.
- Reminders to the tenant - remind the tenant of their obligations under the tenancy agreement shortly before it ends, preferably in writing.
At the end of the tenancy
- Check out report – again, this is best practice. It's fine to conduct these yourself but you can also use a third party inventory company which will hold more weight in the eyes of an adjudicator and isn’t such an objective take.
- Talk to your tenants - don’t shy away from discussing any issues with your tenants; negotiation is the most important way to prevent a dispute by highlighting areas for concern.
- Deposit release – If you both agree and there are no surprises then my|deposits Scotland can release the deposit quickly and conveniently. See our guide on the deposit release process for more information.
And dont forget you can always read out dedicated guide about preparing for disputes here.