Managing expectations: what’s 'reasonable' in deposit disputes?

At our recent ADR workshop, we had a good discussion with letting agents about managing landlords’ expectations with regard to ‘fair wear and tear’, ‘betterment’ and ‘reasonableness’; all of which are leading factors when deciding on the value of a claim. It’s one of the biggest challenges faced by letting agents because there’s a fine line between what constitutes damage and simple wear and tear – if a carpet has a stain, it doesn’t necessarily follow that the whole thing needs to be replaced. On the flip side, a small amount of damage can have a huge effect on the room as a whole.

Damage has to be looked at in context. A mark on the wall can easily be covered but if that damage appears in a room of high quality, it may mean significantly more time and money is required to restore it – so an adjudicator may award a larger amount in compensation.

Obviously a detailed inventory is essential for avoiding disputes but you should always attach a schedule of condition as well. Take photos and add the date to them so that there can be no doubt about the original quality of the property and items inside. Get the tenants to come along and watch the check-out inventory; then they can sign it with confidence. I know it’s not always possible to get tenants to attend the check out so make sure that you can provide evidence that they were given every opportunity to attend.     

The adjudicator isn’t there throughout the tenancy; they don’t know the letting agent, landlord or tenant personally and can’t use this in their decision making process. All they have to go on is the evidence provided, so the key is to make it as compelling and relevant as possible, and before submitting it ask yourself the question 'is it reasonable'?