Landlords Can Avoid Tenancy Deposit Disputes

Tuesday, October 21, 2014

Landlords Can Avoid Tenancy Deposit Disputes

Landlords Can Avoid Tenancy Deposit Disputes

Tenancy Deposit Disputes Can Be Avoided
With Tenant Liability Insurance

The Dispute Service, who are the operators of the Tenancy Deposit Scheme (TDS) in England and Wales, claim that tenancy deposit disputes between landlords and tenants increased to almost 9,500 over the course of the year and that on average, the amount in dispute under the scheme also increased to around £860 (GBP).

The TDS published its annual figures last week and the organisation, who operate on a not for profit basis, claim that they are responsible for holding tenant deposits to the value of £1.2 Billion (GBP) with a 75% share of the private rental market in Northern Ireland, where deposit protection regulations only came into force in April 2013, and protect 58% of Scottish tenants’ deposits as they are partners in the SafeDeposit scheme that operates in Scotland.

According to the TDS, disputes over smaller amounts are more often being resolved between the landlord and tenant before being escalated to the dispute stage. Landlords are also using other means, such as Tenant Liability Insurance, to cover repair and cleaning  costs, as the total number of deposits recorded by the TDS which ended in dispute fell to just 0.87%.Paying for damage to rental property can be expensive, but even if the damage to the landlord’s rental property is accidental, it is the tenants responsibility to pay for the repairs or the landlord will be entitled to deduct the costs from the deposit.

£60 provides a full 12 months Tenant Liability Insurance, covering accidental damage claims up to £2,500 (GBP).

The two biggest causes of tenancy deposit disputes between landlord and tenant in the UK are:

  • End of Tenancy Cleaning – 53%
  • Rental Property Damage – 46%

There is an almost equal divide in the dispute amounts awarded to tenants winning 52% of all awards and landlords/letting agents 48%.

Steve Harriott, TDS Chief Executive commented on the latest TDS Annual Review, saying “As a not for profit scheme we continue to focus on the needs of customers, not shareholders. Improvements to services have been driven by engagement with members.”

TDS Northern Ireland found that tenant rent arrears made up the biggest number of deposit disputes, where 60% of the total awards went to the landlord or letting agent.

This situation can generally be avoided by making use of Rent Protection Insurance for new tenancies where the tenant is comprehensively referenced prior to the start of a tenancy and the policy guarantees the landlord’s rental income should the tenant default on the rental payments due to an unexpected change in circumstances.

Sim Sekhon spokesman for the UK’s leading suppliers of specialist products and services to the lettings industry and the private rental sector, Legal 4 Landlords commented: “There are now a wide range of products designed to protect landlord income and expenditure such as Tenant Liability Insurance to cover repair expenses and Rent Protection Insurance to cover tenant rent default. These insurance products help to alleviate some nightmare scenarios for private sector landlords and also help to avoid the unpleasantness of fighting to retain all or part of the tenant’s deposit to cover financial costs incurred at the end of the tenancy.”

The full Dispute Service Annual Review can be viewed by clicking here


This was written by Mike Clarke. Posted on at 11:30 am. Filed under Insurance. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.