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News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
Residential tenancy deposits are often a point of contention between landlords and tenants and it is not uncommon for deposit disputes to drag out for many months after a tenancy has ended. A tenancy deposit is generally held as security for the performance of a tenant’s obligations within the tenancy agreement. Should a tenant fail to adhere to their obligations, then subject to the terms of their tenancy agreement, a landlord will usually have the ability to counter any losses suffered by making deductions from the deposit held.
Deposit Caps
Since the introduction of the Tenants Fees Act 2019, a landlord is now restricted in the amount they are able to request and hold as an Assured Shorthold Tenancy (AST) tenancy deposit. A deposit is now capped at the equivalent of five weeks’ rent when the annual rent is less than £50,000 and the equivalent of six weeks’ rent when the annual rent is £50,000 or more. Anything above this threshold would be considered a “prohibited payment” and a landlord can be fined for demanding more than permitted under the legislation.
Statutory Obligations
Landlords have an obligation to ensure that they register any deposit taken in accordance with an AST in a government approved Tenancy Deposit Scheme (“TDS”) and that the Prescribed Information, to include details of where the tenant’s deposit is held, is provided to the tenant within 30 days of receiving the deposit. Failure to register the deposit or provide the Prescribed Information within this timeframe can lead to financial penalties and difficulties later down the line when a landlord wishes to seek possession of their property.
Damage & Deductions
Prior to a tenant taking occupation, it is good practice to arrange for an independent inventory clerk to attend the property to take a full schedule of condition. At the end of the term, the inventory clerk can then re-attend. Any damage that may have occurred during the term of the tenancy would be evident when comparing schedules. The landlord should then consider the tenancy agreement and in particular, the tenant’s repairing obligations and the standard the tenancy agreement requires the property to be returned in at the end of the term.
Landlords must generally allow for “fair wear and tear” and the length of the tenancy will need to be taken into consideration and factored in when considering this. Whilst there is no legal definition of “fair wear and tear”, it is generally accepted to mean damage that occurs during the ordinary course of day to day use. This can include scuffs on paintwork, floors etc. Anything beyond this, or anything caused by a deliberate action will likely fall within the realms of the tenant’s repairing obligations.
A landlord will then need to quantify the damage and take advice on whether the items are repairable or if it would be more cost effective to replace. This will then be a point of negotiation between the parties when considering the deductions to be made and balance of the deposit to be returned. If the parties are unable to reach a settlement and the deposit is registered within a TDS, then the matter can be referred to the independent TDS Adjudicator who will take into account both parties arguments and decide whether a deduction should be made, or if the full deposit should be returned to the tenant.
If the cost of rectifying the damage outweighs the amount held as a deposit, in the first instance the parties should try to negotiate to see if a settlement can be reached. If the parties are unable to reach an agreement, the landlord would need to commence court proceedings to seek the recovery of the balance owing.
Lauren Fitzpatrick is an associate in the property team at Goodman Derrick LLP