Disputes are a last resort for landlords and tenants who can’t agree over deposit deductions at the end of a tenancy.

They can be time-consuming and cause unnecessary hassle, so it’s good news that just one per cent of deposits covered by The Dispute Service (TDS) are disputed each year.

The TDS recently published its Annual Review 2020-21, which covers the most common reasons for deposit disputes and whether tenants or landlords win them more frequently.

Just one per cent of tenancies end in dispute

Landlords will be pleased to learn that disputes happen with just one per cent of the deposits for existing tenancies TDS protects, and in three per cent of tenancies that come to an end each year.

TDS’ Insured Scheme received 15,116 dispute applications in 2020-21, while its Custodial scheme adjudicated on 1,660.

SafeDeposits Scotland made a decision on 3,577 disputes during the same period and TDS Northern Ireland had to look at 458 cases.

The small number of disputes means more disagreements over deposit deductions between landlords and tenants are being resolved informally, which is in the interests of all parties as it saves time and stress.

TDS says there’s been a downward trend in the number of disputes in recent years, although the drop in 2020-21 was bigger due to fewer tenants moving during the pandemic.

What are the most common reasons for disputes?

Across TDS’ Insured and Custodial schemes, as well as SafeDeposits Scotland and TDS Northern Ireland, cleaning is the most common reason for deposit disputes, followed by property damage.

Cleaning and property damage were also the most common reasons for disputes across all four schemes in 2019-20 and 2018-19.

With this in mind, landlords should speak to tenants about their cleaning expectations before the end of the tenancy and make sure they have a comprehensive inventory in place.

What happens when deposit deductions are disputed?

The Annual Review shows that the vast majority of disputes (75 per cent) were raised by tenants in 2020-21. TDS says this continues a trend seen in the last five years of tenants raising more disputes than landlords and letting agents.

Letting agents raised 17 per cent of disputes in 2020-21, down from 19 per cent the previous year. Meanwhile, landlords raised seven per cent of disputes, down eight per cent in 2019-20.

Who wins the most disputes?

In 2020-21, the most likely outcome after impartial adjudication is for the disputed amount to be shared between tenants and landlords/agents. However, if the deposit isn’t shared, tenants are more likely to win 100 per cent of the money being disputed.

How can landlords reduce the chances of deposit disputes?

Although only a small number of tenancies end with deposit disputes, it’s in a landlord’s interest to do everything they can to reduce the chances of disagreements over deductions.

Here are six quick tips on how landlords can reduce the chances of deposit disputes:

  • Compile a thorough and impartial inventory with videos and images
  • Conduct regular inspections throughout the tenancy
  • Communicate regularly with tenants and agree on expectations
  • Make sure all deductions are fair and reasonable
  • Refresh yourself with the definition of fair wear and tear
  • Try to resolve any disagreements over deductions informally

By following these steps, landlords can make deposit deductions with confidence that they won’t cause a dispute and need to be referred to the deposit protection scheme.

This means tenants can get their deposit back quicker and landlords can focus on reletting the property, reducing the chances of losing money when the property is empty.