How to Handle Deposit Deductions and Disputes

Step 1: Conduct thorough check-out inventory

When the tenant moves out, inspect the property systematically. Go room by room. Note and photograph everything—condition of walls, floors, fixtures, appliances. Take dated photos.

Ideally, the tenant attends the check-out so there's no dispute about what they saw.

Step 2: Compare to check-in inventory and photos

Pull out your original check-in inventory and photos. Compare directly. What's changed? What's damaged? What's the same? This comparison is your evidence base.

Without a proper check-in inventory, your position is weak. This is why check-in documentation is so important.

Step 3: Identify damage (not fair wear and tear)

You can only claim for damage beyond fair wear and tear. Normal use isn't deductible. Consider the tenancy length—a 5-year tenancy will show more wear than 6 months.

Fair wear and tear (no deduction):

• Minor scuffs on walls
• Carpet wear in traffic areas
• Faded curtains
• General age-related deterioration

Damage (deduction possible):

• Holes in walls
• Burns or stains on carpet
• Broken fixtures
• Missing items

Step 4: Get quotes or receipts for repairs

For each deduction, you need evidence of cost. Get quotes from contractors or, if you've already repaired, provide receipts. Don't guess at figures—substantiate everything.

Step 5: Calculate proposed deductions

Itemise each deduction clearly:

• Item: Hole in bedroom wall
• Evidence: Photo at check-out vs check-in
• Cost: Quote from decorator £80
• Proposed deduction: £80

For partially depreciated items, claim proportionately. A 5-year-old carpet replaced due to damage shouldn't be claimed at new carpet cost.

Step 6: Write to tenant with itemised proposal

Send a formal letter or email to the tenant with:

• Total deposit amount
• Itemised list of proposed deductions
• Evidence for each (photos, quotes)
• Amount you propose to return
• Deadline for response

Step 7: Give tenant chance to respond

Allow reasonable time—typically 10-14 days. The tenant may accept, dispute, or negotiate. Be open to discussion; sometimes a compromise avoids lengthy dispute.

Step 8: If agreed, deduct and return balance

Once you agree on deductions, process the return through your deposit scheme. Return the undisputed amount promptly—don't hold the whole deposit hostage over a small disputed item.

Step 9: If disputed, raise with deposit scheme

If you can't agree, use the scheme's Alternative Dispute Resolution (ADR) service. It's free. An independent adjudicator reviews evidence from both sides and makes a binding decision.

Submit your evidence pack: inventories, photos, quotes, correspondence. The better your evidence, the better your chances.