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Withholding the deposit for tenant damage

Properties get damaged - even if they are looked after well - so landlords need to know how to assess damage

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Damage to property is inevitable. This is one reason why landlords might choose to take a deposit from their tenant – to hold as security against repair costs – but what constitutes property damage is a greyer area than you might think.

Property damage law

Broadly speaking, property damage law holds that damage to rental property can be caused in one of three ways: negligence, wilful destruction or an ‘act of nature’. Unless your tenant is also a powerful druid, most landlords interpret the last one as another popular phrase: ‘fair wear and tear’. Essentially, the natural passage of time and decay eventually takes its toll on even the sturdiest of furnishings.

Criminal damage

By definition, criminal damage constitutes malice; there has to be evidence that your tenant has deliberately and maliciously damaged your property. In the rare occasions that this crops up, this is usually because the tenant and landlord didn’t part on the friendliest of terms, and history has thrown up some real horror stories.

It’s possible to take out a landlord’s insurance policy for things like criminal damage, but there are often exclusions in such policies that can catch landlords unaware. Read our guide to insuring against criminal damage for more information on common exclusions.

Property damage caused by tenant neglect

This is where the distinction blurs a bit. Though criminal damage can still be hard to prove (I’ve seen some shelves put up in a manner I’d consider ‘criminal’, but wouldn’t necessarily involve the civil courts), the definition is at least clear-cut.

What distinguishes between damage and fair wear and tear is usually the element of neglect, but this can be hard to define, and is the source of many deposit disputes. After all, whilst a tenant who has spilled red wine on a shag carpet has been neglectful, is the same true of a tenant who has allowed rust to build up on the pipes under the sink?

The length of the tenancy has a lot to do with it. If a tenant has only been in situ for six months, a coating of scuffs and stains on previously immaculate laminate flooring will be harder to justify than if they had lived there for a number of years.

I recommend taking a detailed inventory and communicating clearly with your tenant what state you expect your property to be in when you take it back. I also recommend referring to the free online guide published by MyDeposits – Wear and Tear – What is Fair? – when examining a property your tenants have recently left.

Can I still withhold the deposit if it’s not criminal damage?

Withholding the deposit to pay for criminal damage is both allowed and encouraged. Your tenant isn’t likely to dispute it if they know that the damage was deliberate, but if they do, you might be called upon to prove the malice behind the damage.  The same will be true if the deposit doesn’t cover the damage and you choose to take the tenant to court for damages.

Wear and tear allowance for furnished properties

If you let out your property furnished, you can offset a ‘wear and tear allowance’ against the income tax you pay. For the year, you need to decide whether this will be:

  • 10% of the net rent to cover gradual dilapidation; or
  • The net cost of replacing an item (not the original cost)

See our expert guide to tax for more information on the tax that buy to let landlords have to pay.

More Stories By TurnKey Landlords

Amelia Vargo is an online marketing executive for CT Capital. Amelia writes for Turnkey Mortgages, Turnkey Landlords, TurnKey Bridging, TurnKey Life and Commercial Trust.

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