Compensation Charges Can Lead to Deposit Disputes, Warns Imfuna Let

Compensation charges at the end of a tenancy can lead to deposit disputes, especially when there is little or no evidence to support the charges, warns Imfuna Let.

The firm reminds landlords and letting agents that they do not charge for betterment or fair wear and tear when calculating compensation costs. It explains that if an item was old at check-in and has suffered some additional damage over a two-year tenancy, the law does not allow a landlord or agent to simply replace the item with a new one. However, some compensation towards the item is allowable.

Compensation Charges Can Lead to Deposit Disputes, Warns Imfuna Let

The Founder and CEO of Imfuna Let, Jax Kneppers, goes into more detail: “Landlords and agents who are calculating the cost for compensation charges against a tenant should ensure that the costs are reasonable and fair. They should also have a working knowledge of the accepted principles of compensation and explain to their tenants how they have worked out the deductions. If landlords and agents can prove how they arrived at the proposed deductions from their tenants’ deposits, all parties involved will be happier to accept the decisions.

“In order to work out accurate compensation charges, landlords and agents need the original cost of an item, age and condition at the time of check-in, length of tenancy, average life expectancy of the item, and any extenuating circumstances. Landlords and agents should be able to provide written evidence of the original cost and age of the item for any compensation claim.

“For example, if a tenant damages vinyl or laminate flooring with drag marks, deep scratches or scrapes, burn marks and stains, these are considered to be chargeable issues. However, a small number of surface scratches, nicks and minor indentations are considered to be consistent with fair wear and tear, depending on the length of tenancy and original condition.”

He explains: “The final compensation cost will depend on a number of factors, such as if pets and children were in the property, any previous wear and tear, quality of the items, etc. Landlords and agents need to ensure they have brought together all the evidence to reach a safe conclusion.

“This evidence will require detailed descriptions and photographs taken at the start and the end of the tenancy as part of an inventory. If a professional inventory has been supplied for the property, then its condition will have been fully recorded at the start and the end of the tenancy. This is the bulletproof evidence that landlords need to support a claim for compensation charges.”

If you need any assistance in compiling a professional inventory, our guide will help you create a comprehensive document and avoid deposit disputes: /guide-compiling-good-inventory/

The Director of Balgores Property Group, Howard Lester, also comments on the importance of correct compensation charges: “Normal wear and tear is a fact of life with rental properties. However, there is a distinct difference between fair wear and tear and actual damage. For example, carpet tread will flatten over time where there has been foot traffic, but cigarette burns, stains or soiling will require a charge.

“Our deposit clerk spends many hours a day explaining the difference in these issues to both landlords and tenants, and the vast majority of issues that end up being sent off for arbitration are from one or other refusing to accept these facts. We find that by preparing a detailed inventory at the beginning, together with the property inspections and final check-out, we are normally able to accurately predict the outcome of over 90% of disputes before they reach arbitration. In the event of there being no inventory, we always advise the landlord that they will be very unlikely to win any compensation.”