How to handle tenancy deposit disputes fairly
July 30, 2025
Deposit disputes are one of the most common causes of conflict between landlords and tenants. With over 1.28 million deposits protected in government-backed tenancy deposit protection (TDP) schemes in England alone, disputes are not rare, but they are often avoidable with the right approach.
Lettings in the UK have become more complex in recent years. In May 2025, the average UK monthly rent reached £1,339, up 7.0 per cent from the previous year, according to the Office for National Statistics. This rental growth, combined with rising maintenance and labour costs, means landlords are under greater pressure to recover genuine end-of-tenancy expenses. At the same time, tenants are more informed than ever about their rights under the Tenant Fees Act 2019 and expect transparency and fairness.
This article sets out how landlords can handle deposit disputes fairly, remain fully compliant with the law, and reduce the risk of conflict, reputational harm or financial penalty.
What causes deposit disputes?
Deposit disputes typically arise when tenants do not agree with the deductions landlords propose at the end of a tenancy. The most common reasons include:
Claims for cleaning or damage that the tenant disputes
Lack of evidence showing the property’s original condition
Disagreements over what counts as fair wear and tear
Poor communication during the check-out process
Delays in returning the deposit
According to the English Private Landlord Survey (2024), 15 percent of landlords reported that they withheld the entire deposit at the end of a tenancy, often because the value of damage or unpaid rent exceeded the deposit. But 29 percent also acknowledged challenges in documenting their claims, particularly where no professional inventory had been produced.
Avoiding disputes starts long before the tenancy ends. It begins with proper protection of the deposit, thorough documentation, clear communication, and realistic expectations on both sides.
Step 1: Protect the deposit properly
In England and Wales, landlords who let under an assured shorthold tenancy (AST) are legally required to place a tenant’s deposit in a government-approved tenancy deposit protection (TDP) scheme. This must be done:
Within 30 calendar days of receiving the deposit
Along with providing the tenant with the ‘prescribed information’, including where the deposit is held and how to raise a dispute
What is ‘prescribed information’
The exact content is set out in law The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 and typically covers:
Contact details for the landlord and tenant
Address of the rented property
Amount of the deposit
The TDP scheme used
The scheme’s contact details and dispute resolution procedures
The conditions under which all or part of the deposit may be retained
Confirmation of who is holding the deposit (e.g. custodial or insured scheme)
A signed declaration from the landlord or agent confirming the accuracy of the information
The scheme’s leaflet for tenants
The three authorised TDP schemes are:
Scotland and Northern Ireland operate separate schemes, but they work in the same way as detailed below. You can find out more on the Scottish and Northern Irish government websites.
Failure to comply can result in a fine of up to three times the deposit amount, and crucially, you lose the right to serve a valid Section 21 notice to regain possession of the property.
Despite the clarity of these rules, the 2024 EPLS found that 11 percent of English landlords were unsure whether they had issued the correct prescribed information.
Step 2: Prepare a detailed check-in inventory
Most successful dispute resolutions come down to evidence. A professionally prepared check-in inventory, supported by high-resolution, time-stamped photos, is one of the most effective tools a landlord can have.
A good inventory should include:
The condition and cleanliness of every room
Notes on fixtures, fittings, flooring, walls and windows
Details of any wear, marks, or damage present before move-in
Appliance checks and meter readings
This document should be signed and dated by the tenant at the start of the tenancy and kept securely. It will serve as the primary reference point when deciding whether damage or cleaning costs are justified at the end.
Step 3: Maintain regular communication
Throughout the tenancy, clear and consistent communication helps build trust and trust reduces the likelihood of disputes. Tenants who feel respected and informed are far more likely to accept reasonable deductions.
Communicate:
When inspections are due with at least 24 hours’ notice
If damage or wear is noted during visits
What the expectations are for cleaning and repair
How the check-out will be handled and when it will take place
By setting expectations early, tenants are less likely to feel surprised or cornered at the end of the tenancy.
Step 4: Understand fair wear and tear
Not all deterioration justifies a deduction. Under the law, tenants cannot be held responsible for ‘fair wear and tear’, which covers the natural ageing and usage of items over time. For example:
Light scuff marks on walls from furniture are usually considered acceptable
A stained mattress or torn curtain may be valid grounds for deduction
The condition of flooring should reflect its age and use
Factors to consider when assessing wear and tear:
Length of tenancy
Number of occupants
Age and quality of items at move-in
Usage level (e.g. student let vs professional let)
Adjudicators will take all of these into account. It is essential to be realistic and fair when assessing any damage.
Step 5: Conduct a fair check-out inspection
At the end of the tenancy, carry out a thorough check-out inspection, ideally with the tenant present. Use the original check-in inventory to compare the property’s condition and record any changes.
Tips for a smooth check-out:
Give advance notice in writing
Bring the original inventory and photos
Document new photos of any damage or issues
Note meter readings and collect keys
Explain any proposed deductions verbally, and follow up in writing
Give the tenant a chance to respond or remedy issues, such as hiring their own cleaner if they disagree with a cleaning charge.
Step 6: Propose deductions with clear evidence
If you believe deductions are necessary, present a breakdown of the charges with evidence:
Quotes or receipts from contractors or cleaners
Photographic comparisons (check-in vs check-out)
Written explanation for each item
Avoid vague language like "general damage" or "excessive wear". Be specific e.g. “Red wine stain on lounge carpet, approx. 80cm in diameter. No similar damage present at check-in. Cleaning unsuccessful. Carpet section to be replaced: £180.”
Be prompt: most TDP schemes expect deductions to be proposed within 10 working days of tenancy end.
Step 7: Understand how adjudication works
If a tenant disagrees with the proposed deductions and you cannot resolve it informally, the matter can be referred to the relevant TDP scheme’s dispute resolution service.
What happens:
Both landlord and tenant submit evidence
An impartial adjudicator reviews the case
A decision is issued, usually within 28 days
The deposit is returned in line with the outcome
Key facts:
Around two-thirds of deposit disputes in 2023 were either partially or wholly awarded to tenants
Most landlord claims fail due to insufficient or poor-quality evidence
Adjudicators do not consider emotional factors, only documentation and fairness
Using August, you can store and export all relevant uploaded documents as a single package, ideal for dispute submissions.
Step 8: Avoiding banned charges
Since the Tenant Fees Act 2019, landlords cannot charge for:
General administrative costs
Professional cleaning, unless justified by condition at check-out
Gardening, unless required in tenancy agreement and not maintained
Carpet cleaning charges that are not supported by evidence of neglect or damage
Any deduction must reflect actual loss or cost and be backed by invoices, not assumptions. Attempting to deduct banned fees may result in a formal complaint, fine, or reputational damage.
Step 9: Return the balance promptly
Once deductions are agreed or resolved, return the remainder of the deposit to the tenant without unnecessary delay. This helps reinforce professionalism and avoids escalation.
If the deposit was protected in a custodial scheme, the scheme will distribute funds. If insured, you are responsible for the return.
Delays beyond 10 working days can lead tenants to initiate formal dispute processes, even when they were not originally inclined to do so.
What if the dispute ends up in court?
While most disputes are resolved via TDP schemes, in rare cases either party may pursue action through the small claims court. Bear in mind:
This process is slower and may be costlier
Legal fees are usually not recoverable for small claims
Courts will expect strong documentation, similar to TDP standards
Avoiding court entirely should be a priority. Professionalism, prompt responses, and thorough records will almost always lead to a better outcome.
Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice or information.
