Sharp rise in tenancy deposit disputes being resolved before adjudication

Early intervention between landlords and tenants across the UK is resulting in many more deposit disputes being resolved by agreement, without the need to go to adjudication.

By law, each deposit protection scheme must offer free dispute resolution services for tenants, landlords and agents who can’t agree how deposits should be distributed at the end of a tenancy. Dispute resolution can involve a number of solutions and does not automatically involve formal adjudication.

The latest data from the Tenancy Deposit Scheme (TDS) and its sister organisations TDS Northern Ireland and SafeDeposits Scotland, shows that the number of disputes over tenancy deposits, which are resolved before going to adjudication, has risen dramatically.

In England and Wales in the last 12 months, the number of tenancy deposit disputes being resolved before going to adjudication increased by 31% compared to the previous period. In Scotland, the increase was 18%, and in Northern Ireland, 56%.

Fewer than 1% of the tenancy deposits protected by TDS in England and Wales ends in a dispute at 17,628 cases between April 2018 and March 2019, but of that 1%, some 23% were resolved in the pre-adjudication stages.

For TDS’s insurance-backed tenancy deposit protection scheme in England and Wales, tenants can raise a dispute if they disagree with the deductions their landlord requests on the deposit. Agents and landlords can raise disputes too if tenants disagree with their proposed deductions. Both parties are then invited to submit evidence to TDS for review.

TDS’s alternative dispute resolution team, based in Hemel Hempstead, has now introduced an early resolution step that proactively helps both parties reach an amicable settlement, without the need for the formal adjudication process. SafeDeposits Scotland carries out the same process from its base in Glasgow.

In TDS’s Custodial schemes in England and Northern Ireland, an online self-resolution is triggered after the parties have disagreed about the repayment of the deposit. The system helps the parties to reach their own settlement through a process of proposals and counter proposals aimed at reducing the amount they are each prepared to settle for.

‘Resolving disputes over how the tenancy deposit should be divided quickly is beneficial for both the landlord and the tenant. That’s why we actively open a dialogue between the parties to secure a swift and amicable agreement,’ said Alison MacDougall, director of dispute operations at TDS.

‘Disputes can be tense for parties involved in a tenancy, but we find that by facilitating a negotiation, we can help defuse situations and settle disagreements quickly and fairly. The parties all benefit from keeping control of the decision rather than asking a third party to make a decision for them,’ she added.