Before the tenancy deposit scheme was introduced tenants could lose up to a month's rent just for minor damage to a property, such as a carpet stain. But a year after the scheme was introduced, the scheme does appear to be preventing rogue landlords taking advantage and is resolving deposit disputes in a fair manner.

But what does a tenancy deposit scheme do?

For tenants, it makes sure that all, or part, of their deposit is returned to them, when they are entitled to it. Disputes are resolved more easily and rogue landlords or letting agents who don't protect a tenant's deposit will have to pay the tenant back three times the amount of the deposit.

The advantage of the tenancy deposit scheme for landlords is that tenants will be encouraged to look after their rental property.

And how does the tenancy deposit scheme work?

Landlords can either pass the tenant deposit to a third party, which will look after the money until the end of the tenancy. This is called a 'custodial scheme'. Or they can use an insurance-based scheme, whereby the landlord holds onto the deposit but pays the scheme to insure against the landlord failing to repay the tenant any money due.

There are three schemes - www.mydeposits.co.uk, www.depositprotection.com and www.thedisputeservice.com.

Within 14 days of the tenant paying their deposit, the landlord must provide the tenant with contact details of the tenancy deposit scheme being used, as well as information on how to apply for the release of the deposit, the purpose of the deposit and what to do if there is a dispute about the deposit.

In cases where a dispute arises between the landlord and tenant regarding the deposit, the scheme appoints an adjudicator to assess the viewpoints of both parties and to evaluate any evidence provided. Then the adjudicator will make a judgement as to how much money the tenant should get back.

Landlords: find out more about the tenant deposit scheme here.

Deposit disputes: when will the adjudicator decide in favour of the tenant?

An adjudicator will usually favour the tenant in deposit disputes if the landlord cannot provide evidence of damage to the property or a failure, by the tenant, to clean it.

If the landlord does not have a record of what the property was like before the tenant rented it - in other words, the landlord hasn't used a property inventory - then the landlord will find it difficult to prove that the tenant was at fault.

Examples of when a tenant will be justified to complain to a tenancy sheme:

• The landlord withholds the deposit for cleaning, but the rental property was not cleaned before the tenant moved in.
• The landlord is complaining of carpet stains, but has no evidence of damage because a property inventory was not signed at check-in.
• The landlord claimed money for the completion of a check-out report, but there was no original check-in property inventory, signed by the tenant, at the start of the tenancy.

Tenants: find out more about your tenant rights here.

How landlords can protect their rental property and defend their rights in deposit disputes

• Draw up a detailed tenancy agreement and property inventory.
• Take photos of the property before renting it out.
• Conduct the check-out report with both parties present.
• Issue instructions for vacating and remind tenants of any requirements and clauses before they move out.
• Retain any invoices, estimates and receipts for repairs to the property or work waiting to be done in case the tenant disputes the cost of repairs.

Further information
Find out more about your tenants rights
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Landlords: Download a tenancy agreement today
Download a property inventory straight to your PC now
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