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Dispute resolution

This content applies to England

How disputes about the return of the deposit at the end of the tenancy can be resolved.

At the end of the tenancy, the landlord/agent and the tenant need to agree if:

  • the deposit will be returned in full to the tenant
  • the deposit will be retained in full by the landlord, or
  • part of the deposit will be returned to the tenant, and part retained by the landlord.

If they cannot reach an agreement about the amount of deposit to be returned or retained they can use the scheme's alternative dispute resolution (ADR) service. The tenant must first request the return of the deposit from the landlord (if the deposit is retained under an insurance scheme) or scheme administrator (if the deposit is retained under a custodial scheme), before the ADR service is engaged.

Alternative dispute resolution (ADR)

Each tenancy deposit protection scheme must have an ADR service for resolving disputes about the return of a deposit without recourse to litigation.[1] However, use of the ADR service is voluntary and cannot be made compulsory by the scheme.[2]

Usually the landlord and tenant must be invited to consent but there are some circumstances where consent will be treated as given, for example when one of them is missing or uncooperative.

Recovery of deposit through the courts

If either the landlord or tenant does not consent to use of the service, then the deposit should be recovered through the courts.

Where the court makes an order, the scheme must return the deposit to the landlord and/or tenant in line with the order.[3] It is important that the court order specifically refers to the deposit and/or the scheme administrator in which it is protected and includes a direction as to the amounts to be repaid to each party, otherwise repayment could be delayed until the order is amended or a separate debt order is obtained.

In the case of insurance schemes, this amount must be paid, regardless of whether the landlord has paid it to the scheme administrator. If the landlord has not paid the amount to the scheme administrator, then the scheme administrator will attempt to recover it from the landlord. If this proves not to be possible, the amount will be covered by the scheme's insurance.

The adjudicator may decide to continue, or decline to continue, with a dispute.[4] The specific rules depends on whether the deposit was protected in a custodial or insurance-backed scheme.

Wales

The legislative references and the footnotes on this page reflect the law in England. In Wales, very similar rules made under Welsh legislation apply, but the references may be different. Visit Shelter Cymru for more details about the law in Wales.

[1] para 10(1), Sch.10 Housing Act 2004.

[2] para 10(2), Sch.10 Housing Act 2004.

[3] paras 4(4)-(5) and 6(4)-(5), Sch.10 Housing Act 2004.

[4] para 10(3), Sch.10 Housing Act 2004, as inserted by art.8 Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

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