Deposit disputes are the most frequent landlord–tenant disagreement in England. Most disputes are not about whether damage occurred, they are about whether the deduction is legally justified. This guide sets out what you can and cannot deduct, how to document a claim, and how ADR adjudication works.
The legal framework
Deposits must be protected in one of three government-approved schemes: Deposit Protection Service (DPS), MyDeposits, or Tenancy Deposit Scheme (TDS). At the end of the tenancy, if there is a dispute over deductions, the scheme's Alternative Dispute Resolution (ADR) service adjudicates for free. ADR is binding and typically faster than county court.
What you CAN deduct
- Damage beyond fair wear and tear, breakage, burns, stains, holes in walls, damaged fixtures
- Unpaid rent, any rent outstanding at the end of the tenancy
- Professional cleaning costs, where the property was returned in materially worse condition than at the start (requires like-for-like evidence)
- Garden deterioration, where the tenancy required maintenance and the garden was returned in a significantly worse state
- Missing items, items documented in the check-in inventory that are absent at check-out
- Unauthorised alterations, cost of reinstating a wall, restoring paintwork, removing a fixture added without consent
What you CANNOT deduct
You cannot deduct for the gradual deterioration of a property through normal use over time. A 5-year-old carpet at the end of a tenancy has depreciated. You can only claim the residual value, not the full replacement cost.
- Fair wear and tear, faded paintwork, minor scuffs, light carpet wear, small marks on walls from picture hooks
- Pre-existing damage, anything already damaged at check-in and documented in the inventory
- Improvements, you cannot deduct for something the tenant improved
- Normal cleaning, end-of-tenancy cleaning must be compared against check-in condition, not a showroom standard
- Above-replacement costs, you can only claim the depreciated value of the old item, not a brand-new replacement
The age-and-condition formula
ADR adjudicators apply straight-line depreciation. A carpet with an expected 10-year lifespan replaced after 6 years has 40% of its useful life remaining. If replacement costs £500, the maximum recoverable deduction is £200. Apply this formula before submitting any claim, adjudicators will reduce overclaimed amounts.
Evidence required to succeed
- Check-in inventory with photos, timestamped, condition noted item by item, signed by tenant or tenant given opportunity to sign
- Check-out report with photos, taken within 24 hours of vacation, matching check-in scope
- Quotes or invoices, at least one competitive quote; inflated single invoices are discounted by adjudicators
- Tenancy agreement, proving the scope of the tenant's maintenance obligations
The ADR process
- Notify the tenant of proposed deductions within the scheme's deadline (typically 10 days after tenancy end)
- If the tenant disputes, either party raises ADR with the scheme
- Both parties submit evidence within the scheme deadline (typically 14 days)
- An independent adjudicator reviews without a hearing
- Decision issued within 28 days, binding on both parties
- Scheme releases the deposit according to the decision
Unprotected deposits
Failing to protect a deposit within 30 days and serve Prescribed Information exposes you to a court order to repay the deposit plus a penalty of 1–3× the deposit amount. You also cannot serve a valid Section 8 Ground 8 notice until the deposit position is regularised.