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.