I was recently sent a document from the Dispute Service, one of the three approved tenancy deposit protection providers under the Housing Act 2004. It was described as an “Evaluation of the Legislation” but is really more of a summary of the statistics relating to deposit protection. However, it is no less interesting for this.
The figures show a rapid increase in the numbers and amount of deposit money protected with around 2.5 million deposits now protected and a current total sum of money protected of £2.3 billion.
The average size of a deposit has not increased significantly over the same time although is has fluctuated up and down a fair bit but remains at around £900. However, the report suggests that there is a wide disparity in deposit amounts across the various regions of England & Wales. This is not a surprise as rent levels across the regions also show a wide disparity with London and the South-East at a significantly higher level than other areas.
Disputes rose swiftly from March 2008 onward but have levelled off sine March 2010 at around 20,000 per annum. One would expect that level to remain relatively static with a small increase to reflect the growth of the sector.
One of the most interesting statistics is the number of disputes as against the number of deposits protected. Less than 1% of protected tenancies result in a dispute. This is massively at odds with the oft-quoted statistic advanced by the National Association of CABs and the government prior to the introduction of the legislation which suggested that as much as 40% of tenants had had their deposit witheld unreasonably. Unless there has been a dramatic change in attitudes by landlords as a result of the legislation this statistic now looks very doubtful. What does seem likely is that landlords and agents are becoming better at explaining their deductions and resolving deposit arguments without involving the scheme.
Many landlords look at the deposit as a means to recover unpaid rent. Indeed, most deposits are set with reference to the rent figure, partially for that reason. In that context it is worth noting that only 10% of deposit disputes relate to arrears of rent, while over 55% relate to damage and cleaning issues. Of course, these figures may be incorrect as a fair few deductions for arrears will occur on the back of a possession order for rent arrears from a court which will not normally then require a deposit dispute to be raised. However, TDS own data would seem to suggest that these figures are not too far out as they show that while rent arrears figures in around 18% of cases, cleaning issues figure in around 52%. Therefore landlords and agents should consider carefully the reasoning behind taking a deposit and also think about what they can do to assist tenants with cleaning properties to the right standard. More work could be done on making clear to tenants what is expected in terms of cleanliness.
The other key statistic is about how disputes are settled by schemes. All schemes show a split award in a good number of their cases. It is notable that both MyDeposits and DPS show the full deposit going to the tenant in over 40% of cases while TDS only shows this in around 23% of cases. Some landlords will consider this evidence of bias in two of the schemes while tenants may assert that TDS is biased against them. It is probably a reflection of the fact that TDS is mostly used by professional agents who are less likely to pursue a pointless dispute and who are also more carefully trained in how to present a good quality submission. TDS has done a lot of work to make clear how it decides disputes. The other schemes could learn from this. Alternatively there is undoubtedly a gap in the market for other providers to jump in and provide training to landlords on how to get the best from their schemes.
This report is a useful contribution to the literature on tenancy deposit protection and TDS should be applauded for taking the time to produce it.