Getting your deposit back: the story of Kelly Osbourne.

The stories about 28-year old Kelly Osbourne suing her landlord for the non-return of her massive $18,700 security deposit (about £11,000) on her rented California flat, must have rung a bell with many tenants who worry about getting their deposits back.

We cannot know all the specific details of this high-profile case but what we do know is that her former landlord is counter-arguing that Kelly trashed the flat, leaving it not only filthy but needing expensive repairs and renovation.  Kelly, for her part, is maintaining that her landlord never inspected the property during her occupation, or ever sent her an estimate of costs when she moved out.

Could something like this happen in the UK?  The rental market here is steadily increasing and now represents about 15 per cent of all hone occupation.  And every time a tenant moves into a new property, a deposit, usually equivalent to six weeks’ rent, has to be paid upfront.

Since 2007, it has been law in England, Wales and Northern Ireland, to protect the deposit in one of three government-approved schemes. Failure to do this means a tenant can take you to court where you can be fined up to three times the deposit.

The tenants know their deposit has been protected once they receive a certificate from the scheme to that effect.  Then, when the tenancy ends, the deposit has to be returned in full unless previously agreed deductions are made.  Otherwise, the dispute resolution service comes into play.

All this is intended to ensure that a situation like Kelly Osbourne’s cannot happen here, as a landlord is not allowed to withhold all or part of the deposit without prior agreement and mostly, I have to say, it works extremely well.

According to Sam Haidar of myDeposits,  the average deposit paid is just over £1000 and mostly, the tenant receives this back in full in checkout. Around seven million deposits have been protected since the scheme started, and only just over one per cent have ever needed dispute resolution.

When there is a dispute, it is almost always over the same issue as Kelly Osbourne’s – cleaning. Sam Haidar said; ‘All tenancy agreements state that the property must be returned in the same condition as when taken. Where there is a difference of opinion over this, the landlord has to provide robust prior evidence that the condition is not acceptable, otherwise the money goes straight back to the tenant.’

In nearly 20 years of being a landlord, I am thoroughly versed in the matter of deposits and their return.  Mostly, I’m glad to say, there are no problems at all, but it does sometimes happen that a property the tenant regards as clean, is anything but, so I always insist at the outset that the property has to be cleaned by a firm of professional end-of tenancy cleaners, at the end of the tenancy, and that either the tenant can pay for this or I will take it out of the deposit and send them the receipt.

Where there is actual damage, noticed either by myself or the agent remarketing the place, I will go round with a builder who will have a look and assess the problem. Just recently, my letting agent reported that the bathroom of a brand-knew flat was covered in black mould and I arranged with the tenant for my builder to go and have a look.

The builder was crystal clear on what had caused the mould and said to my tenant: ‘It’s a hundred per cent your fault for not putting on the extractor fan. My tenant meekly accepted blame, the builder did the work and charged the tenant direct.  He did not argue, but then, I had got a neutral, third party involved before the tenancy ended.

Security deposits are in place to protect both the tenant and the landlord, but tenants stay for five or more years, as some of mine have, you cannot expect the place to be in exactly the same condition as when newly let.  In these cases, I return the deposit in full anyway and replace items and appliances that have come to the end of their line.

But where there is real damage, s six-week deposit will not even begin to cover the damage.  I have been incredibly lucky with my tenants, but last year, a tenant trashed the flat completely.  Her deposit was around £700, and the cost of repairing the damage was over £7,000.  The flat was completely uninhabitable after she vacated it, and once again, I got builders round to assess the damage and send her their estimate for repairs and renovation.  We took photos as well, in case any evidence was needed.

She completely accepted that the dire condition was all her fault and that she would lose her deposit in its entirety.  It will take me years to get back the cost of the renovation in rent, but that’s a risk any buy to let landlord has to take on.  Thankfully, most tenants (and most landlords I have to say) are perfectly decent people.

Even if Kelly Osbourne did trash the flat, she has a point: whenever deductions are to be made from the precious security deposit, the landlord must let the tenant know in advance and back this up with proper written estimates and before and after photos – before the tenant moves out.

If Kelly wins, she could get back three times her deposit, so we shall have to wait and see.

The Times - October 2013