Tenancy Deposit Protection introduced not only the need to protect deposits at the start of the tenancy and to give prescribed information, but also rules about the ending of the tenancy. For the first time, there will be more external examination of the procedures and processes that have happened since the property was first let.

One of the reasons deposits have traditionally been held is to have control at the end of the tenancy and to have ready access to money to fund repairs and cleaning if these should be needed.

Unfortunately, owing to the new TDP rules we effectively have no control and no ready access to money and this may require a rethink about some processes. For example, before TDP legislation, if the property needed cleaning it could be done, using the tenant's deposit money, as soon as the tenant had moved out. Now, unless the tenant agrees to the deduction, and it does not matter which scheme is used, the deposit will not be available in the time span needed to pay contractors. This will mean landlords have to fund the immediate costs and then claim them back.

The choice of what is billable will also be open to scrutiny. The law allows tenants fair wear and tear and so the concept of charging a tenant for a brand new carpet, or whatever is damaged, will not be supported. It does not matter that the carpet was brand new on move in, they cannot be expected to leave a brand new carpet. The cost of the new carpet should be reduced by the age on move out as a percentage of the anticipated life expectancy. Therefore, a carpet with a life expectancy of 10 years, and five years old on move out, cannot be charged at more than 50% of the replacement cost even if the tenant steals it or destroys it. This does not work like insurance on a new for old basis. 

Each scheme has its own rules to comply with for what has to be done on move out. However, there is little doubt that this will often cause delays. For example, some insured schemes (where the landlord or agent still hold the deposit) require from the tenant the written agreement to deductions. This will take time, even if the tenant bothers to reply.

There is a significant risk that more tenants may not pay the last month's rent to recover the deposit. Not because they  have any reason to fear it not being returned, but simply because they do not want to have to clear the administrative hurdles that may  be required to comply
with the scheme rules.

Where tenants abandon property or simply refuse to keep in contact after the end of the tenancy, there are specific rules to be followed. All of these are effectively more burdensome than the previous system where the agent could make an immediate decision and it was down to the tenant to make his case.

The old system very much put the onus on the tenant to complain and initiate the court action if agreement could not be reached. The new system means that neither landlord nor tenant can do anything quickly with out the agreement of both parties. The new system also hands to a third party control over decisions about the amount and liability. This third party, whether the courts or ADR, will not have seen the property before or after the tenancy. They will work purely from the paperwork the parties are able to send in.

To ensure a reasonable chance of success it will be important to invest in good quality inventories and check-in and check-out reports.

With adverts about the new schemes being publicly displayed it is very likely that, at least in the short term, there will be an increase in disputes. In Australia where they introduced a similar sort of deposit legislation the number of disputes rose to about 20% (one in five tenants vacating) in the early years. Over time it dropped back as the parties realised that they would not always win, even if they went to dispute resolution.