Sorting out disputes

Each scheme has a way to sort out disputes between tenants and landlords over how much deposit should be repaid at the end of a tenancy. The ‘dispute resolution mechanism’ reduces the need to involve courts over tenants' deposits.

Overview of the dispute resolution mechanism

Before referring a disagreement to dispute resolution, a scheme administrator must be satisfied the tenant and landlord tried but failed to resolve a disagreement.

When a tenant or their landlord disagree about the deposit, one of them can ask the scheme administrator to send the case to the dispute resolution mechanism.

It is free to use the dispute resolution mechanism. 

Agreeing to use the dispute resolution mechanism

When a landlord asks for a referral, the administrator will only refer the case if the tenant agrees to use the dispute resolution mechanism. 

When a tenant asks for a referral, the scheme administrator will refer the case even if the landlord doesn't agree to use the dispute resolution mechanism.

Disagreement about a deposit in a custodial scheme

In a custodial scheme, the scheme holds and protects the tenant's deposit during a tenancy.  If a tenant disagrees with the deposit the landlord asks the scheme administrator to repay, they should tell the scheme administrator:

  • the amount they think should be repaid
  • the reasons why
  • they want the disagreement to go to dispute resolution

Disgageement about a deposit in an insurance scheme

In an insurance scheme,  the landlord holds the tenant's deposit which is protected through the scheme rules.

If the tenant and landlord disagree about the deposit to be repaid and the tenant tells the scheme administrator their reasons for the disagreement, the scheme administrator will tell the landlord to pay the disputed amount to the scheme.

When they receive the amount from the landlord, the administrator keeps this in a special bank account until the landlord and tenant agree.  The scheme administrator uses the dispute resolution mechanism to reach an agreement.

When a tenant can start dispute action

 A tenant can use the dispute resolution mechanism after they leave the landlord's property. Each scheme provider will have a timescale for referring a disagreement to their dispute resolution mechanism. 

How long a decision about a deposit  takes

The scheme administrator will ask the tenant and landlord to provide evidence supporting the disagreement. Each scheme will decide the evidence they need.

An independent adjudicator will look at the evidence to reach agreement about how much of the deposit should be repaid, 

The adjudicator will make a decision within 20 working days of the scheme administrator passing the case to them.  The tenant, landlord and scheme administrator must be told the adjudicator’s decision within five working days.

Reviewing an adjudicator's decision

If the tenant or landlord disagree with the decision, they can ask for a review. But they must do this within ten working days from the date they got the decision

They can't ask for a review because they're dissatisfied with the decision. They can only ask for a review if the adjudicator:

  • made a mistake in the law
  • failed to consider factual supporting evidence

Following a review, the adjudicator's decision is final. When all parties get the final decision, the scheme administrator must return the deposit within five working days.

Going to court about a deposit

A tenant doesn't have to use the dispute resolution mechanism about their deposit. They can take court action against their landlord. The timescale for court proceedings can be long.

If a tenant's deposit is in a custodial scheme and they tell the scheme they're taking court action to resolve the disagreement, the scheme will write to the landlord. The landlord has 30 days to respond.

After 30 days, the scheme must pay the tenant the amount their landlord agrees is due to them within five working days. The court decides what happens to the rest of the deposit.

When a tenant's deposit is in an insurance scheme and they tell the scheme they're taking court action,  the scheme has no role in the process. 

The landlord holds the deposit until the court decides how the disagreed amount should be paid.

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