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Hope someone can throw some light on this for me. Details are limited as it relates to a case I heard about through a relative.

 

The summary is that the tenancy has ended for a furnished property and the letting agency is retaining the entire deposit of several hundred pounds and is likely to be demanding an additional amount because of what seems to be fair wear and tear, for which a significant amount is cleaning costs.

 

Something I immediately suspected was that if the landlord was claiming as expenses, a 10% allowance for fair wear and tear, or, renewal allowances, then someone (either the tenant or HMRC) will have been defrauded.

 

Would this be a more effective angle to tackle the apparent greed of the landlord/agent than the tribunal type approach?

 

Appreciate any help....

Edited by outlawla
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presume deposit is protected, then claim and raise dispute with TDS or DPS, or take LL to court for its return, then any deductions will have to be justified in front of judge.

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Thanks raydetinu

 

Sorry I'm being vague but my knowledge of the details is limited. I don't know which one is being used but I believe they are going through some dispute organisation or ombudsman.

 

Good point about justifying deductions. I suppose they'll need to produce receipts etc.

 

Any thoughts though on what would effectively be tax evasion, if the landlord uses capital allowances to reduce tax liability while also using the tenants money (the deposit) to pay for renewals?

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It is also illegal for the LL to achieve betterment, ie replace old with new and charge the Tenant.

was there an inventory at move in? and if so was it detailed?

I am not a solicitor :!::!:

 

Most of my knowledge came from this site :-D:-D

 

If I have been helpful in any way at all .............. Please click my star..... :-(:-(

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LL dont have to produce receipts except in replacing damaged items etc.

LL is entitled to make deductions for cleaning etc., if justified and for other items, however allowance for normal wear and tear must be taken into account.

Cant claim for replacing carpets, new for old basis say.

Need more info. to comment really.

The tax issue is between LL and HMRC, nothing to do with deposit deductions, just how LL pays for renewing items that need replacing on a wear and tear basis, and maintenace which tennant does not pay for.

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It is also illegal for the LL to achieve betterment, ie replace old with new and charge the Tenant.

was there an inventory at move in? and if so was it detailed?

 

Another good point. I'll pass on these questions.

 

Regarding the cleaning costs, I believe the tenant had cleaned the property before vacating and the agent argued that some dust had been missed. Whether the transgression was quite that trivial I'm not 100% certain, but you get the idea.

 

EDIT:

 

Regarding an inventory, I'm guessing there was one, but in connection with this, I believe the agent is proportioning some of the deductions for marks on one of the walls which were already there before the tenant moved in.

Edited by outlawla
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...The tax issue is between LL and HMRC, nothing to do with deposit deductions, just how LL pays for renewing items that need replacing on a wear and tear basis, and maintenace which tennant does not pay for.

 

I suppose the tax issue has nothing directly to do with deposit deductions, but if the tenant was aggrieved by the landlord's actions I would have thought it reasonable that the tenant use the potential tax evasion angle as either a persuasive argument in changing their minds or failing that, a way of getting even.

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why is it tax evasion? which would be illegal and if you actually said that would be slander or libel so be careful.

The 10% rule is perfectly legitimate way of offsetting tax against income.

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why is it tax evasion? which would be illegal and if you actually said that would be slander or libel so be careful.

The 10% rule is perfectly legitimate way of offsetting tax against income.

 

A simplified example for illustration purposes only:

 

A landlord receives rent of £7,000 in the relevant tax year in respect of furnished letting.

 

He submits his tax return and uses the 10% fair wear and tear allowance of the income (£700) which HMRC allows for items in need of replacement.

 

This offsets his income which has now reduced to £6,300.

 

He is liable for tax at whatever rate it is (let's say 20%) on £6,300

 

Tax bill is then £1,260. This is £140 less than if the 10% wear and tear had not been applied.

 

If for example the deposit is £700 and the landlord retains all of this for renewals etc., then his income has effectively become £7,000 again so the £140 referred to above will have been evaded.

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Why should the LL retain all the £700 deposit! he can only claim legitimate deductions, not including wear and tear ( cant claim for that )

which must be itemised and a value put on it.

If there is no agreement with the tennant then a dispute can be raied or go to court to settle.

the key is the inventory/condition inspection done and agreed at the start and then at the the end of the tenancy.

if no inspection done aat the start then the LL has a problem.

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