Landlords in Wales have found themselves unable to make deductions to deposits when using occupation contract templates, it has been claimed.

The Welsh government’s model agreement specifies contract holders’ obligations and that a deposit can be taken, explains David Smith, property lawyer at JMW, but nothing in the contract permits for a deduction to meet losses incurred by a landlord due to a contract holder’s breaches.

Deposit protection schemes such as mydeposits, DPS and TDS adjudicate in the event of a dispute by reviewing the terms of the contract and the evidence that supports deductions being made, says Smith, who adds that many landlords and agents – who have quite reasonably used the model written statements as a template or lifted chunks of wording wholesale – could run into difficulties.

Court

“There would be a civil claim in court for those losses, but no clear wording exists that permits the money to be deducted,” he adds.

“For some this is irrelevant as they will be using their own custom versions of an occupation contract which will have such provisions in. But a great many landlords will simply be using the freely available model agreement and will be shocked to find that they have no basis to make any deductions at all.”

He believes this problem will get worse as more contracts end and landlords seek to make deductions. The Welsh government needs to fix the model contract so that it deals correctly with deposit deductions, believes Smith.

“However, that cannot fix the contracts already in use and to deal with this the only option would be to make an urgent amendment to the Renting Homes (Wales) Act itself to permit deposit deductions to be made irrespective of wording in the contract or to imply such a term into a contract regardless of its existence.”

Comment

Tim Frome (pictured) Head of Government Schemes on behalf of mydeposits, says: "Although it may be surprising for landlords who have taken a deposit from a tenant, if the tenancy agreement or occupation contract as it is now called in Wales does not have a clause specifically stating that money can be deducted from the deposit to cover the tenant’s breaches, then the landlord is unable to make any claims for this purpose.

"We have not yet had to disappoint any landlords by explaining this to them after a deposit dispute has been raised but this is likely to occur soon.

"We would recommend landlords update their contracts with a clause to make it clear that money can be deducted from the deposit to cover any breaches of the tenancy otherwise there is little point the landlord taking a deposit."