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Monday, May 09, 2011

Tips On Tenancy Deposit Disputes 41: Betterment

Tip 41: The Principle Of Betterment
This is one that always comes up in the training courses I run for inventory companies. Betterment is an insurance principle, and it essentially means that you cannot claim for more than you have lost.
A good example of betterment in action is in car insurance. If you buy a brand new motorcar and after six months of driving it it is written off, you are not normally entitled to a brand new car as a replacement. A brand new car would be worth more than the six month old car that you have lost, and if the insurance company were to buy you one, you would be better off than you were to begin with. The insurance company will only allow you to claim for what you have lost and will give you something akin to the market value of your six month old car.
The deposit protection schemes, in accordance with industry best practice, will employ the principle of betterment when assessing your claim. A common way to award betterment is to calculate an annual depreciation value (the cost of a replacement item new divided by the number of years reasonable lifespan), and multiply that by the number of years use you have been deprived of.
(Replacement cost / reasonable lifespan) x years use lost
So a claim for an £800 carpet, ruined after just 3 years, that might be expected to last 10 years in a rental property would be valued at £560.
(800/10) x 7 = 560
The depreciation value of the carpet in the above example is £80 per year. The landlord has lost 7 years of useful life from the carpet.
Tom Derrett is the Principal of Deposit Claim, an experienced deposit protection adjudicator and an expert on the Deposit Protection Schemes. Tom helps landlords to claim money through the deposit protection schemes.

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