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Withholding A Security Deposit: The Rules
Both a landlord and tenants are aware of the need for a security deposit when renting a property. A landlord also knows that it must be stored safely, should anything go wrong at a later date. A deposit should also equal four to six weeks of rent. But there’s also a fair bit of confusion over where a deposit is held and how it can be reimbursed after a tenancy – as well as when it can be deducted from. So, if you are about to list your property via an online property agent, in order to make things clear to both parties, why not have a read of our handy little guide below.
Deposit Protection Scheme
In the past, a deposit may well have simply gone into a landlord’s pocket, but since 2007 there are huge protection measures in place to ensure that this is not the case. The landlord must place a tenant’s deposit into a deposit protection scheme within 30 days of receiving it. The scheme will then hold the cash until the end of a tenancy, when it can be returned. But a landlord also has the right to withhold part of it. Should this happen, an independent arbitrator will make a decision on how it is used.
There may be one or two bold clauses in a tenancy agreement relating to when a deposit can be withheld. However, this is usually only done in the circumstances outlined below:
- A backlog in rent
- Damage to the property
- Missing items from the inventory
- A deep clean after a tenancy
Missing items which were on the original inventory are pretty clear-cut. As is damage in the form of holes, stained carpets or broken items such as curtain rails. Landlords are unable to deduct costs resulting from general wear and tear, though it’s important tenants leave the property as they found it. An inventory is essential for cross-referencing and the single best way for both landlords and tenants to fight their corner.
Many landlords will insist on a deep clean, even after the tenants have spent days cleaning up the place and getting ready to leave. A landlord must first justify these costs. This is also where photographs taken during an inventory can be invaluable regarding a landlord’s decision to deduct part of a deposit to pay for cleaning – or for a tenant’s objection to their decision.
If a landlord and a tenant cannot come to a decision between themselves over the deduction of a deposit, then the arbitration service of the deposit protection scheme will take over. A landlord must provide evidence to back their claims and a final decision will be made on these grounds.
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