Tenant Deposits: The Low Down
Deposits are there to give a landlord, protection against any damage or non-payment of rent against their property. Typically a deposit will be returned to tenants at the end of a tenancy upon satisfactory completion of a condition report.
The landlord must put a deposit in a government-approved tenancy deposit scheme (TDP) if the property is on an assured short hold tenancy that started after 6 April 2007. In England and Wales your deposit can be registered with:
Deposit Protection Service
Tenancy Deposit Scheme
If the property is not rented on an assured short hold tenancy, your landlord can accept valuable items (for example a car or watch) as a deposit instead of money. The items won’t be protected by a scheme.
If the landlord has been given a ‘holding deposit’ before the tenancy is actually confirmed, then this deposit does not have to be protected by a scheme. When and if the tenancy commences then this deposit must be protected. Most likely it will be amalgamated into the overall deposit.
TDP schemes for Northern Ireland and Scotland are separate.
What about a 2-Month Deposit?
Landlords can ask for up to 5 weeks’ rent for an assured shorthold tenancy, but only if the annual rent is less than £50,000. This has been the case since the Tenant Fees Act 2019. However, if rent exceeds £50,000, a landlord can ask for 6 weeks’ rent as a deposit.
Usually, this entire process takes 1-2 hours, depending on the property's condition and size.
Usually, it is one month’s rent. This is adequate to protect you against tenants who leave without paying their final rental instalment. If repairs need to be offset the condition report should identify those at the tenancy's end.
Reasons to deduct from the Deposit
Some examples of why you might take money off a tenant’s deposit include any damage to the property that was not there when the initial condition report was carried out. This can consist of missing or damaged items beyond repair or if a property needs cleaning because the tenant has left it dirty. If the tenancy hasn’t followed the terms of tenancy agreement, then this too can be a reason for deduction.
All the of the above can be noted when completing the final check-out of the property. Reports2Go offer free condition report software for inventory clerks, landlords and letting agents. The software can be especially useful if there's a lot of damage or changes to note down. It can help you generate a comprehensive property condition report that states the facts with photographs that cannot be disputed.
Interested in using free property inventory software, including a free condition report template? Give us a try: signup for free today.
Gary, 22 July 2022
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