Hello World! Welcome Friends! Renting out property is an excellent way to create a little extra income for your home – and for some, it can become a lucrative business. But an often forgotten corner of becoming a landlord is the ‘human element’: managing tenants, on the way in and on the way out. This can be a point of friction with many landlords, especially where tenants haven’t taken the best care of their property, and discussion can often escalate to talk of withholding deposits. But what exactly are the laws surrounding tenancy deposits, and when are you legally clear to keep your tenant’s security deposit?
What Is a Tenancy Deposit?
At its simplest, a tenancy deposit – usually to the tune of 5 weeks’ worth of rent – is a guarantee from the tenant, and a failsafe in the event of rent arrears, unpaid bills or even property damage. The deposit is a legal requirement of Assured Shorthold Tenancies (ASTs), which comprise the vast majority of tenancies in the UK. Other types of tenancies, such as excluded tenancies which cover lodgers in a landlord’s home, require deposits but not necessarily in the form of currency – and they are not subject to the same legal requirements as AST deposits.
What are the Legal Requirements Regarding Tenancy Deposits?
You as a landlord are legally obliged to place your tenant’s deposit in a government-approved Tenancy Deposit Scheme, or TDS. This is because the deposit is still technically property of the tenant, existing as a guarantee against failure to pay rent, or a failsafe for property damage. Prior to the legal requirement to use a TDS, landlords were able to exploit deposits in order to create additional income via savings or investments – and in some outlier cases, deposits were lost before repayment to the tenant.
At the end of a tenancy, the amount returned to a tenant must be agreed before the deposit is released – and any deposits must be returned within ten days of that agreement. If you and a tenant remain in dispute about the amount of deposit to return, deposit must too remain in a TDS until an amount is agreed.
Why Might You Keep a Security Deposit?
There are a number of specific situations in which you may be able to claim a portion, or the entirety, of a tenant’s deposit. Most importantly, the deposit covers any failures to pay rent or bills owed on the property, before guarantors have to be called in. More commonly, though, the deposit is used to pay for any damages made to the property by a tenant and not covered by wear-and-tear agreements. This might include repainting, replacement of furniture, re-carpeting, or even cleaning services if the property was not left as found at the start of a tenancy. Of course, if the tenant makes the wise move of using renter’s insurance to cover any damages against a property, insurance payouts will cover the cost of repairs on your behalf – saving you the headache of a tenant dispute and enabling you to return the deposit in full without losing out.
Click the links below for any posts you have missed:
Hire a Professional For All Your Electrical Concerns
Feel More Confident and Empowered
The Best Buyers Guide For Outdoor Awnings
Ensure Your Roof Is Secure and in Good Shape
I’d love for you to join my email list! You’ll receive a notification straight to your inbox which will include links to my latest home project posts! Simply enter your address below.
Thanks for stopping by! Have a wonderful day/night depending on where you are in the world! Go with God and remember to be kind to one another!
Toodles,
[…] The Low-Down On Your Tenant’s Security Deposit […]