Tenants renting a property are required to pay a security deposit to the landlord before moving in. Deposits give landlords security in case of damaging the property. Typically, landlords get 5️⃣ weeks of rent which they must place in a tenancy deposit protection (TDP) scheme.
How much can a landlord ask for a deposit?
The maximum tenancy deposit that can be requested is equal to 5 weeks of rent.
For example, a property that lets for £1,500 per month would require a deposit of £1,730.77.
What happens to the money?
Us landlords, or Future Landlords, don't get to keep the deposit money in our own accounts. It's legally required to put the deposit into a government-approved tenancy deposit scheme within 30 days. This is to make sure that the deposit is protected if there is a dispute between us and the tenant. Which happens quite often...
The deposit is paid back to the tenant at the end of the agreement so long as they:
- Don't damage the property
- Meet the terms of the tenancy agreement
- Pay the rent and any outstanding bills
We must return the deposit to the tenant within 10 days.
Top reasons people lose deposits
A survey of 3,304 people done by End of Tenancy London found that 61% of people said they didn't get all of their money back.
Of the people who had money deducted:
- 80% lost an average of £200 due to the property not being clean enough.
- 68% lost an average of £320 due to damage.
- 49% lost an average of £110 due to lack of maintenance. Make sure you cut that grass.
If you dispute the amount, the deposit will be held until the problem is sorted. This can put renters in an uncomfortable position. They have to pay the first month of rent and deposit in advance for a new property before they get their deposit back.
We came across the team behind Fronted who aim to solve this exact problem. To read about their awesome product, click here.
Finally, are deposits a good thing?
Yes and no. For landlords, it's OK as they have a safeguard for most problems the tenant causes. Unfortunately, deposits are quite small to cover any big damage caused by bad tenants, so it's really only a tool to motivate the tenants to behave well a.k.a not destroy the property.
Are you a renter or a landlord? Did you ever have a problem with receiving/giving back the deposit? Please let us know.
Did we do any fun stuff this week? Check out our first NFT 👇🏼
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