What is a Security Deposit?
A security deposit is a sum of money that is paid by a tenant to the landlord usually before a tenancy commences or on the date of commencement of the tenancy.
This deposit is held by the landlord and/or their agent and should be returned at the end of the tenancy to the tenant, subject to there being, no rent arrears, bills, taxes, charges due or damage beyond normal wear and tear.
How Much is a Security Deposit?
A landlord cannot seek a deposit for a property that is more than the equivalent of one month’s rent for that property. The security deposit should be agreed and a signed and dated receipt provided to both the landlord and tenant.
When Should a Security Deposit be Paid?
A tenant will normally pay a deposit as part of agreeing to rent a property. It is recommended that a tenant only pays a deposit when they are happy with the property and the terms and conditions of the letting agreement and are clear on everyone’s rights and responsibilities. A tenant should avoid paying a deposit in cash and always get a receipt.
Who Holds the Security Deposit?
At the outset of the tenancy it should be clear who is holding the security deposit and who will be responsible to return it at the end of the tenancy. Contact details of the landlord and agent retaining the deposit should also be obtained at the outset of the tenancy. The contact details of a landlord should be provided irrespective of who retains the deposit.
In a situation where an agent is leasing the property on behalf of the landlord, the deposit is normally handed over to the agent.
When Should a Security Deposit be Returned?
The security deposit should be returned to the tenant promptly at the end of the tenancy, unless lawfully withheld.
The deposit does not have to be returned to the tenant on the day they leave the accommodation, however the landlord must return the deposit promptly. Time should be allowed for an inspection at the end of a tenancy, and for any repairs/ cleaning to be carried out.
Reasons why a Security Deposit may be withheld
A landlord may be entitled to retain some or all of a deposit where there has been damage to the property beyond normal wear and tear, or where there are rent arrears, unpaid bills and charges.
If at the end of the tenancy, there is rent outstanding, the landlord may retain part or all of the deposit to cover the rent arrears.
Deductions may be made or the deposit retained in full, if there has been damage above normal wear and tear to the property.
Examples of these damages or deductions could be:
A broken window.
Holes in the wall.
Leaving litter or personal items in the property
Leaving the property in an unhygienic or unsafe condition
Not returning the property in a clean manner
Items broken or missing from the inventory
If a tenant provides insufficient notice of their termination of the tenancy, or they terminate a fixed term tenancy before the end of the agreed term
Outstanding utility bills and other charges:
If the tenant owes money for utility bills, such as gas or electricity, and the utility bill is in the landlord’s name, the landlord may withhold part or all of the deposit to cover these costs. The tenant should always retain a copy of the bills to ensure that payment is applicable to what is being owed
To find out more information on security deposits, download the Security Deposits checklist below in the Download section.