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What Can Landlords Deduct Or Withhold From A Security Deposit?

When renting a property everyone is aware of the need for a security deposit. Tenants realise they’ll have to pay it. And landlords know a deposit is a safeguard should things go wrong. It’s also generally accepted by all parties that the security deposit will usually be equal to four to six weeks rent.


But despite the familiarity with the need for a security deposit, there’s still some confusion surrounding it. What happens once it's paid? And what deductions is the landlord able to make from the deposit at the end of the tenancy? Some tenants too are confused about exactly how they go about getting their deposit money back when they leave the property. We’ll try to make things a little clearer here.


Deposit protection scheme


Tenants may be under the impression that as soon as they pay a deposit it disappears into the landlords back pocket. That may have been true in the past.  But since 2007 the landlord has had to protect the money in a government-approved scheme. The landlord must do this within 30 days and supply the tenant with all the details of the scheme.


This scheme ‘holds’ the money until the end of the tenancy when it’s returned to the tenant. However, the landlord can ask to withhold some or all of the deposit. But the tenant has the right to dispute any deductions. If this happens an arbitrator will decide how the deposit money is distributed.


Deductions from the security deposit


There is some confusion about what landlords can deduct from a deposit. There may be clauses in the tenancy agreement specifying penalties but generally deductions can only be made for:


·         Rent arrears.

·         Damage to the property or fittings.

·         Items which are missing from the property.

·         The costs of end of tenancy cleaning.


In the case of rent arrears, there should be little room for dispute. The rent schedule should be clearly set out in the tenancy agreement. But if the tenant is in arrears at the end of the tenancy the landlord can deduct the amount owed from the deposit. Should the arrears owed be greater than the deposit the landlord may have to take court action to recover the balance.


Damage and missing items


Missing items speak for themselves. It’s pretty obvious if a microwave is missing for example. But claims for damages can be contentious. Holes in the wall, pulled down curtain rails and stains on the carpet are common examples of damage. By the way, landlords are unable to deduct costs for normal wear and tear. But the tenant must leave the property in the condition they found it.


In disputes over damage and missing items, the inventory is invaluable.  The inventory shows the property and all its fittings as they were at the start of the tenancy. Comparing the inventory to the end of the tenancy report is the best way for either party to prove their case.


It’s always wise to compile an inventory. It benefits both parties. But without one the landlord will have problems successfully claiming for costs against the security deposit.


The costs of a deep clean


A common cause for dispute between tenant and landlord is cleaning costs. Most tenants will have a big clean up as their tenancy draws to a close. Yet the landlord will often find cause to do more. Of course, the landlord must justify the need and costs of the extra cleaning. Again, the photos from the inventory will again be vital evidence in deciding who’s right if the tenant disputes the costs.


What happens in a dispute?


We’ve talked about landlords making deductions from the security deposit. But it must be emphasised the tenant must agree to the deductions. If tenant and landlord can’t agree then they should use the arbitration service provided by their deposit protection scheme. The landlord has to provide proof to back up their claims. It’s then up to the adjudicator to decide who’s right.


Should there be no disputes a tenant must receive their deposit back within ten days of the tenancy ending.

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