The Tenancy Security Deposit – What is it there for?

security deposit

Even though the Tenant Fees Act is now in place, preventing landlords and letting agents from charging additional fees, tenants may still find themselves handing money over without understanding what it’s for. Equally, some landlords may not know the exact rules around what can be done with the money handed over as a security deposit.

At the very least, all landlords (and letting agents) should be aware that deposits must be kept in a Tenancy Deposit Protection Scheme. However, the question still remains, what can you take out of this amount and what must you leave alone?

security deposit

The Tenancy Security Deposit – What is it there for?

Reasonable deductions

These are examples of reasons for why you may need to deduct money from a deposit:

  • Unpaid rent

If your tenant has gone into rent arrears, then some of the amount owed to you may be retrievable from their security deposit.

  • Damage to the property

You should only charge a reasonable amount. If you have been thorough with keeping your receipts for the business, you should be able to prove the original cost. Alternatively, you could replace an item, such as a washing machine or sofa, on a like for like basis.

  • Cleaning the property

The cost of cleaning a property is one of the most common deposit deductions. You can do it yourself or bring in a professional cleaning company, but the deductions still need to be reasonable. If the property is in a normal state at the end of a tenancy, you shouldn’t need to bring in a professional and incur the extra cost.

  • Missing items

If you have kept an exact inventory, you will be able to check that everything is still in the property. If an item is missing, you can take money from their deposit to pay for a replacement. Again, this should be a reasonable amount, taking into account the condition of the item when you last checked on it.

  • Restoring a property to its original state

Another situation in which you may want to make a deduction is if the tenant has changed the property in some way and you need to put it back to how it was before. For example, if they have installed a cat flap in a door or redecorated without permission.

Don’t deduct for wear and tear

You may feel like any replacements required due to wear and tear are because of the tenants using the property, but you cannot deduct money for such costs. Wear and tear is considered a typical consequence of having someone live in your property, rather than damage.

Remember to provide evidence

If you do have a valid reason to make a deduction to your tenant’s deposit, be sure to keep all paperwork as evidence, in case your tenant queries it when their deposit is returned to them. Remember, tenants can challenge a deduction if they believe it to be unreasonable.

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