Understanding Rental Deposits – the Ins and Outs

by | Jun 26, 2024 | Renting, Uncategorized | 0 comments

A rental deposit upholds a tenant’s agreement to care for the property, pay the rent and honour the tenancy agreement.  It can be up to the cost of 5 weeks rent, and is often the equivalent of one month’s rent.  A holding deposit can be placed to secure a rental agreement, and this is often the equivalent of one week’s rent.  The remainder of the security deposit would then be paid upon completion of the tenancy agreement. Once the full deposit is paid to the landlord and the tenancy agreement is signed, then the tenancy is live. When it comes to the end of the tenancy, there is a process of inspection of the property to see if it has been damaged and if the agreement has been upheld. It is also possible for a landlord to schedule mid-tenancy inspections of the place. Burke and Wills have a property services wing, that can benefit both tenant and landlord at the end of a tenancy. Here is our in-focus look at rental deposits, from both angles.

Contents

  1. Rental Deposit Schemes
  2. Short term letting  and security deposits
  3. Getting your deposit back
  4. Avoiding disputes as a Landlord – gardens
  5. Changes during the tenancy
  6. Inventories
  7. Burke and Wills Property Services

Rental Deposit Schemes

A rental deposit scheme protects the tenant’s deposit once it is given to the landlord. It is a landlord’s responsibility to place  the deposit in a government- approved tenancy deposit scheme.  This applies to a shorthold tenancy agreement.  The rental deposit will be returned in full to the tenant, providing there are no grounds for dispute or damages.  If a tenant fails to meet the terms of the tenancy agreement, damages the property or can’t pay rent or bills, then there may be deductions from this deposit.  Every landlord is obliged to place the deposit in a scheme within 30 days of receiving it.  There are several government endorsed companies that specialise in this.  It can be reassuring for both parties to know that this money is protected and there is a solid procedure in place when it comes to returning the deposit.

Short-term lets and security deposits

If you are using the Airbnb platform as part of your travel, or as a way of making income from your property, you may have come across the security deposit option.  Hosts do not have to set a security deposit, and many don’t as it could deter bookings, but it remains an option. The Airbnb Resolution Centre is a place where hosts can request reimbursement for any damages incurred during a stay.   The security deposit is a sum that hosts can request before booking, or set up as a requisite for their listing.  The Resolution Centre functions to resolve smaller issues, but a security deposit acts as an incentive for guests to observe the host’s rules and can deter people who may plan to have a party in the listing. Airbnb and other letting platforms do have insurance to cover aspects of process.  While this is conveniently built in, it is somewhat superficial. If you are renting regularly, you may want to consider a house insurance add-on with Pikl.  Depending on the nature of your rental and the frequency of the lets there are different options to explore.

Getting your rental deposit back

As a tenant, getting your entire deposit back will be important. Depending on your rental agreement, there will be stipulations for what is classed as wear and tear and what is damage.  Essentially, returning the property to the state it was in when you arrived is a good guideline to follow. An end-of tenancy clean may be part of your agreement, if not it is recommended. Plus, the landlord may have an inventory of everything in the property, including photos of all the paintwork.  It may be a good idea to touch up the paintwork, take down shelves and generally fix up anything that falls within the tenant’s remit according to the agreement.

Avoiding disputes as a landlord

The National Residential Landlord Association is an informative resource for landlords. They state that gardening is one of the top 5 reasons for deposit deductions. In general, tenants have responsibilities to maintain the garden at a superficial level, while the landlord is responsible for overall maintenance. General expectations of tenants include:

  • Mowing the lawn during the summer months
  • Weeding pathways and flowerbeds
  • Disposing of garden waste
  • Pruning low growing shrubs
  • Alerting the landlord to any changes in the garden and its structure- for example a broken fence, dug-up lawn or damaged gate.

To avoid these disputes it is important to have a clear garden clause within the tenancy agreement.  As a tenant, consider in advance whether it is possible to maintain the garden during the tenancy, depending on its size and your availability.  People new to gardening can find that simple tasks are very time-consuming in the garden.  It is recommended for landlords to take timestamped photos of the garden before the rental period so it is easy to settle disputes and include gardening equipment in your inventories.

Changes during the tenancy and the rental deposit

Sometimes tenants within a tenancy may change, someone may move out and someone else in.  While the landlord can allow alterations to the tenancy agreement and change the names of the residents, it is important to have clarification around the deposit and liabillity.  An ideal situation, one endorsed by The Tenancy Deposit Scheme, is to end the agreement, and release the deposit, once the property has been checked and assessed alongside an inventory.  If there are multiple tenants, and only one is leaving, ending this agreement may mean repaying the outgoing tenant their share of the deposit. In this case, it is advised to set up another tenancy agreement with the existing tenant, and sign a waiver with the outgoing tenant that they have no claim to the deposit. To avoid complications, the TDS Custodial Scheme has a changeover feature that makes light work of this admin. The scheme makes it makes it easy to change names on tenancy agreements, repay persons, and adapt tenancy agreements seamlessly.

Inventories

Inventories are a  safeguard against unpleasant disputes between landlord and tenant. Now it is easier than ever to make inventories with a mobile phone, making sure images are time stamped for validity.  Tenants and landlords alike are encouraged to document the space at the outset of the agreement.  As experts in home removals and bespoke business removals, we know that a good inventory is worth its weight in gold. Depending on the furnished or unfurnished status of the rental, you will want to make a record of all the important aspects.  Part of our property services for landlords includes making inventories as well as handling property inspections on behalf of landlords. We can also be on hand to check your new tenants in and check them out.  Our Compliance service can also ensure you are up to date with all required certificates and checks to maintain your property in accordance with the law.

Burke and Wills Property Services

Our property services allow landlords to manage their property remotely as we provide many top-end services in this sector. Similarly, if you are a tenant leaving a property and want to go out with a fine finish, our cleaners and handymen can professionally prepare your rental for inspection. Here is our range of services that go into our property management sector.  Our team of qualified and professional tradespeople covers all these bases.

  • Plumbers
  • Electricians
  • Painter and decorators
  • Deep cleaning
  • Landlord Compliance
  • Inspections mid and post tenancy
  • Tenant check-in and check-out

The beauty of Burke and Wills property services is swift and professional workmanship, without the waiting time. Once you agree on a quote, you can book a time slot and a member of the team will be there as agreed. Read our reviews here and get in touch with the team to discuss options.  We will be only too happy to help you get your deposit back or to assist you with your rental property.