Deposit deductions: Everything you need to know

Handing over up to 5 weeks of rent when moving into your new rental home can leave your bank account looking a little sorry for itself. Maximise your chances of getting your deposit returned to you in full by taking a look below at some common pitfalls.

What is a tenancy deposit and why do I have to pay? 

A tenancy deposit, or a security deposit, is a sum of money held by the landlord in trust to ensure the property owner against default by the tenant, or to cover any damage. Suzy Hersham, Head of Dispute Resolution at mydeposit, explains, “By law, the deposit remains the tenant’s money throughout. At the end of the tenancy, the tenant is entitled to a full refund UNLESS the landlord can show, with evidence, that they have a claim and may then propose deductions.” 

What is the difference between a Holding Deposit and a Tenancy Deposit?

A holding deposit differs from a tenancy deposit in that it is usually only the equivalent of one weeks rent, and is taken by the landlord so that they can take the property off the market whilst they conduct their reference checks. It must be refunded in full within 7 days of the landlord and tenant signing the tenancy agreement (unless the tenant has agreed in writing for you to use their holding deposit toward their rent or deposit). 

Common tenancy deposit deductions 

Deductions made by your landlord should of course always be realistic and any sum claimed should reflect the genuine cost of any works or loss. A landlord cannot profit from making deductions to a tenant’s deposit, this being known as ‘betterment’. For example, they could not replace an ordinary damaged spring mattress with a luxurious orthopaedic mattress and charge the tenant an excess for this. Your landlord should also account for the usual ‘wear and tear’, though it is worth bearing in mind that ‘wear and tear’ is open to interpretation. Here are some common deductions that landlords make when returning your deposit at the end of a tenancy: 

Cleaning costs 

Cleaning is the most common reason for deductions from a tenant’s deposit (and can be quite costly) so the more you can do yourself the better off you’ll be! The rule of thumb is to leave the property in the same standard of cleanliness as it was when you moved in. 

Damage 

Your landlord is likely to ask you to cover the costs of any damage you caused within the property. Be sure to report any maintenance issues too as failing to do so could be viewed as neglect, thus leading to

further deductions if avoidable damage has been caused as a result. It goes without saying that any malicious damage, that’s damage caused with intent, will also be deducted from your deposit. According to a survey by Simple Landlords, vandalism is the fourth most common claim made by buy-to-let investors, with an average cost of repair ranging from around £1,300 (LSLPS) to nearly £2,000. Check out the benefits of our trusted UK Rent Guarantor service. We’re happy to cover any malicious damage of up to £10,000 per property after a one off fee is paid by the tenant. 

Any unpaid rent or outstanding utility bills 

Your landlord is entitled to use your deposit to cover any rent arrears. If you disagree with your landlord about any rent owed be sure to show them proof of what you have paid. Deductions can also be made to cover any outstanding bills, and if the bills are indeed in your name we advise taking a photo of any final meter readings when you move out and giving a forwarding address to the utility companies so they can send you a final bill. 

Changes to the property 

You shouldn’t make any significant changes to the property without first getting written permission from your landlord to do so. If you fail to get permission from your landlord and the property is not returned to its original state, a landlord would be well within their rights to deduct money from your deposit in order to do so themselves. 

Deposit Protection 

Deposit Protection was introduced in April 2007, as part of the Housing Act 2004. It’s worth knowing that by law, all landlords and letting agents must put your deposit in a government-approved tenancy deposit scheme (TDP) within 30 days of receiving it, if you rent your home on an assured shorthold tenancy. This makes sure that you will get your deposit back if you have met the terms of your tenancy agreement, haven’t damaged the property, and have paid your rent and bills. 

Consistent communication between tenant and landlord, an inventory carried out by a third party accredited inventor prior to signing the agreement (essential!), as well as a thorough understanding of the terms and conditions in the contract will reduce your chances of any surprises when the tenancy comes to an end. 

Check out our related article: Tenant Damage that does NOT count as fair wear and tear.