#AskTDS: “Can I use my deposit to cover my final month’s rent?”

Can I use my deposit to cover my final month’s rent?

As they reach the end of the tenancy, tenants sometimes ask landlords to accept their deposit to cover the final month’s rent. Although landlords may be prepared to do this, they are not obliged to, and it may be in both parties’ best interests to wait until the end of the tenancy and follow the standard procedure to deal with the deposit.

The deposit is taken from the tenant to protect the landlord’s interest, the property, and is protected in a Government-backed scheme to ensure that the tenant can access the deposit at the end of the tenancy. If a tenant’s deposit is equal to one month’s rent it may seem sensible for the tenant to offer up the deposit to cover the rent, but this can leave the landlord high and dry or the tenant open to court action if something were to go wrong.

For example, if the landlord accepts the deposit in lieu of the last month’s rent, he or she will have no immediate protection against potential damage, cleaning, redecoration, or other works required in the property at the end of the tenancy.

Assuming the deposit is the equivalent of a month’s rent, accepting the deposit as a substitute for the final month’s rent will mean that the landlord cannot access the alternative dispute resolution (ADR) service, which is offered for free by TDS. This is because the use of the deposit has already been agreed by the parties, leaving nothing for the adjudicator to distribute.

Costs above and beyond the deposit value would have to be pursued by other means. The landlord would either need to further the claim by taking the tenant through the courts (after seeking legal advice) or absorb the cost of redecoration and repairing the damage themselves.

Landlords will therefore likely choose not to accept the deposit as the final months’ rent as this is held as security against the tenant returning the property in the condition it was let to them in.

For tenants, looking after the property during the tenancy and returning it the way you found it, as well as paying your rent in full, should ensure that you receive your deposit back in full and that you are not liable for further claims.

While it may seem like a simple solution, using the deposit against rent can cause issues for landlords and tenants further down the line. Landlords should always ensure they have accounted for any additional costs and ensure that the tenancy agreement allows them to recover these costs from the deposit.

For more tenant tips please see our tenant FAQ page.

About TDS:

Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.

We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.

TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.

TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.

TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.

TDS Northern Ireland: TDS is Northern Ireland’s leading and only not for profit tenancy deposit protection scheme.

TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.

These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.

ARLA|Propertymark: For agents who would like to stay up to date, you can contact Propertymark | ARLA at: join@propertymark.com. By being a member of Propertymark | ARLA you will be eligible for TDS Insured best headline rates.

RLA: If you are a landlord and would like to keep up to date with any changes that may affect you or your responsibilities, you can contact the RLA at: info@rla.org.uk and quote reference: dg715 to receive 25% off your first year’s membership.