Congratulations on making a responsible start as a landlord! You’ve registered your tenant’s deposit within the first 30 days with a deposit protection scheme, provided your tenants with the prescribed information and necessary documentation, and handed over the keys. But now, you might be wondering what the deposit is meant for, and how can it safeguard both you and your tenants throughout the tenancy? Don’t worry; TDS is here to help! We’ll guide you on the dos and don’ts when handling the deposit at the end of the tenancy and share essential details to include in your tenancy agreement so you’re well-equipped to use the deposit if necessary.
What can I deduct from the deposit?
The deposit is there to serve as a safety net for landlords should they need to make a deduction at end of tenancy. However, it’s important to remember that the deposit belongs to the tenant and should only be utilised if there has been a financial loss on your part.
Reasons for a deduction from the deposit include:
- Cleaning
- Damage
- Redecoration
- Missing items
- Gardening
- Rent arrears
- Unpaid utilities
To ensure you can claim a deduction, it is essential to include a deposit clause in your tenancy agreement.
What is a deposit clause?
A deposit use clause is a section of the tenancy agreement that explains how the deposit can be used. It outlines the circumstances under which the deposit can be kept, such as rent arrears, damages to the property, or other expenses related to the tenant’s breach of the agreement.
The deposit use clause also explains how the deposit will be refunded to the tenant, including any deductions that could be made with mutual agreement, an adjudication or via a court order.
If there’s no deposit use clause, it is unlikely an adjudicator will make an award to the landlord. Therefore, it is essential you include one. Typically, if there is a deposit dispute at the end of tenancy then an adjudicator will require supporting evidence, such as a comprehensive signed inventory, check-in and check-out reports, dated photographic/video evidence, invoices, rent statements; as well as any other documented correspondence between the parties that supports the claims being made.
In addition, the deposit use clause provides landlords with a clear framework for handling deposits. By outlining the circumstances under which the deposit can be kept, landlords can ensure that they are following the law and avoiding any potential legal issues at the end of the tenancy.
What should a deposit use clause include?
A well-written deposit use clause should clearly state the permitted uses of the tenancy deposit. You should consider potential breaches by the tenants and ensure our deposit use clause includes these.
How much can I take from the deposit?
You should only charge a reasonable amount from the deposit, and provide clear evidence of the costs you incurred.
If you are charging for damaged items, you should account for reasonable amounts of wear and tear. For example, if your tenant damaged your carpet after living in the property for five years, you would not be able to charge them for the cost of a brand-new carpet.
We have a guide to product lifespans available for landlords to help you understand how adjudicators factor in wear and tear.
What other clauses should I include in my tenancy agreement?
In certain circumstances, you may wish to add unique clauses to a tenancy agreement. For example, if you have agreed that the tenants may keep a pet in the property you might want to add a clause stating you can use the deposit for any damage caused by the tenant’s pet.
Our guide to Prescribed Information and Clauses includes example clauses you may also want to include in your tenancy agreement.
For more essential landlord tips please view our landlord FAQ page.
Deposit Protection for Landlords
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