The importance of a tenancy deposit.

March 9, 2015

Choosing the right tenant for your property can be tricky. Sometimes the perfect tenant comes along, they want to stay in your property forever and make it their home. They love, respect and admire your property.

However, sometimes you think you have that perfect tenant, but quickly realise you made a wrong decision.

Perfect tenants don’t need a blog post about them, they’re perfect. This is about the not so perfect ones.

To make sure you’re protected even when you make that flawed decision, tenancy deposits were invented.

The tenancy deposit is a key part to trusting a tenant to rent your property. It protects the landlord in the event of the tenant damaging the property or leaving without paying the rent.

What the tenancy deposit covers should always be confirmed in the tenancy agreement that both the tenant and the landlord/letting agent signs. The deposit belongs to the tenant and should be returned at the end of the tenancy, on the condition the property is in the same condition as before they moved in.

During the course of the tenancy, the deposit should be kept in a third party deposit protection scheme (see our blog on how to avoid disputes to find out which on is best for you).

If by any chance, losses do occur, the landlord is entitled to make reasonable deductions from the deposit to cover them (reasonable means you don’t charge a grand to clean a bathroom).

The deposit size often depends on the monthly rent. Normally it is the equivalent to one or two months’ rent. However, there is no legal restriction on the amount that may be asked for (but you will find it more difficult to find a tenant who will pay anymore than that). A larger deposit may be requested if a landlord is concerned about previous tenancies or the tenant’s credit rating.

Having a detailed inventory report will play an instrumental asset for both parties when it comes to the end of the tenancy. Although it is not the law to conduct an inventory before a tenancy, it is rare not to do so. An inventory will give a detailed description of the property before the tenancy and can assist in making sure no damages have occurred in the duration of the tenancy.

Third party inventory providers can be unreliable and in-house can take a big chunk out of your day. Digital inventory creating software cuts the time to create an inventory by 80% and ensures that every report is professional, detailed and accessible.

Alex Evans

You May Also Enjoy

Breaking News

Real-life value of the most famous Christmas film homes

The real-life value of the most famous Christmas film homes, from budget classics to multimillion-pound mansions New research has gathered and analysed the estimated valuations of real homes featured in popular Christmas films, ranking them by cost. The priciest homes are featured in The Holiday, Trading Places, and Home Alone, with Amanda’s home from The…
Read More →
Estate Agent Talk

77% of buyers refuse to buy a flood risk property

Despite 4.7 million English homes facing flood risk New research from Lyons Bowe has revealed that 77% of homebuyers would not consider purchasing a property in a flood risk area, despite more than 4.7 million homes across England currently being deemed at risk of flooding. The findings come as the Government launches a new flood taskforce amid…
Read More →
Letting Agent Talk

Poor Communication becomes Expensive at Scale

The hidden cost of fragmented property management By Adam Hills, Client Services Director, LRG Living Markets A landlord asks for an update on a repair. The property manager asks the contractor, who is waiting for access from the tenant. Meanwhile, the accounts team has received an invoice but cannot tell whether the work is complete.…
Read More →
Estate Agents should not all look the same
Estate Agent Talk

When Estate Agents Decide to Go Solo

Leaving an established estate agency to work independently gives experienced agents more control over fees, client service and working hours. It also brings responsibility for compliance, cash flow and every part of the customer experience. Before handing in your notice, test the idea against realistic sales volumes, local competition and the amount of time you…
Read More →
Estate Agent Talk

What Should Buyers Ask Before Reserving a New Build?

Research from Skipton Building Society has found that 44% of aspiring first time buyers would rather buy a new build than an older property, with just 30% favouring an older build. Modern fittings and appliances were the biggest draw, cited by over half of those who preferred a new build, alongside the promise of lower…
Read More →
Breaking News

The UK cities with the largest property price increases revealed

A new study has unveiled the most challenging UK cities for first-time buyers. Newry leads Northern Ireland’s ranking, with a property price increase of 12.8%, while Hull leads Great Britain’s ranking, recording an increase of 6.6%. The research examined data from HM Land Registry to reveal the cities that have faced the highest property price…
Read More →