The importance of a tenancy deposit.
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.
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