When letting a property in the UK it is usual for a deposit to be paid by the tenants, usually before they move into a property. This is sometimes called a security deposit and can be used by the landlord to cover costs such as: rent arrears and damage to the property. It is strongly advisable for a detailed inventory report of the properties condition to be carried out at the start and end of the tenancy to help support any deductions for damage.
As of 1st June 2019, the maximum tenancy deposit amount was capped at five weeks’ rent for all properties where the annual rental income is below £50,000 and for properties where the annual rental income exceeds £50,000 no more than 6 weeks’ rent. This is not only applicable for any new tenancies but also any renewal of an existing tenancy agreed after this date.
If you rent your home on an assured shorthold tenancy, any deposit taken from the tenant must be registered in a government-backed tenancy deposit-scheme. In England and Wales deposits can be registered with: Deposit Protection Service, MyDeposits or Tenancy Deposit Scheme. At Complete, we register all of our tenant’s deposits with the Deposit Protection Service. These schemes are in place to help keep the tenant’s money safe during the entire tenancy term, and to ensure that a reasonable amount of money is returned to the tenant at the end of the tenancy, where a non-biased approach is taken at the end of the tenancy should any dispute arise regarding deductions made.
When renting a property under a Common Law agreement, which is most commonly seen when tenanting to a Company, there are no restrictions to the amount of deposit taken or how this money is held. Usually under this type of tenancy agreement, up to eight weeks’ worth of rent is requested from the tenant and is held in a separate account with the landlord/agent.
With any tenancy, only reasonable deductions should be made from a deposit and should be returned to the tenant within 10 days of both the landlord and tenant agreeing on the amount.
This blog has been written by Madilaine Rowley, Client Services Executive for Complete Prime Residential.
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