By: Asad Butt
Last Updated: January 31, 2019

What Is A security deposit? Rental Property Security Deposits Explained (2019)

Security Deposit | Property Rental

Rent deposit for a rental property has become a norm over the last few decades. It seems logical as a security deposit acts as a deterrent against any damages caused by the tenants to your house or apartment. The rules and procedures around security deposit are a bit complicated. Here are most common questions and scenarios you may face as a tenant or landlord

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Security deposit for rent have become a standard part of all property rental contracts. An interesting fact is, deposits have not always been a requirement. But as we know, the balance of power in our times lies with the property owners. Knowing the basics can help you avoid disputes and claims.

What Is a Security Deposit?

A security deposit is an amount of money collected from the tenant, on top the rent, at the start of a tenancy.

It is a one time charge and is refundable, provided the property is in a good state and all dues and bills are cleared, on time.

How much is an average security deposit?

The deposit for an apartment or a house varies and the amount depends on various factors. So there is not fixed ratio or amount as per se.

In most cases house or apartment deposit and first month's rent are equal.

Average deposit:

The amount of security deposits, the landlord's charge, varies across the country. Usually, most deposits are between a Month's to six weeks of rent. The landlords are currently charging an average of four weeks' rent as a security deposit.

Two weeks deposit

Very few landlords do offer their property, demanding only two weeks rent as a deposit. This normally is offered on

  • single rooms
  • bedsits
  • one bedroom flat
  • or a small apartment

2 months deposit:

You might come across a few landlords or letting agents requesting a deposit of equal to eight weeks / two months rent. This happens when the property on offer is of very high quality and any repairs or maintenance after the end of the tenancy could be costly. Another factor is supply and demand. If too many tenants are chasing after, fewer available properties, the balance of power shifts towards the property owners.

No Deposit:

There might be cases where you come across a property with no deposit requirements at all. It is not madness. Requiring no deposit at all has its own benefits.

  • Secure a tenancy when there is a tough competition between the property owners to win tenants.
  • They might wave off the deposit but charge higher than average rent.
  • The property can be rented quickly, reducing void rental periods.
  • More tenancy applications mean more choice for a landlord to pick the most suitable candidate.

What is the minimum or maximum amount that could be charged as a security deposit?

Unfortunately, there is no minimum or maximum limit by law as to how much a landlord can charge as a security deposit in the UK.

A landlord can set the security deposit amount from nothing to as much as they like, for now.

There is an intent by the labour party to change the law to significantly reduce the amount that landlords are allowed to charge by capping it to the maximum of three weeks’ rent.

On the other hand, under government proposals, currently before parliament, the maximum deposit landlords could charge would be limited to equal to six weeks’ rent.

Currently, there is a tabled amendment to the Tenants Fees Bill, which is currently before parliament. It only applies to the fees other than the deposits. The bill seeks to restrict the fees that landlords and letting agents are allowed to impose on tenants.

Unfortunately, until that happens the power and freedom to set the amount, lies with the landlords.

Some facts about the security deposit

  • Three in four private renters are required to pay a deposit by landlords when signing a contract.
  • On average they have only 77 percent of the deposit is returned to the tenants at the end of the tenancy.
  • By 2026, it is estimated that average security deposit across the UK will be £1,111.
  • By 2026, the average security deposit in London will reach £2,753.
  • By 2026, the average security deposit in South East will be around £1,469
  • By 2026, the average security deposit in South West it expects to be 80 percent of median monthly earnings.
  • The average deposits are expected to rise sharply across the South of England.
  • A fifth of landlords said they wished to increase deposits in future, the reason being the overall damage repair costs higher than the deposit requested.
  • Less than only 30 percent of initial disagreements between tenants and landlords or agents or solved, without court intervention.

  • In a 2015 survey, around 13% of the tenants had had their deposit held back. The most common reasons for this were:

    • Cleaning costs 32%
    • Damage to fixtures 10%
    • State of garden 4%
    • Rent arrears 3%
    • Damage to landlord's furniture 2%
    • Other (please specify) 49%

Source: HomeLet

When will I get my security deposit back?

As a general practice, you are entitled to receive your security deposit back in 10 working days of moving out of the rental property.

For this to happen, you and your landlord need to agree on how much you’ll be getting back at the time of moving out.

You should be able to get a full refund if you:

  • had fully honored all the terms of your tenancy agreement
  • have not damaged the property
  • have no arrears in rent
  • have paid your bills fully

Is my security deposit secure?

when signing your tenancy contract, make sure, your deposit is held in a government-backed tenancy deposit scheme (TDP). In England and Wales, your deposit will be registered with any of the following.

You will be given a document as proof so make sure you keep it safe. If there is a dispute, your deposit is protected in the TDP scheme until the issue is resolved.

Make sure you receive a completed, signed, move out checklist by your landlord at the time of moving out. This document can be used as a piece of evidence, in case of a dispute.

It's best to write or email when you ask for your deposit back - if you do, you'll have a record of when you asked for it.

Complete Moving Out Checklist

what can a landlord deduct from a security deposit?

Your landlord or letting agent is legally allowed to make certain deductions from your deposit after you leave your rented home. Typically deduction includes:

  • any rent arrears, you owe when you move out
  • deductions for missing items
  • cost for repairs caused by damage to the property
  • any unpaid bills (landlord's name)
  • cleaning costs
  • damage caused by your pets

For this to happen:

  • Deductions rate list be set out in your tenancy agreement or a separate document you both signed
  • Your landlord must tell you what any deductions are for and how much for each item
  • your landlord needs to provide a proof for the loss and receipts for the repair is carried out.

What Deductions can't be made by the landlord from the deposit?

Your landlord isn't allowed to make deductions from your deposit to cover:

  • Costs for re-letting the property
  • Unpaid gas, electricity (in your name)
  • Normal wear and tear
  • Damage caused by an accident that wasn't your fault.
  • Damage due to crime
  • Damage due to repair problems

What is normal wear and tear and does it affect my security deposit?

Your landlord is not allowed to charge you anything from your security deposit for any normal wear and tear.

Normal wear and tear is deterioration or depreciation in value by day-to-day living and is unavoidable. It is not caused by negligence, carelessness or accidents so it's not in your power to avoid it.

Some examples of normal wear and tear are:

  • A carpet showing signs of use but no damage
  • Unnoticeable scuffs on the walls and windows
  • Doors with peeling paint due elements
  • Fading paint on the exterior of the house
  • Fading wall paint or wallpaper
  • faded curtains due to elements

As a matter of fact, you can't be expected to return the property as it was, at the start of your tenancy. Every property is expected to deteriorate with time, no matter how much you maintain it.

Here is a general list for your reference:

  • Faded paint or wallpaper due to the elements like sunlight, wind, and rain.
  • Broken plumbing caused by age or normal usage.
  • Old blinds and curtains.
  • Carpet or rug wear caused by regular usage.
  • Any marks left on the carpet by furniture.
  • Wear and tear on doors caused by age or elements.
  • Wear and tear on windows caused by age, wind, and rain.
  • Broken appliances due to age.
  • Faded curtains due to sunlight.
  • Batteries for smoke detectors.
  • Unnoticeable holes in walls.

Make sure you take photographs of the property, when moving in, get them signed by your landlord or letting agent and keep them as evidence to refute any false claims.

What is Holding Deposit or Holding Fee and how does it work?

A holding deposit or a holding fee as it's sometimes called is fee requested by the landlord to secure your bid for a property.

The landlord should only accept it if they have made up their mind about letting you the property.

If your checks fail, your holding deposit will be returned to you minus reference check fee and any charges against any loss of time and money.

If your checks pass and landlord accepts your application, your holding fee will be used towards your security deposit.

If you change your mind and pull out you are not entitled to get your holding fee back. It will go towards your landlord to cover the loss of time and any money they lost due to missed rental period.

How can I get my security deposit back?

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if you are in the US, your landlord must return the security deposit within thirty days after your moving out date.

If you are in the UK, you are automatically entitled to recieve your deposit back in 10 working days of moving out of the property.

If this does'nt happen at the end of the 10 working days, send a letter or email to your landlord or letting agent request your deposit back.

If you donot recieve your deposit back within 10 days of your written request and provided your deposit is held in Assured shorthold tenancies, you should immediately notify scheme.

The scheme will direct the landlord to pay the disputed amount to the scheme and hold the deposit until the dispute is resolved, which could take three following routes:

  • You reach an agreement with your landlord.
  • You both aggrees to use, scheme's, dispute resolution service and agree to the decision made by the service.
  • You go to the court and because your landlord refused to use the scheme’s dispute resolution service.

Your deposit is held by the scheme until the court reaches a decision on your dispute.

Published Under: Security Deposit
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