What can you take out of a tenancy deposit?

When you have a group of tenants move out, it’s time to take a deep breath and go in to assess the damage. There’s a good chance that you haven’t seen your property for anywhere between a few months and a few years, so it can be a daunting thing to go in and inspect what other people have done to your property.

Having had the occasional glimpse into other people’s lives through various house parties and seeing what people tend do to their rented accommodation, it’s fair to say that sometimes there’s no guarantee that the walls will still be there. At this point, even if you don’t have any landlord-insurance, you can at least take solace in the fact that there is a nice juicy security deposit that you can dip in to if needs be, but what exactly can you take out of that?

 Damage:

If the property is damaged, you can take money out of the deposit to cover this. What you can’t however take money for is normal wear and tear which is a frustratingly ill defined term.

What will classify as reasonable to take out of a deposit is best established by you putting yourself in the shoes of the tenants. Slightly scuffed carpets or faded curtains might not be a fair thing to complain about, but a gaping hole in the ceiling on the other hand might be.

 Missing items:

If there’s anything on your inventory that has mysteriously disappeared, this is one to flag up.

Sometimes there might be a good reason for it. I once had to throw away a wardrobe that came with my flat because it was missing a door making it structurally unsound and the inside was a blotchy blue/green colour with mould. It was also soggy. Even in this case however, the landlord got a phone call to not necessarily ask for permission, but to explain that I was saving him the bother of calling out a hazmat team, so it certainly wasn’t a surprise when it came time for us to leave the property.

 Cleaning:

There are two times that you can take cleaning fees out of the deposit. The first is if you have already agreed to take professional cleaning fees out of the deposit at the beginning of the tenancy, which is not uncommon. The second is if the property is truly filthy and been left in no fit state. This is not the same as “well it could use a bit of a vacuum” but covers a real sense of grime and squalor.

 Unpaid rent:

Any unpaid rent can be taken out of the deposit. Although they really shouldn’t, some tenants assume that the deposit is there to cover their last month.

 Advertising and agency fees:

If tenants have broken certain clauses of the tenancy agreement or haven’t exited from it properly, you might be able to cover agency and advertising costs for putting the property back on the market. This is not however the norm and it’s worth taking advice before you launch into this. It normally is only if the tenants have messed you around that you can do this.

 Some things to bear in mind:

To make your life a little bit easier, bear the following three things in mind. 

1) Don’t look for things to take out of the deposit and don’t try and pull a fast one if the damage isn’t really all that bad. If you’re not careful you could find yourself taken to a small claims court and as you are probably aware, the law sides very heavily on the side of the tenants. If you feel that there is a little bit of damage that isn’t entirely fair for you to put up with, it can sometimes be worth cutting your losses and taking the hit financially.

2) You can only claim for actual financial loss. You can’t impose a punitive fine on your former tenants if they have done something that you told them they couldn’t, like having noisy neighbour-aggravating parties, or keeping a dog. If that dog caused damage on the other hand, that’s a different matter.

3) Legally, you must return the deposit to the tenants within 14 days of them asking for it, so you shouldn’t hang around when deciding what to take out of it.           

Summary

Renting out your property is a daunting process, as is being on the other side of the rent equation and everyone has stories of terrible tenants, shifty letting agents and greedy landlords. The best thing you can do is make sure you are not the latter, but make sure you are not taken advantage of by the former two.

 Written by David Hing, YOUR Insurance blog editor. YOUR Insurance specialises in public liability insurance for small businesses as well as landlord-insurance.