Where does my deposit go?

At a time where there is still significant distrust between landlord and tenant the matter of passing over a deposit can be fraught with worry and fear about where it will end up.

As a tenant you are expected to pay a deposit to your landlord, usually 1 months rent, and this is held until the end of the tenancy where it should be paid back to you less any reasonable deductions.

Since 2007 Landlords have been legally required to protect your deposit. No longer can they keep it in their personal bank account (or spend it). Instead they are legally obligated to put it in one of three government backed tenant deposit schemes where you can be sure that it is safe.

If you are dealing directly with a landlord there are some things you can do ensure that your deposit is not mishandled:

  • Make sure you sign an assured short hold tenancy agreement. You should never hand over a deposit on a handshake alone because this leaves you exposed to fraudsters who could potentially pocket your cash and run.
  • Within 30 days of receiving your deposit your landlord must disclose certain information to you about where it has been placed, what you should do if you can’t get hold of your landlord at the end of the tenancy, what to do if there is a dispute etc. Make sure you remind your landlord of this when you hand over the deposit so that they know you are fully informed. If the landlord doesn’t give you this information they can be prosecuted.
  • Check whether it has been deposited. There are only three places the deposit could be if it has been protected. Contact them one by one to check that it has been done. They are Deposit Protection, My Deposits and Tenant Deposit Scheme.
  • Use your gut. If on meeting the landlord you don’t feel comfortable with them, walk away from the property. The deposit will be the first issue of many that you could have with a landlord as maintenance needs arise or things break. If you don’t think the landlord is somebody you can trust then it’s not worth the risk pursuing the property. There are always others.

What if my deposit hasn’t been protected?

If you find that your landlord hasn’t protected your deposit and you subsequently alert your local court it can order the person holding the deposit to either return it to you, pay it into a deposit scheme within 14 days or in some cases order the landlord to pay you 3 times your deposit within 14 days as compensation.

Please note that your landlord is not obligated to protect a holding deposit. This is an amount you pay to take the property off the market before any agreements are signed. It usually allows your landlord time to properly reference check you before deciding whether to accept your application and whilst this is being undertaken, you have peace of mind that the property is off the market. This is rare amongst private landlords but is often charged by estate agents.

A landlord can also agree to accept a valuable item from you as a deposit instead of money, such as a watch or the keys to your car. This is legal but is not covered by the government’s deposit protection scheme and so please bear this in mind.

Getting your deposit back

Your landlord is entitled to deduct reasonable expenses from your deposit at the end of the tenancy. These include (but are not limited to);

  • Damage to the property (excluding wear and tear)
  • Theft of any contents
  • Unpaid rent
  • Cleaning expenses

They cannot interfere with any utilities and so unpaid gas / electricity/ water etc bills cannot be deducted. It is up to the individual suppliers to contact you for payment. Please be courteous and ensure that you have settled your account before you leave.

When your landlord tells you how much, if anything, he wants to deduct from your deposit you can either accept this or dispute it. Hopefully between the two of you an agreement can be reached, however in cases where the relationship has broken down you can contact the deposit protection scheme who offer a dispute resolution service. They will require both you and the landlord to state your case with evidence to allow them to make a final decision on the amount of the deposit to be returned. Once an agreement has been approved by both parties the final deposit amount must be returned to you within 10 days.

If at the end of your tenancy you are unable to contact your landlord please contact the deposit scheme provider directly.

Do you have any deposit advice? Let us know in the comments below.

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Caroline Engstrom

Caroline Engstrom has a passion to help landlords and tenants by providing helpful tips and advice regarding real estates.

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