It’s recommended that when a landlord puts a property up for rent that they request a deposit. This helps protect against financial losses should the property be damaged throughout the tenancy and can also be a great way to encourage tenants to treat the home well as they will want to guarantee the return of the deposit when they move out.
But how much should a landlord ask for? Is there a set amount or a law which defines how much a landlord has to charge? And where does the landlord need to store the deposit?
Firstly, a landlord can charge as little or as much as they like. The limit is on how much a tenant is willing to pay though there does tend the be accepted minima which can differ depending on which area of the country the property is rented in.
So just how much should landlords be asking for? Below are the standard deposit options available:
1 Month’s rent
The most common by far is for landlords to ask for a deposit amounting to 1 month’s rent. For example if you charge £750 per month in rent then you would ask for £750 as a deposit.
6 Week’s rent
Asking for 6 weeks rent as a deposit is fast gaining popularity with private landlords. This is a result of record high arrears after years of low wages, pay cuts and job losses taking their toll on tenants. It’s seen that asking for 6 week’s rent offers better protection for the landlord in the event of damage caused to the property and failure to pay rent in full.
Some tenants may see this as a tax by greedy landlords who will try to sting them for as much money as possible when the tenancy comes to an end.
Either way, it’s another option to consider. If you charge £750 per month in rent then you would ask for about £1,125.
No deposit required
Landlords asking for no deposit at all is a tactic which is turning heads all over the industry. Surely this is madness! Or is it?
On one hand, asking for no deposit is putting the landlord at risk of having to foot a large bill if there are damages or unpaid rent at the end of a tenancy and the tenant is refusing to pay. On the other hand, a rental property with no deposit is very attractive to tenants therefore helping the landlord to seal the deal much quicker, reducing void periods in the property.
As always when requesting a deposit, make sure it’s protected in a deposit scheme such as The Deposit Protection Service. Landlords have a duty to ensure that any collected deposit is protected within 30 days of receipt and you can find more about your obligations from Gov.UK.
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Landlords, how much deposit do you request? Tenants, do you think asking for a deposit is fair? Let us know in the comments!
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