How much is the deposit on a rental house has been a question that many tenants ask themselves. 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.
How much is the deposit on a rental house? 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 is the deposit on a rental house?
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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There are other questions that tenants ask themselves. Below are the tips and tricks on how to resolve these issues
Where does my deposit on a house go?
At a time where there is still significant distrust between landlord and tenant the matter of passing over a deposit on a house can be fraught with worry and fear about where it will end up.
As a tenant you are expected to pay a deposit on a house 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 on a house 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 on a house 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.