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Why do I have to pay a deposit?

Why do I have to pay a deposit? This is a question we get asked from time to time, which to those in the industry seems a silly question, but understanding the purpose of a deposit is crucial for any rental (not just property letting). It stands to protect the landlord’s investment from unpaid rent, or damages; but also protects outgoing tenants from facing bills for these things; as well as aiming to avoid lengthy court processes that are unnecessary.

That all being said, deposits can be a contentious issue, especially if the landlord or tenant feel aggrieved by the other side. The advantage we now have is that all deposits must be protected under a government approved deposit scheme. All of these schemes have a dispute resolution service (ADR), that will aim to resolve any disagreements between landlords and tenants, that can’t be resolved amicably. As a business, we have seen how useful these can be in bringing to a close negotiations that can become protracted at times, leaving us, as the middle man, in a very difficult position.

At Brighton Accommodation Agency, we protect our deposits with MyDeposits, in an insurance backed scheme. This means that they must all be registered once received, as with any deposit, but that they are moved to a separate account within our business. This money is still, however, held as stakeholder for the duration of the tenancy and cannot be released without the consent of the tenant and landlord. If an agreement can’t be reached, this is where the ADR service would come in.

MyDeposits offer a lot of guidance about what can, or can’t affect a deposit and it is all very useful, although we understand a lot of people don’t have the same time to read through it all, as us professionals in the industry do. If you want to find all of this information, you can here, for landlords and tenants.

Generally, it is only possible for deductions to be made from a deposit, where there is wear or damage to the property caused by a tenant acting in a way other than in a tenant like manner. This means that general wear that is usually expected within a property over time should not be covered by a tenant. Everything in a property, from appliances and furniture, to carpets and décor has a lifespan and it is only for the remainder of this lifespan that deductions can be made.

What this means is, if you are a tenant, or have a tenant in your property and you provide a new mattress, that should last 5 years and in the two years of a tenancy, this item is damaged and requires replacement. The maximum that can be deducted is 3/5 of the replacement cost. It is, however, important to note that this can include costs for contractors handling work, as well as replacing items, as a landlord does not have to carry out everything themselves for no cost!

The best place to know what can and cannot be taken from a deposit would be to look in the Tenancy Agreement. The agreement should outline everything to do with the tenancy and part of this should be the deposit. This could be anything from damage, to missed rent, owed fees, or missed appointments. As a tenant, it pays to know what you could be liable for and as a landlord, it’s always useful to know in advance before proposing deductions that aren’t valid.

Remember, as a tenant and as a landlord, the dispute resolution service is available to resolve any case where an agreement cannot be reached. This often seems scary, but the processes are designed to be simple to follow and will reach a fair outcome. Whenever there are any concerns, the deposit schemes can offer great advice and are a valuable tool to everyone!

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