What are the most common reasons that landlords keep tenants’ deposits?

In England, landlords are legally allowed to charge a deposit of up to five weeks’ worth of rent (or six weeks if the annual rent is over £50,000).

This deposit allows landlords peace of mind that, if necessary, they will be able to fix damages to their property without chasing their tenants for money – but why do most deductions occur? 

What are the most common reasons for deposit deductions?

In a HomeLet survey of more than 20,000 tenants, 12.5% of renters admitted that their landlord had withheld their deposit. 

The most common reason for making deposit deductions cited by landlords was to cover cleaning costs (39%). This was followed by ‘other’ (28%) – which can include a variety of reasons, such as rectifying damage to fixtures and fittings – and to cover redecorating costs (19%).

Research from the Deposit Protection Service also reported that one in five (22%) students lost part of their tenancy deposit at the end of their contract. For students, the reasons cited were similar, with cleaning being the most common justification for the deduction among almost two-thirds of students, followed by property damage (54%) and redecorating costs (37%).

How to work together to avoid needing to make deposit deductions

As the landlord, you will want to avoid needing to undertake repairs or find replacements for furniture at the end of a tenancy, as this may delay your ability to get the next set of tenants in. 

Moreover, it’s imperative for many tenants to get a deposit back in full to move into another rental and pay a new deposit. 

Therefore, setting expectations at the beginning of a tenancy is mutually beneficial to ensure the deposit is returned and you can get your next tenants in without delay.

Cleanliness is a priority

Ensuring the property is spick and span when leaving your rental property should be high on your tenants’ priority list, particularly as this is one of the most common reasons cited for landlords not giving a deposit back. 

When the tenancy begins, set out what level of cleanliness you expect the property to be left in. While you cannot require your tenants to use a professional cleaning service, you should ensure they fully understand what tasks they must undertake to leave the property appropriately. 

It may be helpful to write up a list of jobs and include this in your tenants’ contract, such as wiping down all skirting boards and deep cleaning the oven.

Ensure the inventory is clear

Before your tenants move into your rental property, be sure that your inventory is totally up-to-date and covers all details, big and small. Remind your tenants that this document should be referred back to before they vacate the property.

It can also be helpful to include clear, comprehensive images of the property so that your tenants can be reminded of the state of the home when they moved in.

Fair wear and tear covers slight damage to a property that cannot be seen as the tenants’ fault as it falls under expected usage. By having an up-to-date inventory with clear pictures, you will be in a better position to prove if you do not consider any damage fair wear and tear.

Communicate with your tenants

It goes without saying that good communication between tenants and landlords can help to make the whole rental process as smooth as possible for both parties. 

Encourage your tenants to reach out during the tenancy if something is broken or needs fixing, as this will help prevent any delay in the tenants receiving their deposit back or for you being able to get the next set of tenants moved in.

Can my tenant use contents insurance to help retain their deposit?

As a landlord, you are responsible for ensuring you have appropriate buildings cover. That being said, your tenant may wish to take out a personal contents insurance policy. 

When signing the rental contract with your tenant, it’s important to provide a list of any existing home fixtures you deem them responsible for, alongside your expectations (e.g. cleanliness) that need to be met for them to receive their deposit back.

These fixtures may include:

• Televisions

• Carpets

• Existing furniture in place

• White goods

You may wish to inform your tenant that, by taking out a contents insurance policy, they have an extra layer of protection for any fixtures you have determined they are responsible for. This will allow them to receive compensation or replacements if damaged or stolen, avoiding the need for you to make any deductions from their deposit at the end of their tenancy.

What is a deposit protection scheme?

Since 2007, landlords have been legally required to secure their tenants’ deposits in a government-backed deposit protection scheme (DPS).

These schemes exist to ensure that tenants receive their deposit back at the end of their tenancy, provided they have paid their rent, have not damaged the property, and have met the conditions of their tenancy agreement.

There are two types of deposit protection schemes:

• Custodial: The scheme holds onto the actual deposit for free on behalf of the landlord.

• Insured: The landlord or agent holds onto the deposit and pays the scheme to insure the value of it.

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