What reasons can a landlord keep a deposit for in the UK?

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Deposits are something that if you put down as a tenant you expect to get back at some point. As a result, in the event that this doesn’t happen, you can be left wondering if it was fairly taken away.

However, the truth is, there are some good reasons for a landlord to keep a deposit and this article goes over the reasons why.

A landlord keeping the deposit for fro a tenant

What are the rules around tenancy deposits?

To make things clear, the first thing you must understand if you’re a landlord or a tenant is that a deposit must be protected under an approved tenancy protection scheme if a landlord is renting their property to a tenant in an assured tenancy agreement.

These schemes prevent a landlord from unlawfully withholding a deposit in the first place as it records all the reasons for a landlord to keep a deposit as well as help the tenant contest the withholding of a deposit if they feel the deposit was kept unfairly.

This is a more modern piece of legislation made clear in the deregulations act of 2015 which you can read for yourself here.

If you’re in a type of tenancy that is more relaxed such as a sublet or a lodging agreement, then there are no laws that state you have to have the deposit protected. So the person in charge of collecting deposits outside of assured tenancies can keep the deposit in any way they choose.

This isn’t to say they can keep the deposit for any reason though as a lodger or subtenant can still challenge this issue in court if it were to happen.

The government-approved tenancy deposit schemes

These schemes help protect tenancy deposits but what are they? And what do you need to do to sign up? Well, a deposit has to be kept in one of the three government-approved tenancy deposit schemes. The Tenancy Deposit Scheme (TDS) is the most popular scheme that most landlords use.

There are also MyDeposits and the Deposit Protection Service (DPS) available. The reason why they need to be government protected is that the schemes are regulated by the FCA which means that it is the fairest way to preserve the rights of both tenants and landlords.

It also ensures the tenancy deposit schemes don’t lend this money away and there is always the right amount of money in the scheme in order to pay back landlords and tenants as and when they need it. This prevents schemes from spending or loaning the money and risking the deposits involved. In this way, the deposits are protected and regulated.

What is an insured scheme?

An insured tenancy deposit scheme is an older way in which tenancy deposits were protected but are still completely legal. For example, instead of a landlord submitting the money from a deposit to the Tenancy Deposit Scheme and keeping it with them, they would pay for insurance that protects the deposit in case anything were to go wrong with the finances of the landlord.

This would work out to a small fee that the landlord would have to pay. In real life, if a tenant paid a £3,000 deposit for example and the money was in the landlord’s bank account but the landlord went into debt and got rid of the money. In the event that the tenant asks for the money again and the deposit was insured, the insurance company would then pay the tenant directly.

A landlord checking their bank account for a tenant’s deposit

This means insured tenancy deposits are seen as safe for the side of the tenant and the landlord who advertised their property as having an insured deposit attracted more tenants as a result.

There are also benefits for landlords because they don’t have to inform the TDS if they decide to keep any part of the tenant’s deposit because the deposit is in their own bank account. This means they can just refund the deposit to the tenant without letting anyone know and if they provide reasons for keeping any part of a deposit legitimately then no further steps have to be taken.

The tenant is always within their rights to contact the tenancy deposit scheme and ask for legal help if they feel the landlord is abusing their power though so it is important that both parties know what rights they have when dealing with deposits in schemes in this way.

What is a custodial tenancy deposit scheme?

Custodial tenancy deposit schemes are newer and involve the landlord sending the money from a deposit to the protection scheme in order to protect the money. This means they pay a flat fee at the time of submitting the deposit and don’t have to pay again in order to have the deposit protected.

This is more common in properties where tenancy deposits are larger because there is more money at stake if there was a dispute in the tenancy agreement and more legal protection may be requested by the tenant.

In this way, unless a tenant and landlord come to an agreement about how much money each party is owed and the dispute has been concluded, no money will be paid out from the deposit scheme, protecting the landlord and the tenant.

This is usually done online, with a landlord or tenant initiating the request for the withdrawal of money from the scheme. Both parties will have to provide evidence and approve the payment before anything happens.

What are the reasons for a landlord to keep a tenancy deposit?

Once you understand how a tenancy deposit can be protected, you would have to provide a reason for the tenancy deposit scheme for the unfair withholding of a deposit by a landlord if you were a tenant wanting to protest this.

In addition, if a tenant thinks they still are owed their tenancy deposit but the landlord doesn’t think so. A landlord will have to be clued up on the various reasons for keeping their deposit so they can make a good case for keeping the deposit.

Rent arrears and unpaid bills

Perhaps the most obvious reason for a tenant losing the rights to their deposit is because of rent arrears. Not only is this offence a reason to keep a tenancy deposit but it is also a reason to evict a tenant under section 8.

So if a tenant doesn’t pay rent, it is quite likely they will lose their deposit, and be out of the house within a matter of weeks, depending on the type of tenancy.

Safeguarding against rent arrears is perhaps the most popular and important reason for landlords to collect a security deposit in the first place because of how damaging this can be to the finances of a landlord. For example, if they have mortgage repayments and they begin defaulting on payments because of a troublesome tenant who doesn’t pay their rent, in the worst cases they can lose their house.

A house with a vault representing a tenant’s deposit

Cleaning, decorating or gardening costs

Sometimes, a landlord may believe they have the right to keep a deposit because the tenant hasn’t adhered to the same levels of gardening maintenance, decorating or cleaning standards when they first moved in.

Examples would include the tenant excessively decorating the property which would cost the landlord money to be put back to normal. Sticking things to walls, and repainting the property in paint that isn’t up to standard can all be reasons. If a tenant wants to redecorate a property it is, therefore, crucial they ask their landlord first so they don’t end up losing their deposit.

In terms of cleaning, there has to be a level of cleanliness the landlord expects. Often, after a long tenancy, it is normal for the property to not look exactly as it was in the beginning, in which case any change can be dismissed as general wear and tear. However, hoovering, wiping surfaces and the general reduction of dirt and grime are all things a tenant must do.

If a tenant thinks that the property is too hard to clean to get it close to the original standard then they can also hire a cleaning professional as a final clean to the property to ensure they get the deposit back. 

Breaking the terms of a tenancy agreement

When a tenant signs a tenancy agreement, there will be rules, some of which are obvious but others that a landlord expects a tenant to adhere to for their own personal reasons. If these reasons are shown to cost a landlord money, they would be within their rights to keep a tenancy deposit or at least part of it.

As an example, it could be the case that a tenant isn’t allowed to sublet a property in the agreement. As a result, if the landlord finds out there is damage to the property because of these additional tenants in the property, they can keep the deposit.

Other reasons could be leaving the property without being in a break clause of the agreement. In this case, the landlord can keep the deposit to cover the rent until they can find a new tenant.

Besides a tenant losing their deposit in a tenancy, it would still be a good idea for a tenant to abide by the rules of the tenancy agreement because this could also result in eviction in the worst cases. 

For instance, if a tenant has in their agreement that there must be a reduction in noise levels in the property after a certain time and the tenant breaks this rule. The tenant may not lose their deposit because there is no damage to the property but they may face eviction.

Damaging the property due to pets

Pets are a controversial topic because some landlords take advantage of this by charging an extra deposit for keeping pets in their property. Having said this, there is still a good reason for this, as, for example, if there is fur left in the carpet of a property, they may need to take money out of the deposit to pay a professional to remove it.

        A tenant keeping their deposit due to safely keeping pets in their property

        However, a landlord cannot just charge a tenant from their deposit just for having a pet, they would have to prove there is damage in the property as a result of the pet. Also, it has to be within reason. For example, a small part of a carpet being damaged due to a small pet wouldn’t be a good reason for a landlord to keep the entirety of a deposit 

        Missing items from the property and damage

        If items are missing from the property, this is a good reason for a landlord to keep a deposit and they’d need the money to replace this information.

        In the same way, if there is furniture missing from the property because it has been damaged, this is also a legitimate reason for a landlord to keep a security deposit as they’d need to find the money to replace items.

        Being open and honest about whether items have gone missing or damaged to a landlord is the best thing a tenant can do as they may allow you to replace it and keep your deposit. If you can replace the furniture or items cheaply, it may not actually cost you that much money.

        Should you have a protected or unprotected tenancy deposit?

        Tenants in assured tenancies under the law must have a protected security deposit or tenancy deposit. 

        What are protected tenancy deposits?

        Protected tenancy deposits are those that are protected in a tenancy deposit scheme. This is a mandatory process for those in assured tenancies. For other tenancies, it is not legislation that the deposit has to be protected at all. 

        As a result, if a landlord chooses to keep a tenant’s deposit because that deposit isn’t protected, it can be harder for a tenant to get their deposit back if they feel it is owed to them.

        If you think that a landlord should have protected the deposit but it isn’t protected, follow our guide on if a tenancy deposit isn’t protected here.

        Who’s money is kept in a tenancy deposit?

        Security deposits are always paid by the tenant. As a result, they have the incentive to take care of the property and pay rent on time in order to gain their deposit back when they leave the property at the end of the tenancy.

        The reason why it may be confusing that the deposit is constituted of the landlord’s money is if the landlord is keeping the deposit in an insured scheme. In this case, the deposit is kept in the landlord’s bank account and he/she pays a fee to a tenancy deposit protection scheme to insure this money.

        How does a tenant get the deposit back?

        When it comes time to leave a tenancy agreement or move out of a property, the tenant may ask for the deposit back from the landlord. In the case of a custodial tenancy deposit, they will simply have to go to the tenancy deposit protection scheme and ask for the money. With the consent of the landlord, the money will be paid back to the tenant.

        A tenant waiting for a deposit to be paid out

        If there are any issues in this process, the landlord and tenant will have to go back and forth to discuss what is owed and come to an agreement.

        If the deposit is in an insured tenancy deposit, then it could be the case that the tenant just has to ask the landlord for the money and it is paid out straight away.

        If there are any disputes in an insured tenancy deposit, then the landlord and tenant can go back and forth with the help of the advice of the tenancy deposit protection scheme and things may be escalated to the small claims court by the tenant if they cannot agree.

        How much of the deposit can a tenant get back?

        The amount paid from the deposit back to the tenant is strictly dependent on the grounds on which the landlord thinks they have the right to keep the deposit and how much they can justify keeping legally.

        Either way, it must be within reason and the landlord must be able to prove this either to the tenancy deposit scheme or a court if legal proceedings take place.

        When is a tenancy deposit returned?

        The standard amount of time in which a deposit can be paid back is 10 days. However, if the landlord is keeping the deposit instead of the tenancy deposit scheme, the deposit can be paid out instantly after the tenant asks.

        How long can a landlord hold a deposit?

        At the beginning of a tenancy, after a deposit is paid, the landlord can hold the deposit for a maximum of 15 days before the tenant and landlord have to agree on their tenancy. If they don’t, then the deposit has to be paid back to the tenant and they have to renegotiate.

        After a tenancy agreement has been signed, the landlord can keep a tenant’s deposit for as long as the tenancy is in place and must return it within 10 days of the tenant moving out of the property and the tenant asking for it back. This is given the tenant has requested the deposit after the tenancy has ended and the landlord is okay with the deposit being paid back in the full amount.

        How can a landlord make a deposit claim?

        In order for a landlord to dispute the payment of a deposit, they’d have to give a valid reason for removing any money, give these reasons in writing and then relay this to the tenancy deposit scheme here if they are in a custodial tenancy deposit protection.

        If the deposit is protected under an insured tenancy deposit, they would just have to tell the tenant that they want to dispute the claim and if the tenant wants to dispute this then they can take this up with the tenancy protection scheme which will help provide them with legal advice.

        Evidence required for a deposit claim

        The evidence needed for this type of claim against a tenant would be as follows:

        • Any witness reports from neighbours
        • Inventory of furniture and damage in the property before and after tenancy
        • Video and photo evidence
        • Estimates of how much the repairs will cost

        Overall, you must also make sure you are reasonable with the tenant if you are a landlord or reasonable with the landlord if you are a tenant. Both parties should communicate clearly and effectively and provide clear evidence of what they are disputing.

        A tenant communicating with their landlord about their deposit dispute

        It would also be a good idea to keep a note of every dispute so it is clear what allegations are being made and if any evidence is sufficient. This is because if things were to be taken to court, being as prepared as you can always help.

        To conclude

        To conclude, a landlord is completely within their rights to withhold the full or part of a deposit if they see fit. As long as they have the right reasons for doing so which this article talks about. So, from what level of protection a tenant’s deposits should be entitled to, to what you can do as a tenant in order to get your deposit back, hopefully, you are now more informed about the topic.

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        andreas gerazis

        Andreas Gerazis

        Experienced landlord

        Andreas is a certified landlord with extensive knowledge about the UK property market as he has been actively investing for half a decade. Founder of the first three-in-one property management software, Lofti Proptech, Andreas has a brilliant understanding of the details surrounding what it takes to grow and run a thriving property portfolio.