As a landlord you can ask for a deposit from your tenant.

However, there are a few issues which a landlord should consider before asking a tenant for a deposit, when renting out residential premises.

How much?

There is a limit on how much can be claimed as a deposit from a tenant by a landlord.  This is a maximum of five weeks rent. For example, if the rent is £800 per month the maximum deposit would be £923.07. In that example most landlords would ask for a deposit of £800, being a month’s rent.

What do I do with the deposit

Any deposit must be secured by the landlord under a recognised deposit scheme. The deposit must be secured and specific information about the deposit (known as prescribed information) must be sent to the tenant within 30 days of receiving the deposit.

Be careful; if the deposit is not secured, then the tenant has the right to claim compensation.  If such a claim is made, as well as the deposit having to be returned, the tenant can claim compensation of between one to three times the amount of the deposit.

What about eviction proceedings, if the deposit is not secured?

If the deposit has not been secured (or where the prescribed information has not been provided to the tenant) this causes problems if the landlord wants to evict the tenant.

Any claim based on a breach of the tenancy (known as a Section 8 claim) for example, for non-payment of rent or damage to the tenanted property could be met with a claim for compensation for not securing the deposit and/or providing the prescribed information to the tenant.

Also, no claim can be made under the no fault eviction procedure (known as a Section 21 claim) unless the deposit has been returned to the tenant before the Section 21 notice is sent.  If the tenant refuses to accept the return of the deposit, then the landlord cannot use the Section 21 procedure.

Furthermore, even if the tenant accepts the deposit when returned, the landlord cannot use the accelerated court procedure for Section 21 evictions (which does not require a court hearing).  Instead, the court must list the hearing at which the landlord must prove the deposit has been returned and accepted by the tenant.

For all the above reasons it is vital that any deposit is properly secured, and the prescribed information provided to the tenant under the relevant Housing Act legislation.

Please remember the Section 21 eviction procedure is being abolished under the Renters Rights Bill as currently drafted – but it is not yet known when that bill will come into force.

If you require any advice as a landlord about your rights and responsibilities regarding tenancy deposits, please contact our experienced solicitor David Wilson who specialises in such matters on 0800 8 60 62 65.

David Wilson – Solicitor