Worthing and the surrounding areas are experiencing a significant influx of people looking to rent right now. Whether you’re new to lettings, or already have an established portfolio, make sure you’re in the know with how to correctly handle tenant deposits. It’s an essential part of protecting both your property and your tenant relationship.
In this guide, we’ll walk you through everything you need to know about managing tenant deposits, breaking it down into simple steps so you can handle them confidently and stay compliant.
What is a tenant deposit?
A tenant deposit (also known as a security deposit) is money paid by the tenant at the start of a tenancy. It’s typically the equivalent of four to five weeks’ rent and is there to cover any potential issues like unpaid rent, property damage, or breaches of the tenancy agreement. Essentially, it’s a little safety net to protect your investment.
Deposit protection schemes
Since 2007, UK landlords have been required to protect tenant deposits using a government-approved Tenancy Deposit Scheme (TDS). This ensures that the tenant’s money is safe and fairly handled throughout the tenancy.
You have three main options for deposit protection:
- 1. Deposit Protection Service (DPS) – A free-to-use scheme with both custodial and insured options.
- 2. MyDeposits – Offers a custodial scheme as well as an insured scheme.
- 3. Tenancy Deposit Scheme (TDS) – Another scheme offering both custodial and insured options.
Once you’ve received the deposit, you have 30 days to place it in one of these schemes and provide the tenant with key details, known as Prescribed Information.
Prescribed Information
So, what exactly do you need to share with your tenant after securing their deposit? The law requires you to provide the following details within 30 days:
- • Contact information for the deposit protection scheme you’ve used.
- • The property address and amount of deposit paid.
- • How the deposit is being protected.
- • Conditions under which part or all of the deposit may be withheld.
- • The process for getting the deposit back at the end of the tenancy.
- • What to do if there’s a dispute about the deposit.
If you forget to do this, you could face fines (up to three times the deposit amount) and you won’t be able to serve a valid Section 21 eviction notice if needed. So, staying on top of this step is key!
Managing the deposit during the tenancy
Once the deposit is safely tucked away in one of the protection schemes, it’s important to stay on top of things throughout the tenancy.
- 1. Get an inventory
Before your tenant moves in, it’s essential to have a detailed inventory created, listing the condition of the property and any pre-existing damage. Jacobs Steel provides a professional inventory service, delivering a comprehensive report on your property’s condition before tenancy begins. This report can be invaluable at the end of the tenancy, helping to prevent or resolve any disputes over the property’s condition. - 2. Regular check-ins
Conduct regular inspections during the tenancy (after giving the tenant proper notice) to ensure the property is being maintained. This also helps you catch any small maintenance issues before they become bigger problems. - 3. Stay in touch
Good communication with your tenants is essential. If there’s damage to the property or other concerns, address them as soon as possible. This helps avoid disputes and shows that you’re a responsive and responsible landlord. - 4. Professional check out
At the end of the tenancy, we can also offer a professional check-out service. This is a detailed report on the property’s condition at move-out. It complements the initial inventory and can support any claims or disputes related to the deposit.
Returning the deposit
When the tenancy comes to an end, landlords have a set timeframe to return the deposit, provided everything is in order. If you believe you need to make deductions for damages, unpaid rent, or other issues, follow these steps:
- 1. Compare the property to the inventory
Look at the original inventory and note any damage beyond normal wear and tear. If repairs or cleaning are needed, make sure to document everything with photos and receipts. - 2. Notify the tenant of deductions
If you plan to make any deductions, inform the tenant in writing. Be clear about the reasons and provide evidence to back it up. - 3. Handling Disputes
If the tenant disagrees with your deductions, they can raise a dispute through the deposit protection scheme. Each scheme offers Alternative Dispute Resolution (ADR), which is a free service to help both parties come to an agreement without going to court.
Common mistakes (and how to avoid them)
There are a few common missteps that can cause headaches for landlords when managing tenant deposits. Here’s how to steer clear of them:
- • Missing the deposit protection deadline: You’ve got 30 days to protect the deposit, so don’t let that deadline slip. Missing it can lead to fines and complications with evictions.
- • Forgetting the Prescribed Information: Not providing this info can result in the tenant being entitled to compensation, and it may also prevent you from using a Section 21 notice.
- • Not having an inventory: Without a detailed inventory, it’s much harder to prove damage and justify deductions from the deposit.
Handling tenant deposits doesn’t have to be stressful. By following these steps, you’ll be in a great position to manage deposits smoothly and avoid disputes.
At Jacobs Steel, we have in-depth knowledge of property laws, regulations, and market trends, helping landlords stay compliant. Get in touch with our Lettings Team today and let us take care of your property portfolio.
Jacobs Steel are estate and letting agents with offices in Worthing, Findon, Lancing, Shoreham-by-Sea and Hove. Our commercial sales & lettings team will guide you through the entire process, communicating with you every step of the way.
Disclaimer: While we aim to provide accurate information, this article is intended as a general guide and doesn’t constitute professional advice. Always consult with a qualified professional for specific guidance.