How Long Does the Landlord Have to Return the Deposit?

Tenancy deposit protection: What your landlord or agent must do

A tenancy deposit is a part of every commercial tenancy agreement between the tenant and landlord. Before the tenant moves in, they need to pay the deposit, which the landlord must return at the tenancy's end.

If you have paid money towards a deposit to rent a property, you are owed that money back at the end of your tenancy, provided that there is no damage to the property. Your landlord owes you the deposit within ten days from the end of the tenancy. If your landlord holds the deposit, you can make a formal request to have it returned, at which point they have another 10 days to do so. If the deposit is being held as a part of a custodial scheme, you can make a direct request to have it returned this way.

You can find out more about how long a landlord have to return the deposit and more on the matter below.

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What is a security deposit in a tenancy agreement?

A tenant's deposit is a major aspect of any tenancy agreement. The purpose of the money is to provide the landlord with protection in the case of damage to the property, unpaid rent, and breaches of the tenancy agreement. The landlord uses the money to cover repairs and cleaning at the end of the tenancy.

Here are some other functions of the security deposit:

• Responsible tenancy - tenants have a very good incentive to take good care of the property if they don't want to be held responsible and face penalties for damage.
• Financial security - if the tenant causes damage to the property beyond the normal wear and tear, the deposit acts as insurance to cover repairs.
• Maintains the value of the property - landlords maintain the investment through security deposits
• Fair resolution of disputes - the deposit serves as a tool to settle any disputes that arise when the tenancy ends.

Read our article on what tenants should know about rental deposits in the UK for more information.

What is the Tenancy Deposit Protection scheme?

The Tenancy Deposit Protection (TDP) scheme is required in the UK to keep the deposits of tenants protected and ensure there is fair treatment of all parties involved in the tenancy agreement. The scheme applies to any Assured Shorthold Tenancy and essentially serves to protect the money paid by the tenant while resolving any deposit disputes and deductions.

Under the tenancy deposit protection scheme, landlords are under obligation to put the money of the deposit in a government approved scheme to protect the deposit. They must do so within no more than 30 days of receiving tenancy deposits.

In the UK there are three main Tenancy deposit protection schemes available - Deposit Protection Service, Tenancy Deposit Scheme and MyDeposits. Each custodial scheme offers free and fee-based insurance options. Landlords must inform tenants of the specifics of the deposit protection scheme and all related details in a timely manner. These are legal obligations and failure to comply can lead to fines and other repercussions for the landlord or letting agent.

The tenancy deposit scheme provides dispute resolution services in cases where an issue arises, such as when both parties do not agree on deposit deductions, or when the landlord fails to issue a deposit refund within 10 days of the tenancy end.

Both landlords and tenants need to know the specifics of the tenancy deposit scheme so that the deposit return process can be as smooth as possible. The insured scheme sets out regulations and guidelines that all parties must follow. That way they can protect their rights and best interests in the tenancy agreement.

What are the obligations and timeline for returning a tenancy deposit in the UK?

When letting out a rental property, landlords have several obligations to return a deposit. The timeline of the process features several steps worth noting:

• The landlord must protect the deposit via a deposit protection service approved by the government. They have a 30-day period after receiving the deposit to do so.
• It is within this 30-day period that the landlord must provide the tenant with information on the tenancy deposit scheme.
• At the end of your tenancy, you get your deposit back within 10 days. The landlord has the time to return the deposit after potential deductions for repairs and wear and tear have been agreed on.
• In the case of disputes upon deposit return, the landlord needs to initiate the tenancy deposit protection scheme's dispute resolution service. There must be evidence provided by the landlord or agent as proof to support their claims.
• Based on the evidence provided by both parties - landlord and tenant - the TDP scheme will decide what part of the deposit to return to the tenant and what part can the landlord hold.
• The tenant must be informed of the final decision within 10 days of the escalation of the dispute to the insured scheme.

All of these legal obligations are very important and landlords need to adhere to them all. That is how they can guarantee clear deposit returns and can take legal action to claim compensation for normal wear and tear, cleaning, rent arrears or other valid reason to pay less.

Allowed deductions from a tenant's deposit

Every insurance scheme states the reasons why landlords are allowed to make deductions from security deposits. Any deductions have to be within reason and fully in line with the terms and conditions outlined in the agreement for letting the rental property. Allowable deductions commonly feature:

• Rent arrears - if the tenants owe rent, the landlord can deduct the same amount from the security deposit.
• Property damage - for damage that does not fall within the normal wear and tear parameters, landlords can be paid compensation from the deposit.
• Cleaning - landlords can return the deposit minus cleaning costs if tenants leave the property in an untidy and messy condition.
• Missing items - before tenants move in, the landlord conducts an inventory of the property and the items within. If any items from the list are missing at the end of the tenancy, the landlord can deduct the same value from the original deposit.
• Utility bills - if there are any unpaid utility bills, the landlord can deduct the owed amount before giving the deposit back to the tenants.

For any deductions from the deposit, the landlord needs to provide relevant documentation and evidence. That is the way to avoid legal action and alternative dispute resolution.

Deposit not returned within 10 days - What to do?

If your landlord or agent does not return your deposit within 10 days ask for the landlord to specifically state deductions from your security deposit. Additionally, you can search for the contact details of the deposit protection service that the money is secured with. Each scheme that is backed by the government follows a dispute process that you can take advantage of. If the landlord has not secured the deposit, you can take legal action against them through the small claims court for compensation.

What is the dispute resolution process for deposit-related disputes?

When a dispute happens, landlords, agents and tenants follow specific steps in a designated resolution process. The body that governs this process is the tenancy deposit scheme which provides an unbiased mechanism to resolve disagreements. Following is a quick overview of the process:

• Communicate a potential mutual agreement - when a dispute arises, involved parties are encouraged to communicate and reach a possible agreement. This could mean the tenant can get their deposit back minus certain fees owed to the landlord, as outlined in the insurance based scheme.
• Mediation - if the first step fails, mediation can involve a third party to facilitate negotiations with the sole goal of reaching an agreement.
• Alternative dispute resolution - if mediation fails as well, the services of an alternative dispute resolution provider can be sought out. This provides an impartial assessment of the evidence after hearing both the landlord and the tenant.
• Decision and award - the ADR provider weighs in the evidence and comes up with an outcome and a binding decision. The provider issues an award specifying what part of the deposit, which the landlord holds, should be returned to the tenant.
• Compliance - the landlord needs to comply with the decision of the ADR service and return the determined amount of deposit back to the tenant. Otherwise, there may be legal consequences.

The importance of security deposits for tenants and landlords

A security deposit is very important to both the tenant and the landlord. It safeguards against damage and unpaid rent. Landlords should view the deposit as a buffer for any expenses they incur after the tenancy. Tenants benefit from having their rights secured when the deposit is put within an approved scheme, which means the funds are secure. Both parties can benefit from a fair resolution of any disputes with the aid of an objective third party.

FAQs

How long should a landlord take to return a deposit?

A landlord or agent has no more than 10 days to return a deposit to the tenants after the request to terminate the tenancy. The landlord or letting agent holds the deposit during the tenancy so such a request cannot be made before the end.

Can a landlord charge for cleaning?

Depending on the state tenants leave the property in, landlords can charge for cleaning. If the property is clean and tidy, the landlord will probably not charge anything. But if the property is left untidy, it is likely they will charge cleaning fees from the deposit.