The top five reasons why landlords should take a deposit
It’s not compulsory to take a tenancy deposit, but they remain a trusted safeguard for most landlords
Although there is no legal requirement to take a deposit, the benefits of taking a deposit are widely accepted. Here’s why most landlords continue to take a tenancy deposit.
1. It provides a financial safety net
Deposits give landlords some protection if there is damage to the property at the end of the tenancy. Without a deposit, landlords may have to cover these costs out of their own pocket. It should however be emphasised that taking a deposit is not a substitute for having comprehensive landlord insurance.
Find out more about mydeposits and protect your deposit today
2. It covers more than just damage
The main purpose of protecting a deposit is to cover end-of-tenancy costs like cleaning, repairs or damage. If needed, it can also be used to recover unpaid rent, bills, arrears or removal of abandoned items. This reinforces the importance of keeping the deposit fully protected until the tenancy ends and not using any portion during the tenancy.
3. It encourages tenants to look after the property
Nearly all tenants who pay a deposit are looking for a full refund when they move out so having something to lose incentivises them to look after their rental home. It also signals that the tenant is financially stable and ready to meet their responsibilities. A happy tenant will feel more comfortable and secure in their home, potentially encouraging them to stay longer.
4. It demonstrates you’re a professional landlord
Taking and protecting a deposit shows tenants that you’re serious about doing things properly and by the book. It’s a key part of building a transparent, professional landlord-tenant relationship. Read Total Landlord’s article on nine steps to becoming a good and successful landlord for more guidance.
5. It gives you access to negotiation options
Disagreements at the end of a tenancy are rare - but they do happen. If you’ve taken and protected a deposit from your tenant with mydeposits, you can use our free independent resolution service to resolve claims fairly and impartially.
If you are looking to recover more than the deposit amount when the tenancy ends, you also have the option of low-cost tenancy mediation through the Property Redress Mediation Service who can help find a quick and agreeable solution.
While most tenancies end with the landlord and tenant reaching an agreement about the deposit, negotiation is sometimes unsuccessful. If the issue escalates to court, it can become both costly and time-consuming. That’s why having alternative ways to resolve issues early on benefits everyone involved.
Yes – it provides important protection and peace of mind
No – there are better alternatives like insurance
Maybe – it depends on the tenant or property
