Helping tenants with deposits during the cost of living crisis

While everyone is being impacted by the current high inflation, it’s tenants – particularly those on lower incomes – who may be feeling the financial squeeze more than homeowners.

As a landlord, there are a number of things you can do to help your tenant continue to afford their rent, and you can find out more about these by reading our article, surviving the cost of living crisis: the ultimate guide for landlords. But what about deposit funds?

It can be challenging for tenants to afford both the first month’s rent and the security deposit at the start of a tenancy, but there are ways you can make it easier for them, while still following the rules for deposits.

If you have a current tenancy that’s coming to an end, try to make sure the tenant’s deposit is returned to them as soon as possible:

You should inspect – or ask your agent to inspect – the property a week or two before the tenants are due to leave, so any damage can be identified, giving them the chance to make it good themselves. That may be cheaper for them than having you deduct the cost of labour and materials from their deposit.

Also, remind them to check the inventory so they’re clear on the condition they should leave the property in – particularly the standard of cleanliness.

“When it comes to tenant and landlord negotiating costs at the end of a tenancy, the same issues tend to occur year after year. Issues with the property not being properly cleaned, damage to flooring or things missing, particularly in the kitchen, regularly feature on deposit claims. The best way to make sure deposits are dealt with fairly – for both landlords and tenants – is for the check-in inventory to have clear photographic evidence and a detailed written description so that a comparison can be made at the end of a tenancy.”

– Suzy Hershman, Legal Division Manager and Head of Disputes at mydeposits

If you use an agent to manage your property, agree any deductions with the agent, who will negotiate on your behalf. Any part of the deposit that is not being withheld should be returned to the tenant straight away.

If you choose to protect the deposit using a  custodial backed scheme or an insured-backed scheme you will need to register the full deposit amount.

For custodial protections, the money must be paid to the scheme provider as you receive it, and the prescribed information reissued to the tenant every time, where the deposit has been paid in instalments.

With insured protections, if you have agreed to take the money in instalments, make sure you keep accurate records and receipts in the event that not all the deposit has been paid and the tenant raises a dispute at the end of the tenancy. Without evidence, the provider will assume the full amount is protected.

Learn more on how landlord insurance can support landlords during the cost of living crisis.

For more information and advice on tackling the cost of living crisis, read our guide, surviving the cost of living crisis: the ultimate guide for landlords.