Deposits for student lets: a guide for landlords and agents

Renting to students can be very rewarding and lucrative for landlords, offering a stable and reliable income.  But there can be a higher possibility of issues when the tenancy comes to an end. It’s advisable to take a security deposit for any tenancy, and especially when you have student tenants. 

If they’re living away from home for the first time, they may not be used to taking care of a property – whether that’s keeping it clean or reporting maintenance issues and breakages. And, given that students tend to be fairly sociable, there may be a lot of people coming and going and more parties than you might expect with other types of tenant.  

So it’s wise to take a security deposit that can be used to pay for any damage at the end of the tenancy. That can be up to five weeks’ rent – six if the annual rent is over £50,000 – and it must be protected in a government-approved scheme such as mydeposits, within 30 days. 

Although some tenants find it challenging to come up with both the deposit and the first month’s rent at the start of a tenancy, you often find with student lets that parents or other family members are willing to help out, particularly if they’re also acting as a guarantor for the tenancy.

If students are concerned about affording the deposit, they could consider a deposit replacement scheme, which  mydeposits offers  in partnership with Ome. Instead of paying an up-front deposit, tenants pay a monthly subscription and landlords are protected to the same value as a five-week cash deposit for damages, unpaid bills and rent arrears. 

Protect your deposit today

If you have taken a cash deposit, you must protect it in a government authorised scheme within 30 calendar days

What are the most common end of tenancy deposit issues?

By far the most common issue at the end of student tenancies is over the standard of cleanliness. Around a quarter of all tenancy disputes are due to cleaning standards, but when it comes to students, it represents 44 per cent of disputes.

And around 13 per cent of student deposit disputes concern general redecoration costs. When you have multiple unrelated students living in one property, the associated  high traffic usually means far more scuffs and wear and tear than you’d expect to see in a single let. However, this is simply down to the way you’ve chosen to let your property, so don’t expect your students to pay.

What you can charge them for is the cost of any damage, such as carpet stains, mould build-up, missing kitchenware and torn or broken furnishings. However, you will need documented evidence that they were caused during the tenancy, such as photographs and/or descriptions of the items you believe to have been damaged.  

Reduce the likelihood of deposit disputes 

As the saying goes, prevention is the best cure, so make sure your student rental is:

  • Decorated using wipe-clean and mould-resistant paint
  • Furnished with hard-wearing furniture and fittings, with sturdy hinges
  • Easy for the tenants to keep clean – for example, use durable flooring such as large tiles on the floor and walls of the bathroom 

Then when you check the students into the property, be clear on your expectations and take the time to explain:

  • The inventory – confirming the condition of the property and its contents 
  • How to use the appliances and equipment properly
  • Your expectations for maintaining the property in good condition – perhaps suggest they set up a cleaning rota 
  • The importance of reporting any issues as soon as possible
  • The causes of damp and mould, emphasising the need to ventilate the property properly and that they should report any evidence of mould right away
  • What is considered ‘fair wear and tear’ 
  • That they will be expected to hand the property back in the same condition it is currently – allowing for fair wear and tear
  • That deposit funds may be retained to cover any damage, including the cost of any cleaning required

Towards the end of the tenancy, remind the students in plenty of time to check the original inventory so they’re clear how you expect the property to look when they hand it back. It is good practice to carry out a pre check-out inspection a week or two before the tenants move out to highlight any issues that they are expected to remedy. In our experience this helps avoid disputes at the end of the tenancy.  

At the end of the tenancy, ask them to be present for the check-out so they can answer any questions you might have, and you can agree any deposit deductions there and then. And have the check-in inventory to hand so you can clearly compare the condition and contents of the property to when they moved in.

If you use an agent, they should be managing all this for you and doing periodic checks to make sure your tenants are keeping the property in good condition and highlight any maintenance and repairs. 

Protect your deposit today

If you have taken a cash deposit, you must protect it in a government authorised scheme within 30 calendar days

How to handle disputes

If your tenants don’t agree that they should be responsible for the cost of any damage, it’s best not to get into an argument. Take photographs, describe the damage in detail and ask the tenants if they’re happy to pass the matter on to your deposit scheme provider’s free dispute resolution service. 

If the students have guarantors, it’s worth contacting them to explain the situation. They may prefer to settle the costs with you directly, rather than wait for dispute resolution.

If you do go down the formal dispute resolution route, as with any type of tenancy, both parties will be asked to provide evidence, then the service will make a decision about the deposit, which will be final.

For further information, read the mydeposits NRLA guide, Students, tenancy deposits and avoiding disputes, which includes the main reasons for student disputes, an example case study, guidance on how to approach negotiations and using evidence to support your case. And for all you need to know about renting to students, read Hamilton Fraser’s Ultimate guide to student properties