Types of Landlord Deposits

There are three kinds of landlord deposits, all of which have different purposes.

1. The first one is the security deposit, which is basically meant to be a reserve fund for the landlord in case of any problems. Security deposits are sometimes called damage deposits, or rental deposits.
2. The second type of landlord deposit is the holding deposit. This is basically meant for the purpose of persuading the landlord to hold that tenancy for a certain period before the tenant moves in. Once a holding deposit has been paid, the landlord is certain that the prospective tenant is serious about moving in. Consequently the landlord will stop advertising the property, do background checks on the tenant and let other interested parties know that the tenancy has been taken.
3. Thirdly, there is a rent deposit. The rent deposit is collateral against rent arrears. It is mostly applied to tenants in commercial buildings.

Important Facts Concerning Landlord Deposits

The landlord has the legal right to hold a tenants deposit for up to 30 days after the tenant has moved out.During the period, the landlord is required to assess the house and repair any damages that may have been made by the tenant. The cost of these repairs is deducted from the deposit and the tenant gets the difference, however, it is worth noting that if the damage to the house is too severe then the landlord has the right to take the whole deposit. Additionally if repair costs are higher than the deposit then the tenant can be held accountable and forced to pay the extra amount.

Most tenants normally assume that they can stay their last month rent free so that the landlord can use the deposit as rent. This is wrong and illegal. The tenant is not allowed to stay on the deposit and use the deposit as rent. The deposit is strictly for security purposes.  The security deposit covers any damage on the property, cleaning of carpets and cookers and the changing of locks incase keys are not returned or are lost.

The holding deposit is non-refundable even if the tenant decides not to take up the tenancy. The landlord can keep the deposit as consolation, especially if the property had been taken off the market in readiness for the prospective tenant. However, this aspect may vary depending on the terms stipulated in the holding agreement.

Landlord deposits are important and are very beneficial to both the landlord and the tenant.