Tenancy deposits and inventories
Here's the lowdown on two of the most important issues for anyone renting a room in a flat or houseshare.
Deposits explained
We're going to be talking about two different types of deposit:
- Holding deposits
- Security deposits (sometimes called tenancy deposits)
Holding deposits
A holding deposit is a payment you make to a landlord or agent in order to reserve a room or property. They can only take one holding deposit for a room (or property) at a time. This type of deposit should be refunded in full if you take the room, or if the landlord decides not to rent to you.
It must be declared as a holding deposit at the time it's taken. The landlord/agent can only keep it if you decide not to rent the room, give false or misleading information or fail to pass a 'right to rent' check.
Security (or tenancy) deposits
This is the type of deposit charged to guard against damage to the property or unpaid rent at the end of your tenancy. The deposit remains your money and should be refunded in full at the end of the tenancy, unless there's unpaid rent or damage to the property. Damage doesn't include 'fair wear and tear to the property' over the course of the tenancy.
If you're renting under an Assured Shorthold Tenancy (AST) your landlord must use a Tenancy Deposit Scheme.
For more information on deposit schemes, and how they affect you, see Tenancy Deposit Scheme for tenants in England and Wales and the different rules that apply in Scotland.
If you're a lodger, there's currently no requirement for your landlord to protect your deposit as you won't have an Assured Shorthold Tenancy. However, they can choose to place your deposit in a government scheme if they want to.
How much can I be charged for a deposit?
The rules are slightly different depending on where the property you're renting is.
How much can I be charged for a holding deposit?
In England and Wales, a holding deposit can't be more than 1 week's rent for the property (or room) in question. In Scotland landlords can't charge a holding deposit.
How much can I be charged for a tenancy deposit?
In England the deposit can't be more than 5 week's rent. This limit applies to ASTs, students in halls of residence and lodgers, providing the rent isn't more than £4,167 a month. Above that the limit is 6 week's rent.
In Scotland the maximum is 2 months' rent. Wales doesn't have a limit.
How to calculate how much your deposit should be
Working out how much you can be charged seems pretty simple on the face of it, but it's easy to get it wrong without meaning to. SpareRoom doesn't let advertisers set a limit higher than the legal maximum in their area.
If you'll pay weekly rent, then 5 week's rent is just 5 x the rent. Simple. However, if you pay monthly rent then it's (only slightly) more complicated.
Here's how it works:
Monthly rent x 12 ÷ 52 x 5 = 5 week's deposit
Rent x 12 gives you the annual rent, divide by 52 to get 1 week's rent and times that by 5.
The Inventory
This goes hand in hand with your deposit. You'll normally be asked to sign an inventory, itemising every piece of furniture and the state of repair of every room you have access to, when you move in.
If something's missing or damaged at the end of your tenancy you could be liable, so it's worth checking the document thoroughly. Deductions are likely to be made from your deposit so make sure that, if you find any discrepancies, you mention them to the landlord or agent straight away. If you're in any doubt it's worth photographing any existing damage to avoid disagreements later (ideally you'll want that attached as part of the agreed inventory).
Some landlords might not bother with an inventory. With no record of the state of the property before you moved in it will be difficult for a landlord to prove you've caused any damage. Damage shouldn't extend to 'fair wear and tear' - this means that your landlord can't expect the property back in the same pristine condition they let it out in, if you've been living there for a while. You should try to ensure that you return it in a reasonable condition though, to avoid arguments over what fair wear and tear actually constitutes. It doesn't include spillages on the carpet, for example, but minor scratches on the wall will probably be ok.
It's reassuring to know that, in the eyes of the law, the deposit is yours, and it's up to the landlord to prove that the damage was done by you, which is why tenants are often successful in legal cases related to damage.
One of the added complications with shared houses is what happens when a flatmate leaves and gets replaced by someone new. Before anyone leaves, you need to ensure that they've paid for any damage they caused, particularly if you're on a joint tenancy agreement where you're all equally liable. Most sharers usually agree between themselves to pay for any damage. If you're the new flatmate coming in, ask for a fresh inventory to be done before you sign a tenancy agreement, so you don't end up paying for any existing damage.
If you're baffled by tenancy agreements, check out our guide to tenancy agreements for more info.