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Understanding the terms of your rental deposit is critical

Understanding the terms of your rental deposit is critical

Author: Pranil Maharaj
Date: 2017-06-09

One of the most common areas of conflict between letting agents and tenants is around the refund of the tenant's deposit. A particular area of concern is the time it takes the agent or landlord to pay back the deposit, as many tenants want to use these funds for a deposit for their new rental.

Fortunately, this conflict is easily avoided by carefully reading the lease agreement and taking note of the contractual obligations you are agreeing to upfront. Specifically related to the repayment of deposits, lease agreements usually stipulate that an outgoing inspection will be carried out within seven days of the termination of the lease, and if no damages are discovered, that the deposit will be refunded within the seven-day period.

The agent must keep the deposit in an interest-bearing trust account for the duration of the lease.

The tenant may not at their own discretion use the deposit in place of any month's rental, including the last. If the agent has to use the deposit to cover a month's unpaid rental, the deposit immediately becomes owning to the agent.

As you can see, there are clauses that protect both the tenant and the landlord or agent. Be sure that you have fully understood the requirements of your lease, have queried any problem areas, and have entered into an agreement with your agent or landlord that is satisfactory to you both.