An age-old trick tried many times, by many tenants “Please Mr landlord just use my deposit for the last month’s rent”. A good question though, and one many people may respond to with ‘Well I don’t see why not’. However, on so many levels this is wrong and could leave a landlord immensely out of pocket. So, what is the correct answer to this? Is this allowed? You may well ask and the long and short of it is no, this is not allowed and not what the deposit is for. The deposit is not for arrears, it is for damages, hence its name damage deposit. If the tenant fails to pay you their last month’s rent they are effectively in rental arrears. A promptly following second question though would be how on earth can you avoid this happening?
Here we list the best ways to avoid and deflect this from happening:
State it at the start of the Tenancy
Make it explicit at the start that the deposit is for damages and not rental arrears.
Refer to the Tenancy Agreement
If they do suggest this as a course of action advise them in writing of the clause in their AST that adds an interest rate to any late rent received.
Remind them of future Referencing
You could also remind them that if they are renting again, they may well need a reference from yourself and by going into rent arrears you would not be able to provide a good reference.
Insufficient Monies for Damages – CCJ looming
If they do follow this path and at the end of the tenancy there are deductions to be made without sufficient monies left to cover these damages you will be requesting the additional monies direct from them. If this is then not paid you will pursue court action which could result in a CCJ.
Tenant ID and Landlord Referencing Database
A final threat would be that you will add their name to the Tenant ID and Landlord Referencing database which will make it very difficult for them to rent again.
If a landlord agrees to off-set the last month’s rent from the deposit, there is no way to then go back and claim for damages later found, even through arbitration. Pursuit of the tenants would need to be through the courts or costs would simply have to be absorbed by the landlord.
We hope with the above guiding hand and advisory slant to the tenants, that they may think twice before using the deposit for any final rental payments. The easiest way to reduce the likelihood of this happening though is through clear communication with your tenants, at the start and throughout the tenancy, of your expectations of them and what is legally required of them as tenants.
Connect with us on Facebook and LinkedIn to receive updates of all our tips and tricks and property know-how and for any ad-hoc advice or details of our services to help protect your private rental property, we are always happy to help, so please feel free to get in touch today.