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Can A Tenant Use The Rent Deposit As Last Month’s Rent?

Can A Tenant Use The Rent Deposit As Last Month's Rent?

Can A Tenant Use The Rent Deposit As Last Month’s Rent?

What Happens If The Tenant Asks To Use There Deposit For The final Rent Payment?

A question we often get asked is “Can a tenant use the rent deposit as last month´s rent?”. Some tenants at the end of the tenancy agreement will ask the landlord if they can use their deposit to cover their last rent payment. A landlord is not obligated to do this and it may become complicated for both the landlord and the tenant if this is agreed. It is always best to wait until the tenancy comes to an end.

The Deposit 

A deposit is taken from the tenants by the landlord to protect the landlord’s interest and the property. This is protected by a government-backed scheme so that the tenant can access their deposit at the end of the tenancy. However, taking the deposit as the last month’s rent can leave the landlord in a difficult position.

Why Would I Be In A Difficult Position If I took The Deposit As Last Month’s Rent?

One of the biggest problems could be damages caused to the house. Let’s say that the tenants have damaged certain items then the landlord has used the last month´s rent this, in turn, means that there will be no money in the kitty for any dilapidations, ie cleaning, maintenance, redecoration, gardening.

This means that the landlord would then have to start a small claims court action against the tenants for damages caused and this could not only be costly but you may find it difficult to locate all parties.

Furthermore, if the landlord does use the last month’s rent as a deposit they will not be able to rely on the government back deposit scheme or the ADR which is the alternative resolution service because the deposit will be gone so there will be no funds to distribute or adjudicate with.

What happens If the damage Is Over And Above The Months Rent deposit?

Any costs over and above this amount will not be covered which means that the landlord will have to pursue the tenants separately for any further damage costs through the courts. Remember that any claims under £10,000 you will not receive costs.

You can as a landlord carry this out yourself by registering at https://www.gov.uk/make-court-claim-for-money. This an effective way for landlords as they will not incur solicitors charges, however, remember that the landlord will have to represent themselves in court and deal with all the associated paperwork. 

So I’m Best Not To Accept The final Rent from The Deposit?

Yes. Don’t take the last month’s rent as the deposit as you will be in a better position both financially and from a business standpoint. If your tenant has damaged any items make sure that you take photographs that are date and time-stamped. Also, keep all receipts for items that you have purchased as you may need to use them as evidence if the matter does end up in court.

When Does The Tenant Get the Deposit back?

Your tenant will receive their deposit back once the property has been checked and there are no associated problems with it and that the last month´s rent has been fully paid.

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