#AskTDS: “Can I use my deposit to cover my final month’s rent?”

As they reach the end of the tenancy, tenants sometimes ask landlords to accept their deposit to cover the final month’s rent. Although landlords may be prepared to do this, they are not obliged to, and it may be in both parties’ best interests to wait until the end of the tenancy and follow the standard procedure to deal with the deposit.

The deposit is taken from the tenant to protect the landlord’s interest – the property – and protected in a Government-backed scheme to ensure that the tenant is able to access the deposit at the end of the tenancy. If a tenant’s deposit is equal to one month’s rent it may seem sensible for the tenant to offer up the deposit to cover the rent, but this can leave the landlord high and dry or the tenant open to court action if something were to go wrong.

For example, if the landlord accepts the deposit in lieu of the last month’s rent, he or she will have no immediate protection against potential damage, cleaning, redecoration, or other works required.

Assuming the deposit is the equivalent of a month’s rent, accepting the deposit as a substitute for the final month’s rent will mean that the landlord cannot access the alternative dispute resolution (ADR) service, which is offered for free by TDS. This is because the use of the deposit has already been agreed by the parties, leaving nothing for the adjudicator to distribute. 

Costs above and beyond the deposit value would have to be pursued by other means. The landlord would either need to further the claim by taking the tenant through the courts (after seeking legal advice) or absorb the cost of redecoration and repairing the damage themselves.

Landlords may therefore wish to wait until the check-out report has been completed before considering whether they are prepared to accept the deposit to cover the last month’s rent.

For tenants, looking after the property during the tenancy and returning it the way you found it, as well as paying your rent in full, should ensure that you receive your deposit back in full and that you are not liable for further claims.

While it may seem like a simple solution, using the deposit against rent can cause issues for landlords and tenants further down the line. Landlords should always ensure they have accounted for any additional costs and ensure that the tenancy agreement allows them to recover these costs from the deposit.

About the author:

Alison has been involved in dispute resolution for over 12 years, including senior positions at the Police Complaints Authority and the Office of the Independent Adjudicator for Higher Education. Alison joined TDS in 2007 as an adjudicator and is now responsible for the operational management of the dispute resolution team.

About TDS:

Tenancy Deposit Scheme (TDS) is a government approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.

We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.

TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.

TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.

TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.

TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.