#AskTDS: Trick or treat - How does the ‘deposit use clause’ work?
In this week’s #AskTDS, we lift the mask on the scary-sounding deposit use clause after a tenant asked us: “How does the deposit use clause work?”
At the very beginning of your tenancy, your landlord or letting agent should have provided you with a tenancy agreement for you to read and sign. The agreement is a contract between you and your landlord which spells out where the parties responsibilities lie. For example, it will say how much rent is due and the condition the property should be returned in at the end of the tenancy.
Crucially, if you have paid a tenancy deposit, the tenancy agreement should contain what’s known as a ‘deposit use clause’. The purpose of these clauses is to outline what your tenancy deposit can be used for. For example, it should state whether a landlord can request deductions from the tenancy deposit to cover repairing any damages cause during your tenancy.
One landlord recently got a fright when they made claims against the tenant’s deposit for cleaning, damage and redecoration; the landlord had good evidence including a well-prepared check-in and check-out report, estimates for the cost of making good, and invoices to show the age, cost and quality of affected items. Having accepted all of the claims were entirely justified, the adjudicator was still unable to award any of the deposit to the landlord.
The reason? The tenancy agreement referred to the tenant having paid a £1,000 tenancy deposit but did not have a clause setting out what it could be used for at the end of the tenancy. Because the tenancy agreement did not say that the deposit could be used to pay for cleaning etc, it had to be returned to the tenant.
To avoid a tenancy deposit nightmare this Halloween, landlords and letting agents should always include clear deposit use clauses in tenancy agreements.
Make sure you don’t have a howler!
We have example deposit use clauses and guides on our website.
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 Northern Ireland: TDS is Northern Ireland's leading and only not for profit tenancy deposit protection scheme.
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.
These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.
ARLA|Propertymark: For agents who would like to stay up to date, you can contact Propertymark | ARLA at: firstname.lastname@example.org. By being a member of Propertymark | ARLA you will be eligible for TDS Insured best headline rates.
RLA: If you are a landlord and would like to keep up to date with any changes that may affect you or your responsibilities, you can contact the RLA at: email@example.com and quote reference: dg715 to receive 25% off your first year's membership.