When renting a new home, one of the most common questions is how much deposit needs to be paid. It is within a landlord’s legal rights to request a deposit when renting out their property, but there are certain limits. The law outlines how much deposit landlords can charge.
What is a Deposit?
A deposit is a specific amount of money requested from the tenant at the start of a new lease agreement. It’s a method landlords use to secure themselves and their property. The deposit is not considered income for the landlord or an expense for the tenant.
If the tenant does not return the property in the same condition as when they moved in and has caused damage, the cost of repairs can be deducted from the deposit. If the deposit exceeds the damage costs, the remaining amount is refunded to the tenant. Conversely, if the deposit does not cover the damage costs, the tenant must pay the difference. These costs should be mutually agreed upon; landlords cannot unilaterally decide the amount to deduct from the deposit.
What is the Limit on Deposits?
Landlords are free to request a deposit amount within the limits set by law. Some landlords may not ask for a deposit at all, while others might request a very high amount.
According to the law, the deposit amount requested by the landlord cannot exceed the total rent of three months. Any deposit amount exceeding this limit is not legally enforceable, and tenants are not obligated to pay such an amount.
Deposit amounts are one of the most common sources of disputes between landlords and tenants. If necessary, these disputes can be resolved through the courts. Landlords can deduct from the deposit if they can prove damage to the property, but if they attempt to deduct without any damage, the tenant can take legal action.
