Tenancy deposits are taken by landlords for two main reasons

There are two main reasons why landlords take deposits:

• Holding deposit: to hold the tenancy for a short period prior to the contract being signed.
• Security deposit (sometimes referred to as a damage deposit, rental deposit or bond): to give the landlord a reserve fund in case of problems.

The holding deposit

The holding deposit is particularly appropriate where there is good demand for the property and the landlord may lose other prospective tenants if you cause unnecessary delay or decline the tenancy at the last minute.

In the event of the tenancy agreement falling through, the landlord may well decide to keep this holding deposit to offset for the inconvenience and cost caused, but this should be pointed out and stated in writing to you at the outset.

However, if the tenancy agreement falls through because of the landlord’s decision, you cannot be charged.

The security or damage deposit

The items that are usually covered by the deposit are listed below, all of which should be referred to in the letting agreement.

• damage to the property, landlord’s fixtures, fittings and furniture - beyond normal wear and tear
• cleaning - for example, a cooker or carpet cleaning.
• rubbish removal - tenants may leave unwanted items of their own such as furniture or general rubbish both inside and outside the property.
• unpaid rent.
• replacement keys/locks when keys are lost or not returned: if keys are not returned, it is a landlord's duty to change the locks.

Further information

For further information about tenancy deposits visit Direct.gov.