What you need to know about rental deposits
Rental deposits help to protect the landlord against unpaid bills as well as from damage to the property. Paying a deposit can be expensive so you’ll need to save up before you start looking for a property to rent.
You can expect to pay one to three months’ rent as a deposit before you move into the property.
Owners renting out their property need to make sure that they inspect the property before their tenants move in as well as before they move out.
If you’re looking for a new place to stay, you can find rental properties on GotProperty.
Photo source – pixabay.com
Why is paying rental deposit necessary?
Tenants are required to pay rental deposits to protect the landlord against unpaid rent. The deposit can also be used to cover the expense of any breakages caused by the tenant.
If the tenant has any unpaid bills related to their rental of the property, the deposit can be used to cover these expenses. This lump sum also covers any items that go missing from the property.
How much should a deposit be?
Tenants are typically asked to pay one month’s rent as a deposit, but some landlords require deposits that are equivalent to two months’ rent.
In the cases of larger deposits, it’s important to consider that this requirement will reduce the number of people who can afford to rent your property.
Larger rental deposits may be required if the rent exceeds 33% of the tenant’s salary. If the person’s income is unstable, it may be advisable to ask for an additional deposit. Small problems with their credit history or other credit commitments are also reasons to consider asking for a larger deposit.
When do rental deposits get returned?
Rental deposits should be reimbursed one week after the tenant moves out if there is no damage to the property. The landlord has two weeks to repay the deposit if deductions need to be made to cover the cost of repairs.
Tenants are not permitted to use the deposit to cover their last month’s rent. They are required to pay their rent on time according to the specifications of the lease agreement.
If a tenant uses the deposit to pay the remainder of their rent before they move out, they could face legal action.
Photo source – unsplash.com
What are the landlord’s obligations?
When you’re renting out a property, you’ll need to invest your tenant’s deposit in an interest-bearing account.
The money should be kept secure in an account at a reliable financial institution with an interest rate that does not fall below that of a savings account’s interest rate. Landlords must inspect the property before the tenant moves in.
Any existing damage must be noted in a document and signed by the landlord and tenants. When the tenant decides to move out, an exit inspection needs to take place within the final three days of their occupancy.
The exit inspection is an opportunity for the landlord to check that the tenant hasn’t caused any damage to the property.
What to consider before paying a deposit?
Before paying a deposit, you’ll need to be certain that you’ve chosen the right property to rent. Signing the lease and paying the deposit is a big commitment so you’ll want to make sure that you’ve selected the right place.
One of the major considerations is the cost of the rent as this will influence the amount of money you’ll need to pay to your landlord upfront as a deposit. As a general guideline, it’s not advisable to spend more than a third of your salary on rent.
Photo source – pixabay.com
You’ll also need to determine whether you can afford the deposit or not. Don’t forget to factor in the cost of utilities and transport when you’re calculating your monthly budget.
Other important factors to consider before renting property include its location and size as well as the level of security the property offers.
Now that you know more about rental deposits, you can look for a place to stay on GotProperty. Paying a deposit is a requirement of most landlords so it’s important to factor this expense into your budget.
