What is a rental deposit?
When you find a property you want to rent - whether it’s a house or flat - you will usually be expected to pay a rental deposit, which is a fixed payment that secures your property. A rental deposit is a fixed amount of money that you’ll pay to your landlord before moving into your property that secures your tenancy. It also provides extra security for you (to make sure you aren’t charged for anything you shouldn’t be) and your landlord (in case you breach your lease or damage the property).
The amount you’ll have to pay in your deposit is normally the equivalent of a month’s rent - though legally it can be up to 5 weeks. Your landlord cannot charge you more than this amount. If they do, they are breaking the law - make sure your deposit is fair.
What’s the difference between a rental deposit and rental fees?
During the rental application process, you may come across rental “fees”, such as charges for viewing the property, or checking credit - but most of these are banned under government regulations. If you see any of these fees, don’t pay them.
That being said, you may be asked to pay a holding fee. This fee, unlike those above, is legal, and it’s paid in order to reserve your property until you’ve paid your deposit. It can’t be more than 1 weeks’ worth of rent. In most cases (including here at Ocasa) this holding “fee” is more of a down payment that’s taken off your first month’s rent, so you aren’t paying extra.
You should only pay a holding fee if you’re serious about moving into a property, as you may not get it back if you decide not to take it. If you do pay the fee, your landlord or letting agent should stop advertising the property you’ve chosen, and they shouldn’t take any further fees or deposits from anyone else.
When will I need to pay a deposit?
You’ll usually need to pay your rental deposit after you’ve found the property you’d like to rent, and paid any holding fees. Once you’ve paid your deposit, the property is yours, and you can begin to start the move in process - but make sure to get a copy of your receipt.
Remember that your landlord must have your deposit before you can move in - you can’t pay it once you’re in the property. Usually, you’ll have to pay the deposit upfront, and payment instalments aren’t an option. At Ocasa, we take your deposit after we’ve confirmed your references, up to 48 hours before you move in.
Your deposit can be paid by someone else, but you need to be sure that you have the money you need before committing to renting a property.
What happens to my deposit when I have paid it?
Paying a sum of money at once can be quite worrying. After all, once you’ve paid your rental deposit, you want to be sure that it’s safe.
And it will be, providing your landlord has followed their legal requirement to protect your deposit through a deposit protection scheme.
The details of your deposit, and how it is being protected should be included in your tenancy agreement. You should see one of the following schemes listed below:
These government approved schemes make sure tenants are refunded their deposit, as long as rent is paid on time and the property is left in good condition.
When will I get my deposit back?
By law, your deposit belongs to you, no matter what company is protecting it. This means you’re entitled to a full refund unless your landlord can evidence a claim that you aren’t eligible. For example, if you damage the property and the landlord needs to pay to fix it, you may lose part of your deposit.
However, don’t worry! As long as you leave the property in a good condition and you have no outstanding rent to pay, you’ll get your rental deposit back at the end of your tenancy as soon as practically possible. Deposit protection schemes exist to make sure you’re protected, as well as your landlord.
Although rental deposits can be intimidating, you’ll find that the process isn’t as complex as it may seem at first. If you’re concerned, it helps to have a complete understanding of what you can expect from the rental process as a whole. This way, you can make sure the process goes as smoothly as possible.
To see how ready you are to rent your own property, read our free guide on how to rent for the first time - where we help you determine the next step in your moving out journey.