29 Jan 19 by Anna Simpson
What is a rent deposit? A rent deposit is paid prior to lease completion by the tenant to the landlord, it is completely separate to the first rent payment. The deposit will normally be held until the lease end (unless agreed otherwise) in a separate bank account. The deposit is taken as the landlords security and they can draw on it if the tenant fails to comply with their lease obligations.
What is rent in advance? The majority of leases will require the tenant to pay their rent in advance for that quarter or month in addition to the rent deposit.
How much will the deposit be? Normally the equivalent of 3 months rent (plus VAT, if payable) unless agreed otherwise.
When will I get my deposit back? Usually at the end of the lease, as long as all terms have been adhered to within the lease e.g. rent and service charge paid up to date, property kept in good repair, dilapidations liability satisfied.
Why do I have to pay a rent deposit and rent in advance? The rent in advance is your first rental payment for either the first quarter or month of the lease, the deposit is entirely different and is usually held by the landlord for the duration of the lease as their security.
Personal guarantor – Often if the tenant is not able to provide sufficient references or financial information or they are a start up business with little history then the landlord will request that they stand as a personal guarantor in addition to/instead of the rent deposit. This means that if the company folds the onus to pay any outstanding monies will fall to that individual.