If you are looking to become a landlord in Ireland, you’ll no doubt have considered whether or not you will ask for a security deposit. The money can be invaluable in protecting your investment and helping you deal with unpredictable tenants, but it’s important to fully understand what it entails before you ask for one. Here is everything you need to know about security deposits as a landlord in Ireland.
What Is A Security Deposit?
A security deposit is a sum of money that is paid by a tenant to their landlord prior to moving into a property. It acts almost like insurance, providing funds that can be used in the event of things like damage to the property or rent arrears (more on this below). If there is no reason for any of the deposit to be retained, then at the end of the tenancy it is returned to the tenant in full.
How Much Should A Security Deposit Be?
There are no legal guidelines in place that dictate how much you should ask for as a security deposit. However, one month’s rent is the usual amount that most landlords will ask for (and the most that the Residential Tenancies Board recommends).
You should always provide a receipt for the payment which the tenant can keep hold of and should also note the amount paid in their rent book (for more information about this, take a look at our post 12 Things You Must Do As A Landlord In Ireland).
Who Looks After The Security Deposit?
By law, the security deposit is considered the tenant’s money. However, for the duration of the tenancy, the deposit is usually held by either the agent letting the property on behalf of the landlord or the landlord themselves.
It should always be clear at the start of the tenancy who will be holding the deposit and whose responsibility it is to return it when the tenancy is over.
Under What Circumstances Can You Deduct Money From the Deposit?
Though the security deposit technically belongs to the tenant, it is possible to establish a right to keep it in a few different situations. These are as follows:
If the tenant has fallen behind on the rent, you are entitled to keep part or all of the deposit to cover the arrears. For more information on dealing with rent arrears, head over to our guide ‘Know Your Rights: What To Do When A Tenant Stops Paying Rent’.
You are entitled to retain part of all of the deposit to cover repairs for any damage that falls outside of normal wear and tear. This includes things like:
- Leaving the property in unhygienic or unsafe conditions
- Leaving rubbish or personal items in the property
- Broken windows or holes in the wall
- Not cleaning the property to the same standards as when the tenant began
- Damage to or missing items from the property inventory
Arrears for Utility Bills
If the utility bills are in your name (as opposed to your tenants) and they have fallen behind on the payments, you are allowed to keep part or all of the deposit to cover the arrears.
Breach of Tenancy Agreement in Regards to Termination
If the terms are clearly set out in the tenancy agreement, you are entitled to retain part of the deposit if the tenant either provides insufficient notice they will be leaving the property or if they end a fixed-term tenancy before the end of the agreed term.
What Counts As Normal Wear And Tear?
As noted above, only damage outside of normal wear and tear is grounds to retain some or all of the deposit. To be clear, normal wear and tear include things like:
- Faded or chipped paint
- Worn furniture
- Worn finishes on the flooring or carpet
Though it is subjective, scuffs and scrapes are completely unavoidable, and you can’t reasonably expect a property to be in the exact same condition as it was before the tenancy started. As a result, the security deposit cannot be used for routine upkeep like repainting the walls.
The onus of proof will always be on you to show that any damage exceeds normal wear and tear, so a reasonable and common sense approach is crucial in avoiding any disputes. You must also bear in mind that the cost of any additional work carried out along with the repairs cannot be passed on to the tenant.
Furniture damage can especially become an issue if your tenants have pets.
When Should You Return The Security Deposit?
Once the tenancy ends, the security deposit should be returned ‘promptly’. There are no written guidelines as to a specific timeline, but it’s good practice to return the money within 14 days of the tenancy ending (after the relevant inspections, inventory and any repairs have been carried out).
Disputes Regarding the Security Deposit
If you have a proper tenancy agreement in place and follow these guidelines for security deposits, then you shouldn’t run into any problems. However, there may be an occasion where a tenant believes you are unfairly keeping their money.
The first step is always to try and resolve the issue between yourself and the tenant. While things like arrears and breaches of contract are easy to prove, the extent of any damage is not so clear cut. This is where carrying out a property inventory is invaluable, as you will be able to clearly show any damage that has been done and how it goes beyond the expected wear and tear.
However, if you are not able to reach a resolution, the next step is to contact the Residential Tenancies Board (RTB). They offer two options. For more information, check out our post on resolving tenancy deposit disputes.
A free service where an independent mediator will try to help you and your tenant come to an agreement. The mediator is not there to show who is right and who is wrong, but rather to help both parties reach a shared understanding and a solution that everyone is happy with. This service does not need to be done in person but can be conducted over the phone.
If a resolution can’t be reached, then a hearing can be arranged in front of an independent adjudicator. There, both you and your tenant will present your evidence and the adjudicator will decide the outcome. The fee for adjudication is €15 for an online application and €25 for a paper application.
Although the chances are that no security deposit dispute will get this far, if either party is unhappy with the outcome at either mediation or adjudication they can refer it to a tenancy tribunal.
Check out this post on renting out residential properties in Ireland for more advice.
A security deposit is an important part of the lettings process, and in most cases it will exchange hands without any problems. Nevertheless, understanding the guidelines around security deposits will ensure that should any issues arise you will be equipped to deal with them swiftly and efficiently.
If you would like a helping hand getting set up as a landlord in Ireland, then we would love to help. At SCK Property, we offer a range of landlord services from finding and vetting prospective tenants to a full end-to-end package that takes care of the hard work for you. Head over to our property management page to find out more or get in touch via our contact form and we’ll get back to you as soon as we can.