Can my tenant use his deposit as the final months rent?

Q.  My tenant is vacating at the end of the month and his rent was due a week ago and he has still not paid. When I contacted him to draw this to his attention he boldly announced that I can use his dilapidation deposit to pay for the last month’s rent. Can he legally do this? I was under the impression that the deposit could not be used for rent and anyway what if there are costly dilapidations, I could end up out of pocket. Can you please advice?

A.  You are completely correct, rent is rent and the deposit is exactly that. If your tenant insists on withholding the last month’s rent they are officially in rent arrears. The deposit is totally separate to rent payments and any Assured Shorthold Tenancy Agreement will clarify this. Make sure they are aware of this in writing (warning letter) in case the situation escalates. The warning letter should refer to the clause in the AST (Assured Shorthold Tenancy Agreement) that adds an interest rate to any late rent received. If at the end of the tenancy there are deductions to be made and the deposit is insufficient to cover the arrears and damage etc. you will need to ask for the additional amount. If they fail to pay this this then you will be left with no alternative but to seek court action to recover your money. It’s worth letting the tenant know the consequences of non-payment and make it quite clear to them that to have a CCJ against them will impact their lives in the future. In reality it’s not often worth pursuing so it is far better to try to solve the issue with the individual if possible. Their deposit should also be protected in one of the government backed schemes and you will note one of their clauses for releasing the deposit is that all rent is paid up in full; you could also remind them of this too. Basically your tenant is making up his own rules at this point and I think a short sharp reminder of his contractual obligations in writing, maybe attaching copy contract and highlighting the clauses he is in breach of will be enough to make him realise that contracts are there for a reason and need to be adhered to. Sadly this happens more often than you would think but standing firmly and using your AST and tenancy deposit scheme to remain complaint is my best advice.

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