Whether you are the owner of a rented flat or a tenant, you are interested in knowing all aspects of the return of a rental deposit.
Throughout this article, we will see the different types of guarantees that can be demanded, when to demand them, when to return them and why they are so important.
WHAT IS A RENTAL DEPOSIT?
The deposit is a guarantee obtained by the landlord. This guarantee consists of a financial amount agreed upon by the tenant and the landlord and is intended to cover the non-fulfilment of certain obligations by the tenant.
In accordance with Article 36 of the Urban Rentals Law, when a rental contract is drawn up, it will be compulsory to demand and provide a cash benefit in an amount equivalent to one month’s rent for the rental of housing.
Thus, if a rental contract of 500 Euros per month is concluded, the tenant must be required to pay a deposit of 500 Euros.
Furthermore, once the first 5 years of the contract have passed, the deposit may be subject to updating, and this may be increased or decreased.
The deposit for a rental must be returned to the tenant at the end of the rental contract. In order to receive the deposit, the flat must be in perfect condition, and certain repair costs may be deducted from the amount of the deposit.
RENTAL DEPOSIT: IS IT THE ONLY GUARANTEE?
Is the deposit the only thing that can be demanded from the tenant? No! Other types of guarantees may also be demanded, such as insurance against non-payment of rent, a bank guarantee or a deposit.
In this way, in addition to the conventional rental deposit, other types of guarantees can be used to avoid non-payment of the rent:
–RENTAL DEFAULT INSURANCE
RENTER’S DEFAULT INSURANCE
Non-payment of rent is, in Spain, one of the main risks faced by owners of rental homes, being one of the main obstacles when renting a property. For this reason, the possibility of contracting a rental default insurance arises.
This insurance will be in charge of the owner and covers the possible non-payments, assuring the collection of the rent. In addition, it covers the possible damages that the tenant may do.
With our services of intermediate and complete management of long term rent, we include the insurance of non-payment!
The bank guarantee is a commitment contract involving bank, landlord and tenant. In this contract, the bank guarantees that the tenant can pay the rent.
If the tenant fails to pay the rent, the bank will pay the corresponding rent money to the landlord.
In short, with a bank guarantee, the landlord ensures that the rent is collected, which is a good method of providing a rental deposit.
In accordance with the Urban Rentals Law, the landlord can request a deposit from the tenant as an additional guarantee.
Unlike the conventional deposit, the amount of the deposit will not necessarily be equal to one month’s rent, the amount of the deposit being that agreed between the landlord and the tenant.
The deposit must be returned to the tenant as long as no damage has been caused to the property, no debts have been incurred or the contract has been broken.
HOW MUCH IS THE MAXIMUM DEPOSIT FOR A RENTAL?
In the case of a housing rental contract, the minimum amount required from the tenant will be the equivalent of one month’s rent. With respect to other types of rental contracts different to housing contracts, the deposit will be equivalent to 2 months.
However, the parties may reach an agreement in which they agree on other types of guarantees already mentioned.
REASONS FOR NOT RETURNING A RENTAL DEPOSIT
The return of the rental deposit is widely unknown in Spain. In a rental contract, a number of clauses are agreed upon, the breach of which may result in the withholding of part of the rental deposit.
The reasons for not returning the deposit are as follows:
-NON-PAYMENT OF RENT
-DIRT IN THE HOUSE
-ABANDONMENT OF THE PROPERTY BEFORE THE END OF THE CONTRACT
NON-PAYMENT OF RENT
As soon as the tenant stops paying a monthly fee, the landlord is exempt from refunding the rent deposit. In this way, the landlord will collect the deposit as a monthly rent, since the amount of the deposit is equivalent to the rent.
DAMAGE TO THE PROPERTY
If the tenants have caused damage to furniture, appliances or general areas of the home, the owner has the right to deduct money from the deposit to cover the damage caused.
It should be noted that if any furniture or appliances have been damaged due to natural wear and tear, nothing should be deducted from the deposit.
DIRT IN THE HOUSE
When entering a property, it is normal to find it in adequate hygienic conditions. Therefore, if the property is left in poor hygienic conditions that may make it difficult for new tenants to enter the property, part of the rental deposit can be deducted to cover the cost of cleaning.
LEAVING THE HOME BEFORE THE END OF THE CONTRACT
The tenant may leave the property before the end of the contract. However, the landlord must, in the circumstances, retain the deposit in full.
In this way, the costs of the next monthly payment are covered as the owner finds new tenants.
If the tenant leaves the property without having finished paying the corresponding bills (water, electricity, gas, wifi, etc…), the landlord can retain the amount of the deposit required to rectify these bills.
If the tenants make excessive noise that results in complaints from the community in which the property is located, the landlord may withhold part of the deposit.
This is because most contracts contain a clause in which the tenant agrees not to make excessive noise, especially after 10pm.
WHEN AND UNDER WHAT CIRCUMSTANCES DO I HAVE TO RETURN A RENTAL DEPOSIT?
The deposit must be returned to the tenants after the end of the contract, once the contract has been terminated and the keys handed over, after verifying that all the clauses of the contract have been complied with.
If any of the clauses have not been fulfilled, as regards the return of the rental deposit, part of the rental deposit will be retained to cover any possible expenses.
It should be noted that the deposit may not be used as payment for the last month’s rent.
WHAT IS THE PARTIAL RETURN OF A DEPOSIT?
The partial return of a deposit is, for all purposes, the return of the deposit to the tenant by the landlord once it has been deducted:
-Cleaning costs as long as the house is not returned in perfect hygienic conditions
-Payment of rent arrears
-Replacement of the property in case of works carried out without the landlord’s permission
-Replacement of furniture damaged by tenants
It should be noted that during the process of returning the rental deposit, conflicts often arise between the landlord and the tenant. Therefore, we recommend the greatest possible transparency between both parties during the duration of the contract.
WHAT IS A RENTAL DEPOSIT FOR?
The rental deposit is, in short, a guarantee that serves to ensure that the tenant complies with all the clauses of the rental agreement.
Some of the clauses that are usually included in rental contracts are the following:
-Request to the tenant a second address where to receive notifications
-Terms and conditions of rent
-Duration of the contract and possible penalties
-Type of repairs that will be in charge of the tenant
-No work may be done without the owner’s permission
-Property return in optimal hygienic and living conditions
-Period in which the deposit will be returned
-Method of communication to be used by landlord and tenant
Thus, the deposit of the rental deposit must be made once the contract is concluded and will be returned in full if all the clauses of the contract have been complied with.
CONCLUSION: WHY IS THE RENTAL DEPOSIT SO IMPORTANT?
If you are the owner of a property and you wish to rent it, you should be aware of the importance of the rental deposit nowadays.
The reasons why it is so important are the following:
-GUARANTEEING PAYMENT OF MONTHLY FEES
-GUARANTEE OF GOOD TREATMENT OF THE FURNITURE
-INVOICE PAYMENT GUARANTEE
-GUARANTEE COMPLIANCE WITH THE CONTRACT
GUARANTEE OF PAYMENT OF MONTHLY INSTALMENTS
Paying a deposit equivalent to the cost of a recoverable monthly payment after the end of the contract, makes the tenants take care of the monthly payments, otherwise the landlord may withhold part of the rent deposit return.
GUARANTEE OF GOOD TREATMENT OF THE FURNITURE
The good treatment of furniture is usually one of the clauses included in all rental contracts. Therefore, if the tenants want their deposit to be returned, they must take care of the state of the furniture, appliances and, in short, the general state of the home, as well as its cleanliness.
BILL PAYMENT GUARANTEE
Another of the clauses included in practically all rental contracts in which the tenant takes charge of the bills and whose breach results in the retention of the rental deposit. Therefore, the deposit guarantees the landlord that the tenant will pay the corresponding bills.
GUARANTEE OF COMPLIANCE WITH THE DURATION OF THE CONTRACT
While it is true that decisions arise from one day to the next and nothing is certain, the deposit is often an incentive for the tenant to comply with the duration of the contract, especially in medium-term rental contracts.
HOSTICASA LONG-TERM RENTAL SERVICE
Do you have a house and want to rent it, but you are not clear about how the rental deposit is returned and what is involved in renting a property? If so, at Hosticasa we offer different services for long term housing rentals, in which we manage the rental of your home.
If you want to rent your property, making sure you have good tenants, do not hesitate to contact us!