REAL ESTATE MATTERS|How can Tenants guarantee the return of a security deposit? – Part 1

Juliet Risdon

Juliet Risdon is a Director of JML Property and a property investor.
Having established the company in 1994, JML Property offers Investment Property & Homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.

There are some horror stories and rumors about how tenants are unable to recover their security deposits from unscrupulous Landlords.
With rents being as high as they are and the security deposit usually consisting of two months rent, it is a significant amount of money.
When a tenant is moving to a new apartment, the deposit is often relied upon to cover the deposit on the next rental property.
In order to allay concerns over your security deposit there are some elements to consider. In this article we look at;

Where is the deposit held?
What deductions can be made against the deposit?
What steps can you take to ensure you get your deposit back?
What happens if something goes wrong?

1. Where is the deposit held?
When you agree the terms of the lease and secure the property, you will pay a security deposit usually equal to 2 months rent.
Depending on who you are dealing with, your deposit will be recorded and a receipt given which should be kept for future reference.
Prior to handing over the money, you should also ask who would hold the deposit?
If you are dealing through an agency, the deposit may be held by the agent on behalf of the landlord as they can act as a neutral party.
If however your Landlord does not pay for a managed service you may find the deposit is passed on to them, in which case they will hold the deposit.

2. What deductions can be made against a security deposit?
Whilst you want to have your whole security deposit returned, there are some deductions that are unavoidable. Lets examine the different elements;
a. Utility Charges – Unavoidable
When you check out of your apartment, there will be an amount of electricity, water and gas consumed since the last bill was paid.
To calculate the amount, take the last paid bill and check the meter reading on that bill. Then check the meter’s current reading, and the difference between these two numbers is the amount of units consumed.
You then calculate the amount of money owed for utility usage based on the charge per unit.
b. Wear & Tear charges – Avoidable
Wear and tear means the deterioration of an item through everyday usage. For example, a floor will show wear and tear through people walking on it. However, should there be any other marks on the floor such as dents or gauges, this would be considered damage.
c. Damage and breakages – Avoidable
Damage is anything outside of reasonable ‘wear and tear’ as described above, and of course breakages are self-explanatory.
There are some grey areas in this category. For example, if the washing machine no longer works but it is already 6 years old, it would not be reasonable to pay for a brand new machine.
d. Outstanding Rent – Avoidable
According to Macau Law, the security deposit cannot be used to cover back rent. Simply put, a deposit should only be returned once all rents are paid and up to date.
Next week we look at steps 3 and 4 that you can take to get a full refund of your security deposit, and what choices do you have if the deposit is not refunded.