Ladybird Living – Your London Estate Agent

Ladybird Living

Jul 05 2023

Deposit use clause in tenancy agreements

What is a deposit use clause? 

A deposit use clause is found in your tenancy agreement and outlines how the deposit can be used. It is important to read this part of your tenancy agreement as it informs you when a deposit can be kept, for example, in the case of rent arrears or to make up for any property damage.  


The clause will also explain the deposit refund process.  



Why is a deposit use clause required in tenancy agreements? 


A deposit use clause can be useful if there are any disputes in the future. This is because the adjudicator usually relies on the clause within the tenancy agreement to make decisions. Without a deposit use clause, the adjudicator will not be able to provide any compensation to the property owner even though the tenant may have breached the agreement.  

The following will be required for an adjudicator to make a decision after a dispute:  

  • A comprehensive signed inventory 
  • Check-in and check-out reports 
  • Dated photographic/video evidence 
  • Invoices and other necessary supporting evidence 



What is included in a deposit use clause? 

The following is included in a deposit use clause:  

  • The potential breaches by tenants such as those relates to cleaning of the premises or damage to the property 
  • A mention of potential deductions to the deposit if such breaches are made. 
  • Mention that the deposit may also be retained by the property owner if there are any unpaid accounts for utilities or water charges or environmental services or other similar services. 
  • The deposit may also be retained if there is any rent or other money due or payable by the tenant under the tenancy agreement.  

The information in this post is valid to the best of our knowledge on the date of posting. It is advised that you seek independent advice based on your individual circumstances. 

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July 2023