6 Reasons not to return deposit back to the tenant

Security deposits are the advance payments that the tenants have to give to the landlord so that he does not provide the same space to someone else. These deposits can be utilized by the landlord in case of emergencies like unpaid rent, repair major damages, and fulfill unpaid bills. A security deposit is important as it is beneficial to both the parties involved in leasing the property for rent.

According to Malaysian’s common practice, the tenants have to pay a two and a half month rent in advance when it comes to the security deposit. This amount is a little heavy on the pocket and can cause little repercussions in between the two. There can be certain possibilities that the tenants want to get their security money back and you have to be sure when to allow that! So, here are certain pointers you should abide by and make sure you know your move when tenants ask you to return deposit:

Early termination of lease

A security deposit is basically a security amount for both sides of the table. The property is not handed to any other tenant and the landlord does not need to worry about that the tenant won’t return after fixing the deal. So, if the tenant breaks the lease and decides to leave earlier than the contract says, the tenant has no right to ask back for the security deposit. You can simply deny even if he does. In situations like these, the landlord can compensate for the loss with the help of the rental deposit. 

Still, this is subjected to what is written in tenancy agreement. For instant, if notice period is given, and tenants honored all the payments, deposit still has to be refunded or just waive as the last 2 months rental.

Unpaid rents

There are times when tenants may fail to pay the monthly rent, and in such cases, landlords have valid reasons not to return deposit funds to the tenants. However, tenants must understand that paying a security deposit does not exempt them from their obligation to pay rent. The deposit is intended for emergencies or covering specific damages, not as a substitute for rent. If tenants deliberately withhold rent without a solid reason, it is against the law, and landlords have the right to take legal action.

However, evicting tenant via legal process is never a short process and the cost incurred can be easily thousands of ringgit. Therefore, if you are connecting security deposit, probably the chances of you recouping losses is low. That’s why SPEEDHOME launched Overstay Cash Defender that covers your tenant’s overstay cost.

Property damage

If tenants have caused significant damage to the property, landlords have valid reasons not to return deposit funds to cover the cost of repairs. However, deductions should only be made for major damages, not for normal wear and tear, such as nail holes, small stains on the carpet, dirty grout, loose handles, or general dirt. If these minor issues escalate into larger problems that significantly impact the property, they become valid reasons not to return deposit amounts. For instance, big stains on the floor, broken ceilings, or damaged windows are the tenant’s responsibility. Tenants must understand their obligations to properly maintain the property until their tenancy ends.

Unclean house

Daily cleaning expenses are not valid reasons not to return deposit funds, nor are minor oversights like leaving a garbage bag inside the property or failing to participate in garbage collection. However, problems arise when tenants vacate the property and leave behind excessive trash, stale food in the fridge, or unwanted items. In such cases, landlords are justified in deducting a portion of the security deposit to cover the cost of clearing out the mess. Proper maintenance and cleanliness are part of the tenant’s responsibilities to ensure a smooth handover of the property.

Unpaid bills

The times when the tenants did not pay the utility bills like the gas bill, electricity bill, or the water bills, you have all the right to deduct the amount that you paid for them from the security deposit. This is simply non-negotiable as it was the responsibility of the tenants to pay the bills on time and not yours. While we suggest mentioning everything on the lease will never let you fall in such deductions. The tenants have to agree to all the clauses written in the agreement and if they fail to do so, you can keep the money as well as use them for something very serious.

Missing items from the property

When you inspect the property after they vacate the house, you have to look around for everything and if it is in place or not! You are allowed to keep the deposit to yourself if you see things that have gone missing from the property like some furniture or décor! Things like soap and other literary and small things don’t count over here. So, before making an allegation make sure you know what you have to say to the tenants.

What the law says

The Malaysian law says that the security deposit has to be given back to the tenants within 21 days after he vacated the property. If there are any deductions made or the amount is not going to be returned, you will have to inform the tenant with reasons of course.

If you fail to do so then the tenant might request you an accounting of charges. The landlord always has to keep in mind that the security deposit can never be non-refundable and if he does so, it might turn out to be a problem for him.

If the above points do not apply on the tenants and they have a clean chit then they can simply file a deposit refund letter. If you don’t have a clue on how to write one then you can surely find various sample letters of refund deposit online. These letters will give you a clear picture of how formal you have to be when drafting a letter for your landlord. It is basically the tenant requesting the landlord to return the deposit in a given period of time. If the landlord fails to do so, then you might have to take action legally.

What We Suggest You?

Did you know that if you rent with SPEEDHOME, basically you do not have to worried about this anymore? Our home insurance covers you up to RM90,000 and all of the issues above are fully covered. Currently, we are the safest end-to-end property rental platform that you can use.