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:
1. 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.
2. Unpaid rents
There are times when the tenants may fail in paying the monthly rent and in that case, you have the right to say no when the tenants request you to pay back the security deposit. This does not mean that you can avoid paying rent as you have paid the security deposit. This is supposed to work at the time of emergencies and if you have a solid reason for not paying the rent on time. If you are doing it deliberately, then it is against the law and the landlord can take you to the court.
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.
3. Property damage
If the tenants have caused any kind of damage to the property, they have to pay for it and that money is deducted from the security deposit. The damage has to be some major issue and not the normal wear and tear like nail holes, small stains on the floor or carpet, dirty grout, loose handles, and dirt on the property. When these concerns become big and create a larger impact on the property then it has to be something you should consider. Obviously, the tenant will be responsible for leaving big stains on the floor or broken ceilings and windows, right? The tenant has to know what are his responsibilities and what all he has to take care of the property till the tenure gets over.
4. Unclean house
The house has to be cleaned on a daily basis and these types of expenses are not counted and deducted from the security deposit. You can’t deduct money from the deposit even if the tenant leaves the garbage bag inside the property or does not involve in the garbage collection of the house. The problem starts to occur when the tenants have left off all the trash inside the apartment and stale food in the fridge and things he doesn’t need before vacating the property, then you might deduct a certain amount out of the security deposit.
5. 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.
6. 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.