A deposit nobody can account for
A tenant asks for their rent deposit back. Their lease ended six months ago, they left the unit in good order and they say the deed releases the deposit after a set period. The property team checks. The deposit account shows a balance, but it does not match the amount in the deed. There has been interest, perhaps a drawdown when the tenant fell behind two years ago, perhaps a top-up that was never made. Nobody can quickly say what the tenant is owed.
Across the portfolio there are dozens of deeds, some held in a designated account per tenant, some pooled, some inherited when a building was bought.
Why rent deposits drift
- Each deed has its own terms on interest, top-ups, drawdowns and release.
- Deposits inherited with an acquisition came with little information.
- Drawdowns for arrears are made but the requirement to top up is not followed.
- Interest is credited by the bank but not allocated to tenants.
- Release conditions, such as a period of good payment or passing accounts tests, are never checked.
- Deposit accounts are not reconciled to a register because no register exists.
What each deed requires is for your solicitor to confirm. The problem is that nobody is looking after the requirements once they are known.
What it costs you
Tenants who are owed deposits wait while you investigate, which damages relationships at exactly the point you might hope for a renewal or a reference. Deposits that could be drawn on for arrears are not used because nobody knows the balance. Top-ups that the deed requires are never requested. And at an audit or a sale, the deposit accounts are a list of questions nobody can answer quickly.
There is a governance side as well. Deposit money is the tenant's money held on terms, and an auditor, a lender or a buyer will want to see that each balance is known and matches the bank. When the answer is a spreadsheet last updated by someone who has left, the conversation becomes uncomfortable and slow.
The deposit register we build
- Each deed is abstracted into its terms: amount, where it is held, interest treatment, top-up requirement, release conditions and dates. A person checks each against the deed, which is linked from the record.
- Bank balances are reconciled automatically against the register through a bank feed or statement import, and any difference is flagged.
- Interest received is allocated to the right deposit under the terms recorded.
- Drawdowns are recorded with the reason and approval, and the top-up request that follows is generated and tracked.
- Release conditions are watched, with a prompt to the asset manager when a condition may be met, such as a review date or the end of the lease.
- When a deposit is released, the calculation of what is due is produced with the history, for a person to approve before payment.
| Question | Before | With the register |
|---|---|---|
| What does this tenant's deposit stand at? | Search bank statements | Current balance on the record |
| Does the bank agree? | Unknown | Reconciled automatically |
| Was a top-up requested? | Nobody knows | Tracked from the drawdown |
| Is release due? | When the tenant asks | Prompted from the conditions |
What your team gets
Every deposit can be accounted for in minutes. Tenants who ask about release get an answer supported by a clear history. Drawdowns and top-ups are handled properly. At audit or sale, the register and reconciliation are ready.
Credit control benefits too. When a tenant falls into arrears, the escalation shows whether a deposit exists and what it stands at, so the asset manager weighs the options with the facts. Whether to draw on it is still their decision, taken with the deed and advice in front of them.
Signs your deposits need attention
- You cannot quickly state the balance of every rent deposit.
- Deposit accounts are not reconciled to a register.
- Deposits came with acquired buildings and were never checked.
- Drawdowns have not been followed by top-up requests.
- Tenants have waited a long time for deposits to be released.