Rental Security Deposit: What You Must Know

13/02/2019

Rental Security Deposit: What You Must Know

Rental security deposit

Every landlord in Singapore will ask for a sum called a rental security deposit. Can you avoid paying it? No,unfortunately you can’t. Here are some key points to note about Rental Security Deposits in Singapore.

What is a Rental Security Deposit?

A rental security deposit is a fixed sum (borne by the tenant) that safeguards the landlord’s interests from potential damage caused to their property by the Tenant and to encourage the Tenant to return the rented property in the same manner that it was received.

What is its Purpose?

Landlords entrust their property to tenants for the duration of the lease. During the lease, however, many things can go wrong. From late rental payment to property damage, the possibilities are endless.

Thus, the security rental deposit exists to mitigate the risks associated with renting out the property. It is a financial safety net for landlords: If the landlord experiences any property - related loss due to the tenant’s actions, the landlord can then claim some or all of the security rental deposit to recover from it.

How Much Can the Landlord Request for the Rental Security Deposit

How Much Can the Landlord Request for the Rental Security Deposit?

Singapore law does not specify the amount of money for the rental security deposit. However, landlords generally ask for one month worth of rent for every one year lease. Since there are no official numbers for this matter, both landlord and tenant can negotiate and finalise the deposit’s value between themselves.

Certain external factors can influence the deposit’s value. Landlords of luxury units with luxury appliances and furniture have been known to ask for higher rental security deposits. Also, landlords may request from tenants, a higher rental security deposit if the latter’s is deemed to be of a higher risk profile such as a large group of students staying in the same unit.

Can Tenants Reclaim Their Rental Security Deposit?

As per the usual rental terms and conditions, tenants can recover their rental security deposit upon returning the property in an acceptable condition. However, no legal specification of "acceptable condition" or "wear and tear" exists in Singapore law.

Therefore, only the rental terms and conditions may dictate these specific terms, which tenants must abide by to reclaim the money they have locked in the deposit.

Usually, landlords evaluate wear and tear by comparing the property's pre-tenancy and post-tenancy conditions. So it is important to clearly document the original condition of the house both in writing and with pictures or videos to minimize future potential disputes.

Can You Rent An Apartment With No Security Deposit

Can You Rent An Apartment With No Security Deposit?

Unfortunately, there’s no way to escape it. However, you no longer have to freeze a chunk of your budget in a security cash deposit.

Rental deposit guarantees from Sing-Guarantee will still allow tenants to move into their Singapore rental property of choice. They will also enable landlords to claim for any property-related loss (e.g. outstanding tenant debt).

Seems too good to be true? Find out how you can get a “no security deposit” apartment here.

.

Copyright © 2018 SG, Sing-Guarantee Pte. Ltd. All rights reserved.