9. Rental Deposit

The general term ‘rental deposit’ covers three different types of payment made to the landlord to create the tenancy.

1. Damage Deposit

A damage deposit is normally demanded by a landlord, which can be used to offset against dilapidations (and arrears of rent) to the property.

The damage deposit is known as a dépôt de garantie.

The amount of the deposit is, in part, regulated by the law: it is one month for unfurnished properties, although there is no maximum for furnished accommodation.

In relation to holiday lettings the damage deposit cannot exceed 20% of the total rental (25% where an intermediary - estate agent - is involved), and where an intermediary is involved it cannot be demanded more than six months in advance of the letting, always provided no advance payment is made. It is normally most appropriately handed over when the letting is taken up.

For an annual tenancy the deposit must be returned to the tenant within two months of the end of the tenancy, save any arrears or damages.

In relation to a holiday rental, the deposit is normally returned at the end of the letting, although the agreement can specify a longer ‘reasonable’ period.

In all cases any offset against the deposit at the end of the letting must be clearly justified; it cannot be an arbitrary figure.

2. Booking Deposit or Advance Payment?

There is frequently confusion about payments made to reserve a rental property, whether a booking deposit or an advance payment.

The former is called les arrhes while the latter l'acompte.

For annual lettings the position is clearer, as a booking reservation is not made; the tenant normally pays one months rental in advance.

However, the position in relation to short term furnished lettings is frequently left unspecified.

Unless the parties otherwise state expressly, then in law any such payment is deemed to be a booking deposit, which implies that in the event the tenant does not take up the letting, then the limit of their liability is the deposit. Where the landlord cancels, then they are liable to refund the tenant twice the amount of the booking deposit. Any clause in the contract that imposes damages on a tenant for cancellation, which does not also offer an indemnity to the tenant in the event of cancellation by the landlord, is illegal.

Where the sum paid is formally stated to be an advance payment, then the letting is said to be definitive, and the tenant can be required to refund the full amount of the rental for the whole of the letting period, although a court of law would consider any extenuating circumstances. By the same token, the tenant is entitled to be fully indemnified by a landlord who cancels a reservation when an advance payment is made.

Neither payment can exceed 25% of the total rental, and cannot be demanded more than six months in advance of the letting. In practice, this rule is frequently ignored, as the prospective tenant will wish to sometimes secure the property well in advance of the letting date.

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