When you create a tenancy, the amount of the security deposit specified in the tenancy agreement will be recorded as a line of income in the “Finances” section.

You can also manually create a collected security deposit, simply add a revenue of type “Security Deposit” in the “Finances” section. A receipt will automatically be generated for this transaction.

Once the tenancy is over and the security deposit is returned, you can record an expense under the heading “Refund of Security Deposit”. A corresponding document will be created to reflect the details of the refund.

For this particular type of income and expense, you have the option to:

• Check the “Amount for information purpose only” box to exclude this amount from any calculation in the “Finances” section.
• Add a message that will appear on the generated document, which is useful for detailing the things in case of a partial refund of the security deposit.

The deposit must be put in a government-backed tenancy deposit scheme (TDP).

Deposit refund

Refunding the security deposit to the tenant:

• Within 10 days of both parties agreeing on the returned amount ;
• If a dispute arises, then the deposit will be protected until the issue is sorted out.

To record the refund of the security deposit, you need to Add an expense from the Finances section and enter the amount to be refunded.

You can also do this when recording the tenant’s departure.

Deposits made by a third party

The landlord must use a government-backed tenancy deposit scheme, TDP, even if the deposit is paid by a third party and not by the tenant.

Deduction from Security Deposit

The law allows the landlord to deduct from the security deposit amounts still owed to him, for example:

• unpaid rents ;
• unpaid charges ;
• tenant’s repairs ;
• damages.

In this case, the landlord is required to justify the deduction he makes from the security deposit by providing the tenant with documents such as:

• entry and exit inventories ;
• photos ;
• invoices ;
• estimates.

If you retain an amount from the security deposit, you should simply create an expense of this type for the refunded amount.

You can put in the message area the detail and description of the retained amount.

If you do not refund the security deposit, you should not record anything in the Finances section.