Your legal obligations regarding rent and deposits

Updated: 20 May 2013
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It's in your interests to keep a rent book
Handing over money
The amount of rent that can be charged will depend on the type of tenancy - that is, whether it is a "controlled" tenancy or an "uncontrolled" tenancy. Landlords of controlled tenancies are limited by law as to the maximum amount of rent they can charge but those tenants living in the uncontrolled sector can be charged open market rents.

Controlled tenancies

The Private Tenancies Order (NI) 2006 exercises control over some tenancies by limiting the amount of rent that can be charged. Rent control applies to all protected tenancies (formerly known as restricted and regulated tenancies under the 1978 Rent Order). These tenancies will have been created before the 1st of April 2007.
Rent control also applies to any property found to be unfit for human habitation when inspected by the district council. Under the Private Tenancies Order 2006, from the 1st of  April 2007 any new tenancy in a property that was built before the 1st of January 1945 must have a fitness inspection unless the property is exempt from the order. The landlord should apply to the local council for the fitness inspection.
If the local council issues a Certificate of Fitness then the market rent can be charged. If the property fails the fitness inspection, the Rent Officer will determine a "controlled rent" for the tenancy. This rent will be the maximum chargeable until the property is brought up to the fitness standard. A second inspection will be required to end the rent control in these circumstances.
Note: if a tenant pays the landlord more rent than he is legally entitled to be charged, he can claim it back. As well as taking a small claims action, the tenant can claim back up to two years overpaid rent from future rent payments.

Uncontrolled tenancies

Where the tenancy is for a fixed term, such as six months or one year, the rent will normally be fixed for that period. However, if the tenant stays on at the end of the fixed term the tenancy becomes periodic, often known as a "month-to-month" tenancy. In this case a new rent level can be set. There are few restrictions on the rent a landlord can charge, but you should consider the market and what the rent covers before proposing a rent figure.
When deciding on this figure, consider the quality of the accommodation, its size, the services or furniture included and the property's location. The amount of rent must be stated in the tenancy agreement and the statement of tenancy terms.

Increasing rent

Protected and statutory tenancies are always subject to rent control. From the 1st of April 2007, to increase the rent the landlord must apply to the Rent Officer. If the property does not meet one of the exemptions under the Private Tenancies Order then in order to maximise the amount of rent that can be charged the landlord must obtain a Certificate of Fitness from the local council. The amount determined by the Rent Officer may be increased from time to time by the Department for Social Development.
Rents for uncontrolled tenancies normally do not increase during the tenancy. However, if the tenant stays on after the tenancy finishes, on a month-to-month tenancy, the landlord can increase the rent. Generally, if the tenancy is for a fixed period of time, such as six months or a year, the rent is not increased until the fixed period ends.
The only exceptions to this are if the tenant agrees to a change in the rent or it states in the tenancy agreement that the rent will be increased. You must give your tenants at least four weeks notice before increasing the rent.
If you are unsure about how to increase the rent you should consult a solicitor.

Collecting rent

Since 1978 all private landlords in Northern Ireland have a legal obligation to provide their tenants with a rent book. This should contain the landlords name and address and the main terms of the tenancy agreement.
A rent book must be provided free of charge and your tenant must make it available to you or your agent for updating. It is in your interests and that of your tenants, to ensure that the rent book is accurately kept, as it is both a receipt and a rent book. Rent should be collected regularly and by an appropriate and agreed method.

Deposits

In the private uncontrolled sector deposits for accommodation are quite common. The landlord is legally entitled to request a deposit from any prospective tenant. While there is no limit on the amount of money you can ask for as a deposit, most landlords will ask a tenant for a month's rent as a deposit.  
Generally, such deposits are used as security by the landlord or agent to cover any damage, theft, unpaid bills or rent arrears. Remember, the statement of tenancy terms must state the amount and purpose of the deposit, the circumstances where all or part of the deposit can be withheld and contain an inventory of furnishings. Where a landlord wrongfully keeps a deposit, the tenant can take legal action for recovery.
A major problem for people trying to rent privately is raising the deposit. You may wish to consider accepting the deposit by instalments to assist the tenant.
You should always provide the tenant with a receipt for any deposit received. Remember, the deposit is the tenants' money which you are holding on trust. It is recommended that you hold the money in an interest bearing account.
The money should be returned in full, plus any interest, at the end of the tenancy, if there are no losses or damage to the property. You should allow for normal wear and tear of furniture coverings, carpets etc. and this should not be deducted from any deposit paid.
Please note that it is illegal for agents to request letting fees in respect of their administration costs. It is also illegal for a landlord, agent or former tenant to ask a prospective tenant for key money, that is, a payment made for handing over the tenancy of the property being let.

Rent arrears - spot the problems early on

If your tenant starts to get into arrears, try to discuss it with him or her. Consider the following:
  • Have your tenants' circumstances changed?
  • Should your tenant be claiming Housing Benefit?
  • Have you given them the all information and documentation that we need in order to assess their claim?
  • Have you completed the Certificate of Occupation on the tenant's Housing Benefit claim form?
Don't wait for the situation to get any worse - act immediately. If you think the tenant can afford to pay but is simply refusing to do so, you can serve the required notices.
Just serving these can be enough to persuade the tenant to start paying properly. If it doesn't work you can apply to the court. You will have to prove that the tenant is in arrears, and it is reasonable for the court to grant possession to you. If the court agrees with you, your tenant will be given a little more time and be asked to pay what he or she owes.