Security Deposit Matters

As a serviced accommodation property investor. You will also need to collect a security deposit. A security deposit is used as a type of security to ensure that the property will be maintained well during the time of the guest’s occupancy. In the case that either of the above circumstances should occur, you will have the security deposit to serve as compensation for any damages.

The exact amount of the security deposit which you collect will vary depending on circumstances. Some states have regulations regarding the amount of money that can be collected for a security deposit. Ideally, it is best to collect the largest deposit allowed to ensure that you do not run into any problems later on. Where allowed by law, many landlords or serviced accommodation operators find it beneficial to collect a security deposit that is 50% or equal to their booking value.

For example, if the guest has a pet, you may decide to collect a larger security deposit. The same would be true for other circumstances such as if the guest will be having a celebration in your property, or will come in a large group, etc. In these cases, you may decide that it is a good idea to collect a larger security deposit than you would normally collect to cover the risk you are taking on; provided, of course, that you are allowed to collect a larger security deposit under local law.

Security deposits should always be paid in full before the time the guest arrives. Keys should never be issued until a security deposit has been received in full; otherwise you will find that the purpose of the deposit has been defeated. It is simply not a good idea to allow guests to pay a security deposit in the form of several payments.

Remember that it is always important to check with and follow your terms and conditions and company protocol regarding what you must do with the security deposit after you have received it. Generally, it is better if you do not complicate matters by labeling the different parts of a security deposit. In the past many operators charged a variety of different deposits including a key deposit, cleaning deposit, etc. This can become quite confusing very quickly. These types of guests tended to leave the property in terrible conditions and necessary repairs that the deposit did not cover. You may even wish to state in your terms and conditions all the additional charges if there are damages or loss in the property upon check-out.

Learn more on how we minimise anti-social behaviour or guests abusing their properties by contacting us at Ikonic Training Academy.