About 33% of Philadelphia households are renters, and if you're a new landlord, you'll likely be meeting some of them soon!
Before you rent out your property, you should know about security deposits. What are they anyway, and why should you require them?
We're here to talk about it. Read on to learn what you need to know about security deposits in Philadelphia, PA.
1. Why Should You Require a Security Deposit?
So what's the point of security deposits when you're renting out Philadelphia real estate anyway?
Well, security deposits aren't a requirement. Not all landlords ask for security deposits in 2022, and not requiring one could help you attract more tenants.
That said, security deposits do benefit landlords and tenants alike.
When a tenant gives you their security deposit, it means that they've claimed the property and you're no longer taking applications (even if it's not yet move-in ready).
The tenant will get the deposit back at the end of their tenancy as long as they left the property in good condition. This is good for them, because they'll walk away with money they can use elsewhere, and good for you because it motivates them to keep the property nice.
In the event that there is damage to the property, you have the option of using part of the deposit to make repairs. This way, money isn't coming out of your pocket.
2. How Expensive Should Security Deposits Be?
In Philadelphia, a landlord can not set the security deposit any higher than two months' rent. This means that if the unit is renting for $1,500 per month, the deposit can be no higher than $3,000 per month.
There is no lower limit to security deposits. It's not uncommon for landlords to only require a small deposit if they're trying to attract new tenants. That said, most landlords set their deposit limit at the equivalent of one month's rent.
3. Do You Have to Return a Security Deposit?
In almost every situation, the landlord must return the tenant's security deposit within 30 days of the lease ending. Not doing this can open you up to legal problems unless you have a good reason.
You can withhold some or all of the deposit if the tenant didn't pay rent or if they caused damage to the property. Keep in mind that damage and "normal wear and tear" are not the same.
Anything that could reasonably happen to a rental unit even if a tenant was taking care of it likely falls under the "normal wear and tear" category. This includes things like chipped paint, faded carpets, minor dirtiness, and tack marks in the walls.
For you to retain the deposit, you must find actual damage, such as a broken window, ripped carpet, or holes in the walls (among other things).
Security Deposits Are Simple
Remember that tenants expect to pay security deposits for your Philadelphia property, so they're nothing to worry about. As long as you request a reasonable deposit and return it when the tenant is ready to leave, you won't run into any trouble.
Are you looking for a Philadelphia property management team to help you with your property? We can assist you with marketing, tenant screening, rent collection, and more. Get a free rental analysis today.