Security deposit on rental homes: What landlords can — and cannot — deduct from your rent deposit

Security deposits are meant to protect landlords against genuine losses, but disputes often arise when tenants vacate a property and discover that part of their deposit has been withheld for repainting, cleaning or minor repairs. While landlords are entitled to recover the cost of damage caused by tenants, they cannot make arbitrary deductions for ordinary wear and tear.

The extent of permissible deductions largely depends on the terms of the rental agreement and the provisions of the Transfer of Property Act, 1882.

What does the law say?

Section 108(m) of the Transfer of Property Act, 1882, places an obligation on tenants to maintain the property in good condition during the lease period and return it in substantially the same condition when the tenancy ends. However, this responsibility does not extend to normal wear and tear that naturally occurs over time.

In simple terms, tenants are expected to take reasonable care of the property but are not liable for deterioration caused by regular use.

What qualifies as normal wear and tear?

Routine ageing of a property is generally considered the landlord's responsibility and should not result in deductions from the security deposit.

Examples include:

Faded or peeling paint due to age
Minor scuff marks on walls
Slight wear on flooring from everyday use
Natural fading of fixtures or fittings

These are considered inevitable consequences of occupation and are typically treated as part of the landlord's maintenance obligations.

When can landlords deduct from the deposit?

Landlords may have valid grounds to retain part of the security deposit if the tenant has caused damage beyond ordinary use.

Such instances may include:

Large holes or extensive damage to walls
Broken doors, windows or fixtures
Unauthorised structural alterations
Severe stains or damage to flooring
Missing fittings or appliances
Excessive dirt, grease, waste or unhygienic conditions requiring extensive professional cleaning

In such cases, any deduction should be reasonable and proportionate to the actual cost incurred for repairs or restoration.

Why the rental agreement matters

The tenancy agreement is often the primary document that governs security deposit deductions. Clauses relating to repainting, cleaning, repairs and restoration should be clearly defined before the lease begins.

Both parties should also document the property's condition through photographs or videos at the time of move-in and move-out. This evidence can prove invaluable if disagreements arise over the property's condition.

Avoiding disputes

Legal experts recommend conducting a joint inspection before handing over possession and recording any existing defects at the start of the tenancy. At the end of the lease, landlords should provide an itemised explanation for any deductions, supported by repair bills or estimates wherever possible.

For tenants, carefully reading the rent agreement, maintaining the property responsibly and documenting its condition can significantly reduce the risk of disputes. While landlords have the right to recover the cost of genuine damage, they cannot use the security deposit to recover expenses arising from ordinary ageing or routine maintenance of the property.