Security deposit refunds: Tenants seek clearer rules on delays and deductions

Dubai: With the end of a lease and the handover of the property keys, a tenant’s relationship with the landlord or property management company does not necessarily end. Another phase begins involving the return of the rental security deposit paid at the start of the contract. Tenants have complained about waiting weeks for deposits to be returned and about deductions for painting, cleaning and maintenance, as well as additional charges or deposits sometimes associated with removing furniture from the property. They cited a lack of clarity over deposit refund dates and deductions for maintenance and renovation work, particularly when it is difficult to distinguish between normal wear and tear and damage for which the tenant should bear the cost. They also raised concerns about additional financial demands related to furniture removal, questioning the basis for such charges and whether they are covered by the terms of the lease agreement. Tenants proposed creating an independent fund into which security deposits would be paid when lease contracts are signed, rather than allowing the landlord or property management company to retain the money. The fund would manage and safeguard the deposits throughout the contract period and return them to tenants when contracts expire, after settling any outstanding amounts or deductions supported by technical reports and approved invoices. Real estate experts said the security deposit serves as a guarantee for the rights of both landlords and tenants. They stressed the need to document the condition of properties at handover, identify any damage and establish repair costs through clear technical reports, while ensuring tenants are not charged for normal wear and tear or renovation costs. They said security deposits typically amount to 5% of the rent for residential apartments and 10% for commercial units, with any remaining balance usually refunded within seven working days under established procedures. Deposit refund Tenant “H.K.”, who preferred not to give his name, said: “The problem was not in paying the security deposit when signing the contract, but rather in the time it took to get it back after leaving the property.” He said some tenants may have to wait weeks to receive their money, adding: “The lack of a clear and specific date for the return of the deposit keeps the tenant in a state of waiting, despite the end of the rental relationship and the handover of the unit.” He proposed creating an independent fund into which tenants’ security deposits would be paid when lease contracts are signed, rather than allowing landlords or property management companies to retain the money. The fund would manage and safeguard the deposits throughout the contract period and return them to tenants when contracts expire, after settling any outstanding amounts or deductions supported by technical reports and approved invoices. He said such a mechanism would ensure that deposits are held by a neutral entity, reduce disputes over delayed refunds or deductions made without clear justification, and strengthen confidence among tenants and landlords in the rental relationship management system. Tenant “M.H.”, who also preferred not to give his name, said he was surprised to find deductions from his security deposit for painting, cleaning and other work when leaving the property. He questioned where the dividing line lies between normal wear and tear and damage for which the tenant should bear the cost. “The problem lies not only in the deduction, but also in knowing the basis on which its value was determined,” he said. He explained that property handover procedures can sometimes lead to additional financial claims, particularly when tenants are charged for painting, cleaning or replacing materials. He asked: “If the property has been used normally, how can it be determined whether it is normal wear and tear or damage that warrants deduction from the deposit?” Another tenant, “T.A.”, who preferred not to give his name, said some tenants face additional financial demands when moving out, including charges related to removing furniture or what is described as “furniture moving insurance”. He questioned the contractual basis for such charges and whether they are separate from the original security deposit. Clear terms Ismail Al Hammadi Ismail Al Hammadi, founder and CEO of Al Ruwad Real Estate, said such cases exist in the market and can develop differently depending on several factors, particularly the absence of clear, agreed terms and conditions governing the handover of units. “Addressing these cases requires clear procedures, beginning with documenting the unit’s condition upon handover and receipt, providing evidence of the reasons for the deduction and its cost, and setting a binding deadline for refunding the security deposit,” he said. He added that when a dispute concerns only part of the deposit, the entire amount should not be withheld. “The security deposit in the rental relati