Re: [property address]
It has recently come to my attention that your deposit was not protected properly. I apologise for this. The regulations say that I need to refund this to you now. However as you are currently in arrears of rent of £A, you may prefer me to offset this sum against your rent arrears.
If you would like this, can you please sign and date the copy letter provided, at the bottom and then return it to me in the enclosed stamped addressed envelope, as soon as possible.
I will then credit this sum to your rent account [and send a cheque to you of £B for the balance]
Signed ……………………………. Dated …………………………..
You need to enclose an additional copy of the letter for the tenant to sign and return to you. This is important as it is your evidence of the agreement.
I would suggest that you either enclose an SAE for the tenants to make it easy for them to return the letter, or maybe if you visit the tenants you could suggest that they sign the letter then. However if you do this you want to be careful to avoid any suggestion of intimidation.
If the rent arrears are less than the deposit sum then it is probably best that you pay them the difference. However if they are happy for you to hold the money against the next months rent – do not refuse this! But again get them to confirm this in writing. Perhaps ask them to write at the bottom of the letter :
Please can you use the balance of the deposit money against my next months rent, rather than paying the money to me.
And then get them to initial and date this.
If you want to make an offer to them regarding the penalty and/or an offer of a payment to vacate the property then you can adapt the wording used in letter 1.
Please now go to the final part of this guide where I talk about what you should do if you then issue court proceedings.