Security deposit is taken by the landlord/licensor since during the rent period as a tenant/licensee you are going to be in possession of his property. It is only returned when you are handing over the keys to the landlord/licensor while vacating the flat. The landlord/licensor would usually inspect the house for any damage.
Negotiation of Security Deposit
There is no specific law or regulation that determines the amount of the deposit a landlord/licensor can take. The amount is usually negotiated when the agreement is being made. The security deposit is taken by the landlord/licensor for the following purposes :
- To recover any costs incurred due to any damage caused by you during the rent period
- To recover unpaid rent or utility bills.
- To use it as leverage to evict tenants/licensees.
Amount of Security Deposit
In some cities, like Delhi and Mumbai, it is a practice to take 1 to 2 months of rent amount as a security deposit, and in some others, like Bangalore, the amount taken as security is almost 10 months of rent.
Some landlords/licensors even increase the security amount when the rent increases at the end of an 11 months agreement.
Since there is no law regulating security deposit, it is all based on your capacity to negotiate and a sense of good faith between you and your landlord/licensor.