Investing in a property in Cambodia can be a huge deal, especially when you’re renting a property. Moving to Cambodia and renting a property is extremely heavy, especially when a lot of deposit money is involved.
Now that this is a huge investment for you, it is also important to protect it. Thus, the Deposit Protection Scheme is being introduced to secure the deposit as an investment.
At IPS Cambodia, we help everyone find a property in Cambodia, whether it’s rent or purchase. Now, when you’re renting, we guide you about the Deposit Protection Scheme to protect all your significant investments and get the property of your choice.
What is a Deposit Protection Scheme?
Deposit Protection Scheme is a scheme that helps protect the funds the tenants deposit when they rent a property. The primary purpose of the scheme is to protect the tenant’s money legally and ensure that they receive the amount specified within the rental agreement after the end of the tenancy. The Deposit Protection Scheme safeguards the interests of not only the tenants but also that of landlords, especially in dispute resolution.
Why Do People Need to Opt for Deposit Protection?
Opting for deposit protection schemes can play an essential role in the long run, especially for the protection of interest for landlords and tenants. This is to ensure they offer protection to them against any legal issues.
Some of the major reasons why it is important to opt for deposit protection include the following:
Legal Requirement
Landlords need to follow the legal conditions of the Deposit Protection Scheme. Failure to comply with any of the schemes may lead to severe penalties as specified within the terms. Moreover, if the claims are too severe, the authorities may levy restrictions on property rights.
Since it is a legitimate scheme, they must ensure the funds are deposited within the timeline. Moreover, you also need to explain the terms and conditions to your tenants. Such clarity in conversation eventually plays a vital role in winning the trust of tenants.
Financial Security
Financial security is one of the major aspects to consider, especially when the tenant is depositing a huge sum of money. A landlord is responsible for offering financial security for all tenant’s money. Moreover, when the amount is deposited under the Deposit Protection Scheme, it ensures the money is returnable and accessible.
When promising financial security to tenants, it is also essential to ensure that the tenant meets all the terms and conditions. The landlord should specify these conditions within the contract so that when the tenants vacate the property, they leave it in good condition. Clarity and transparency in contracts also help to avoid unnecessary disputes over money.
Relation with Tenant Protection
When landlords secure the tenant’s security deposit, it helps to establish a positive relationship with them. Moreover, offering proof that they follow the government-approved scheme showcases that they are a responsible landlord.
When there is transparency regarding such crucial matters between you and your landlord, it helps to boost a sense of confidence and trust. Moreover, the tenant will be reassured that the funds are safe, which will ensure a long-lasting relationship.
Conflict Resolution
Conflicts between landlords and tenants are common, considering the huge sum of money involved. This can get financially and emotionally draining. Having a deposit protection scheme will help with impartial dispute resolution.
If there is any unresolved disagreement regarding the return of money, having a deposit protection scheme can be helpful. This is mostly because the scheme will help avoid court proceedings, saving against unnecessary hassle and spending.
What Should Landlords Know About Deposit Protection in Cambodia?
The landlords should be very aware of the deposit protection scheme to protect the interest of the tenants. Moreover, it is also essential to comply with Cambodia’s legal standards and rules.
Some of the significant things you need to know about the deposit protection scheme in Cambodia are as follows:
Timely deposit of funds:
All landlords must place the tenant’s deposit in any authorized scheme within the specified number of days of receiving it. They may have to pay penalties if they fail to deposit it within the timeline.
Prescribed information:
The landlord should provide all necessary information regarding the deposit to the tenant. Thus, they must inform them where you have deposited the fund, how to apply for release, what to do in case of any dispute, whether the landlord will keep some or the entire deposit, and the reason for it.
End of tenancy process:
After the tenant has vacated the place, landlords must return the promised deposit amount within specific days of reaching the division which will be mentioned in the scheme. Submitting it further for resolution under the deposit protection scheme is important in case of any dispute.
Will the Landlord Return the Deposit?
Usually, most landlords return the deposit after deducting the damages. However, when you have caused severe damage to the property under certain conditions, the landlord may refrain from returning the deposit. The landlords mostly highlight these points.
Final Thoughts
Before renting a property, it is crucial to always request details about the Deposit Protection Scheme. Cambodia had around 1.2 million registered housing units in 2023. It offers peace of mind that your investment is secure and will be returned within due time. This is one of the most significant ways to secure investment while getting a property in Cambodia. Contact us if you want to know more about the Deposit Protection Scheme!
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