Q: Is Zakat due on a tenancy deposit?

A: Deposits on assured shorthold tenancies (AST’s) must be protected with a government approved scheme. Under the Housing Act 2004 the landlord or agent must protect the deposit and issue prescribed information to the tenant within 30 days of receiving it.

A tenancy deposit is a sum of money which a landlord requires a tenant to pay at the start of the tenancy or which the landlord holds over from a previous tenancy with the same tenant. The money is security in case the tenant does not meet their obligations in connection with the tenancy.

Zakat is not binding on a security deposit as it is not in the possession of the tenant – neither constructively nor physically.

And Allah knows best!

Mufti Faraz Adam