Deposit

Deposit (also called tenancy deposit or security deposit) is money paid by a tenant at tenancy start as security against damage, unpaid rent, or tenancy breaches. Under the Tenant Fees Act 2019, deposits are capped at 5 weeks' rent (6 weeks if annual rent exceeds GBP50,000) and must be protected in a government-approved scheme within 30 days. Approximately 750,000 deposits are protected annually across England and Wales.

Legal Limits

Under the Tenant Fees Act 2019:

• Maximum deposit: 5 weeks' rent (annual rent under £50,000)
• Higher rents: 6 weeks' rent (annual rent £50,000 or more)
• Holding deposits: Maximum 1 week's rent (separate limit)

Deposit Protection

In England and Wales, deposits for ASTs must be protected in a government-approved scheme within 30 days of receipt:

Custodial schemes (free):

• Deposit held by scheme
• Returns controlled by scheme

Insured schemes (paid):

• Deposit held by agent/landlord
• Scheme provides insurance

Approved schemes:

• Deposit Protection Service (DPS)
• MyDeposits
• Tenancy Deposit Scheme (TDS)

Penalties for Non-Protection

If a deposit isn't protected:

• Tenant can claim 1-3x the deposit amount
• Section 21 notices are invalid
• Court can order return plus compensation

Deposit Deductions

Valid deductions at tenancy end:

• Damage beyond fair wear and tear
• Missing inventory items
• Unpaid rent or bills (if agreed)
• Professional cleaning (if required by agreement)

For Letting Agents

Deposit management requires:

• Clear processes for collecting deposits
• Timely protection (within 30 days)
• Prescribed information served to tenant
• Fair and documented deductions
• Knowledge of ADR process for disputes