Paying a tenancy deposit

Most private landlords and agents ask for a deposit at the start of a tenancy.

What is a tenancy deposit?

You usually pay a tenancy deposit before you move into a property in case you cause financial loss to the landlord while you live there.

It's sometimes called a security deposit and can be used to cover things like rent arrears or damage to the property.

With a joint tenancy, you usually have to pay a single deposit for the whole tenancy between you. 

The deposit is your money. It should be returned to you in full at the end of the tenancy unless your landlord has a reason to make deductions.

A tenancy deposit is different to a holding deposit which you pay to reserve a property.

How much you can be asked to pay

From 1 June 2019, the maximum tenancy deposit is equal to 5 weeks' rent.

How to calculate your maximum tenancy deposit:

Your monthly rent x 12 ÷ 52 x 5 = maximum tenancy deposit

This limit applies to deposits taken from all assured shorthold tenants, lodgers and students in halls of residence as long as the yearly rent is less than £50,000.

If you're overcharged you can complain to: 

There was no limit on the amount that could be charged before 1 June 2019.

Deposit protection schemes: how they work

Your landlord or agent must protect your deposit with an authorised scheme if you have an assured shorthold tenancy. Most private renters have this type of agreement. 

There are 3 deposit protection scheme providers. Your landlord or agent can choose which scheme to use.

Each provider runs an insurance scheme and a custodial scheme.

Insurance schemes

The landlord or agent keeps the deposit during the tenancy.

You can tell the scheme if your deposit is not returned at the end of the tenancy or if you feel that unfair deductions have been made.

The scheme will then:

  • tell the landlord to pay the disputed amount into the scheme
  • provide a free dispute resolution service to decide how much you get back

You may have to claim your money back through court if you can't get in touch with your landlord or they refuse to pay the disputed amount in to the scheme.

Custodial schemes

The landlord or agent pays the deposit into the scheme when they receive it.

The scheme:

  • keeps the deposit during the tenancy
  • refunds your deposit at the end if your landlord agrees

If your landlord won't return your deposit or wants to make deductions, you can use the scheme's dispute resolution service to decide how much you get back.

You may be able to get your deposit back from the scheme without going to court if you can't get in touch with your landlord at the end of the tenancy.

If you can't afford a deposit

You may be able to get help with a deposit from a local rent deposit or bond scheme. These are usually run by councils or charities.

Deposit replacement insurance

Some landlords may suggest you take out deposit replacement insurance instead of paying a large tenancy deposit.

You pay a non-refundable fee to an insurance company as a lump sum at the start of your tenancy or in smaller monthly instalments.

If you damage the property or fail to pay rent, your landlord can make a claim through the insurance company.

The company will usually ask you to repay any money they pay out to the landlord and might take you to court if you don't.

You can't be forced to pay for deposit replacement insurance as a condition of your tenancy. The landlord can only offer it as an alternative to paying a deposit.


Last updated 03 Jul 2019 | © Shelter

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