Tenancy deposit rules

A deposit is a sum of money that a landlord or letting agent can request at the beginning of a tenancy as security against non-payment of rent, damage to property, or removal of furniture.

For the purposes of the tenancy deposit protection schemes, a deposit is defined as money held, by the landlord or other, as security for:[1]

• the performance of any obligations of the tenant, or

• the discharge of any liability of the tenant arising out of the tenancy

Rent in advance is not a deposit.[2]

A rent deposit for the purposes of this page should be distinguished from a 'holding deposit' which is a sum of money paid to a landlord or letting agent to secure accommodation prior to signing a tenancy agreement.

A deposit for an assured or assured shorthold tenancy must be protected in a government approved scheme.

The landlord must serve prescribed information on the tenant and any other relevant person.[3]

A deposit can only consist of money.[4]

Find out more about tenancy deposit protection.

A tenant cannot lawfully fail to pay the last period of rent in lieu of the return of a deposit of the same amount.

This is because the tenant remains liable for the rent for that period and a landlord would be able to take court action to recover the money as rent arrears. The tenant would then have to counterclaim for the return of the deposit.

In practice, many tenants withhold rent for the final period, especially if they know that their landlord has unreasonably withheld the deposits of previous tenants.

The amount of a tenancy deposit is capped for most private tenancies.

If the deposit is more than the maximum amount, the extra money is a banned tenancy fee.

The amount of a tenancy deposit is capped at:[5]

• five weeks’ rent, where the total annual rent is less than £50,000

• six weeks’ rent, where the total annual rent is £50,000 or more

Find out more about tenancy fees.

Rent Act 1977 tenancies

Landlords of Rent Act tenants cannot take a deposit unless:[6]

• it is reasonable in relation to the tenant's potential liability

• it does not exceed one sixth of the annual rent

At the end of a tenancy the landlord or letting agent should return the deposit to the tenant less any deductions. For example, deductions to cover unpaid rent or damage.

Where a deposit is not covered by tenancy deposit protection rules, for example a deposit paid on a tenancy other than an assured shorthold tenancy, and there is an unresolved dispute about the return of the deposit, the only recourse for the tenant is to issue a money claim against the landlord through the Civil National Business Centre using Court form N1.

People having difficulties paying a deposit to secure rented accommodation may be able to get help with housing costs.