Deposit (Tenancy Deposit)
A tenancy deposit is a sum of money paid by a tenant at the start of a tenancy, held as security against unpaid rent or property damage. For assured shorthold tenancies that began after 6 April 2007, landlords in England must protect the deposit in a government-approved scheme within 30 days of receipt.
What is a tenancy deposit and what can it be used for?
A tenancy deposit is money a tenant pays at the start of a rental agreement, held by the landlord or a scheme as security. At the end of the tenancy, a landlord may make deductions for unpaid rent or damage beyond fair wear and tear. Whatever remains must be returned to the tenant within 10 days of both parties agreeing the final amount. Disputes that cannot be resolved by agreement can be referred to the free Alternative Dispute Resolution (ADR) service operated by each approved scheme, avoiding the need for court proceedings.
Which tenancies require deposit protection in England?
The duty to protect a deposit in a government-approved scheme applies to assured shorthold tenancies (ASTs) in England that began after 6 April 2007, as set out in the Housing Act 2004. From 1 May 2026, the Renters' Rights Act 2025 replaced most ASTs with assured tenancies, but the deposit protection obligation continues for those tenancies under amendments made by the Act.
New PBSA tenancies granted on or after 1 May 2026 by qualifying providers are common law tenancies. Because the statutory deposit protection regime under the Housing Act 2004 applies only to assured tenancies, it does not apply to those tenancies as a matter of legislative analysis. However, accredited providers under the ANUK/Unipol code of practice may still be required by that code to protect deposits in some circumstances, though accessible guidance uses qualified language on this point and the position should be confirmed against the current code text.
How much deposit can a landlord take?
The Tenant Fees Act 2019 caps the deposit at five weeks' rent where the annual rent is below £50,000, or six weeks' rent where it is £50,000 or more. One week's rent is the annual rent divided by 52. Any deposit above the cap is a prohibited payment under the Act, and the excess must be refunded. The cap applies per tenancy: the statutory language sets the limit by reference to the tenancy as a whole rather than the number of tenants, which implies that for a joint tenancy the landlord cannot collect the maximum separately from each individual resident, though no case has ruled on this point explicitly.
What happens if a landlord fails to protect a deposit?
If a landlord does not protect the deposit and provide the required prescribed information within 30 days, the tenant or any relevant person who paid the deposit can apply to the county court. The court must order the landlord to pay a sum of between one and three times the deposit amount as compensation, in addition to returning the deposit itself. Late compliance does not remove liability. Claims can be brought within six years of the cause of action arising.
Key takeaways
- A tenancy deposit is held as security for unpaid rent or property damage, and must be returned (less any agreed deductions) within 10 days of both parties agreeing the final amount.
- For assured tenancies in England, landlords must protect the deposit in one of three government-approved schemes within 30 days of receipt: the Deposit Protection Service, MyDeposits, or the Tenancy Deposit Scheme.
- The Tenant Fees Act 2019 caps the deposit at five weeks' rent (annual rent below £50,000) or six weeks' rent (annual rent £50,000 or more); any excess is a prohibited payment.
- Failing to protect a deposit within 30 days exposes a landlord to a court-ordered penalty of one to three times the deposit amount.
- New PBSA tenancies granted by qualifying providers from 1 May 2026 are common law tenancies outside the statutory deposit protection regime, though the ANUK/Unipol code of practice may impose comparable requirements.
How Cloudfox Helps With Deposit
Managing deposits across a PBSA or BTR portfolio creates data fragmentation: amounts, protection dates, scheme references, and deduction records typically sit across spreadsheets, email threads, and property management systems with no visibility in the CRM. Cloudfox implements HubSpot so tenancy and deposit data from your PMS is surfaced alongside the contact and deal record, giving your team a single place to track deposit status, flag overdue protections, and log deductions without switching systems. The finance stack (Xero, ApprovalMax) handles the accounting treatment so deposit liabilities are always reconciled. Find out more at cloudfox.it/what-we-do.
Frequently Asked Questions About Deposit
How long does a landlord have to protect a tenancy deposit?
30 days from the date of receipt. The landlord must also provide the tenant with the prescribed information about the scheme within the same 30-day window.
What are the three government-approved deposit protection schemes in England?
The Deposit Protection Service (DPS), MyDeposits, and the Tenancy Deposit Scheme (TDS). Each offers a custodial option (the scheme holds the money) and an insurance-backed option (the landlord holds the money, insured by the scheme).
Are PBSA deposits exempt from statutory protection rules?
New PBSA tenancies granted on or after 1 May 2026 by qualifying providers are common law tenancies. Because the Housing Act 2004 deposit protection regime applies only to assured tenancies, it does not apply to those tenancies as a matter of legal analysis. That said, accredited providers under the ANUK/Unipol code of practice may still face code-level requirements to protect deposits in some cases; operators should check the current code text and take advice.
What is the maximum deposit a landlord can charge in England?
Five weeks' rent where the annual rent is below £50,000, or six weeks' rent where it is £50,000 or more, under the Tenant Fees Act 2019. Any excess is a prohibited payment.
Can a landlord keep the deposit if the tenant leaves early?
Not automatically. Deductions must correspond to actual losses such as unpaid rent or damage beyond fair wear and tear. Retaining the whole deposit without justification is not permitted, and the tenant can dispute deductions through the scheme's ADR service.