Tenancy deposit

A tenancy deposit is a sum of money a tenant pays at the start of a tenancy as security against specific risks, unpaid rent, damage beyond fair wear and tear, missing items, or reasonable cleaning at the end of the tenancy. It is not an extra fee or income. If there are no justified claims, it must be returned in full.

In England, for most assured tenancies you must keep within the tenancy deposit cap, usually up to five weeks' rent, or six weeks for higher-rent tenancies, protect the deposit in a government-approved scheme within the legal deadline, and serve the scheme's prescribed information and relevant documents to the tenant.

Under the Renters' Rights Act, correct protection and paperwork remain strict pre-conditions for using key possession grounds. Failing to comply can lead to financial penalties, restrictions on recovering possession, and difficulties defending deposit disputes.

Tenancy deposit claims: what landlords can and cannot deduct

A tenancy deposit claim is a landlord's formal request to retain all or part of the deposit at the end of a tenancy to cover specific losses. Landlords can make a claim for unpaid rent arrears, damage to the property or its contents that goes beyond fair wear and tear, the cost of replacing missing items listed on the inventory, professional cleaning where the property has been returned in a worse condition than at the start, and any reasonable costs arising from breach of the tenancy agreement.

Landlords cannot claim for fair wear and tear, the gradual deterioration expected from normal use over time or for repairs or replacements that would represent an improvement on the original condition of the property. The principle of betterment applies: if a carpet was already five years old at the start of the tenancy and needs replacing at the end, a landlord cannot claim the full replacement cost but can claim a proportion reflecting the tenant's contribution to the early end of its life. Apportionment of costs is common in deposit disputes.

How to make a tenancy deposit claim

At the end of the tenancy, landlords should carry out a check-out report comparing the current condition of the property against the check-in report and schedule of condition from the start of the tenancy. This comparison, supported by dated photographs, receipts, and invoices or quotes for remedial work, forms the evidence base for any claim.

Set out proposed deductions in writing to the tenant promptly after the tenancy ends, itemising each claim with supporting evidence. Many claims are resolved by agreement at this stage. Where agreement cannot be reached on all or part of the deposit, either party can raise a dispute with the deposit protection scheme holding the funds. The three government-approved schemes, Tenancy Deposit Scheme (TDS), Deposit Protection Service (DPS), and MyDeposits, each offer a free adjudication service for disputed amounts.

The deposit dispute and adjudication process

Once a dispute is raised, the relevant scheme appoints an independent adjudicator to review the evidence submitted by both parties. The adjudicator makes a binding decision on how the disputed amount should be split. They will look at the quality and contemporaneity of the evidence, detailed inventories with photographs at both check-in and check-out are the most important documents a landlord can produce. Vague descriptions, undated photos, or claims unsupported by quotes or invoices are typically unsuccessful. The adjudicator's decision is final within the scheme process, though either party can pursue further action through the courts if they believe the decision was wrong in law.

Good practice throughout the tenancy protects a landlord's position at this stage. Use a detailed inventory and schedule of condition at check-in and check-out, set out proposed deductions in writing with evidence including photos, invoices, and quotes, and distinguish clearly between fair wear and tear and true damage or loss.

Also read our landlord blog articles including: