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 arrears, damage beyond fair wear and tear, missing items, or reasonable cleaning costs at the end of the tenancy. It is not an additional fee or income for the landlord. If there are no justified claims when the tenancy ends, the deposit must be returned in full.
In England, for most assured tenancies governed by the Housing Act 2004, a landlord taking a deposit must comply with three distinct obligations. Keep within the tenancy deposit cap, protect the deposit in a government-approved scheme within 30 days of receipt, and serve the scheme's prescribed information and relevant documents on the tenant within that same 30-day period. These are separate steps, protection and service of prescribed information must both be completed within 30 days but one does not automatically satisfy the other.
The deposit cap
The maximum deposit a landlord can take is five weeks' rent, calculated as the annual rent divided by 52, multiplied by five, for tenancies where the annual rent is £50,000 or less. For tenancies where the annual rent exceeds £50,000, the deposit cap is six weeks' rent. These caps were introduced by the Tenant Fees Act 2019 and apply regardless of the length of the tenancy or the number of occupants. Taking a deposit above the cap is a prohibited payment, a criminal offence under the Act.
Protection and prescribed information
The three government-approved deposit protection schemes in England are the Tenancy Deposit Scheme (TDS), the Deposit Protection Service (DPS), and MyDeposits. Each scheme offers two types of protection: custodial, where the scheme holds the deposit for the duration of the tenancy; and insured, where the landlord or agent holds the deposit but pays a scheme fee to insure it. The choice of type affects cash flow — a custodial scheme means the landlord does not have access to the deposit funds while the tenancy continues.
Where a landlord fails to protect the deposit within 30 days, or fails to serve the prescribed information within 30 days, the tenant can apply to the county court for a penalty of between one and three times the deposit amount, payable by the landlord to the tenant. The court has discretion over the exact multiplier. From 1 May 2026, deposit compliance is also a prerequisite for using most Section 8 grounds for possession, a landlord who has not protected the deposit correctly cannot pursue possession on rent arrears, property sale, or most other grounds until the failure is remedied. For a full guide to protecting a deposit correctly, see the August guide to how to protect a tenancy deposit.
August's compliance checklist tracks deposit protection deadlines and flags when prescribed information has not yet been served, giving landlords a clear record that both obligations have been met within the 30-day window.
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. Deductions are permitted for unpaid rent arrears, damage to the property or its contents that goes beyond fair wear and tear, the cost of replacing items listed on the inventory that are missing or broken, professional cleaning where the property has been returned in a materially worse condition than at the start, and other reasonable costs arising from breach of the tenancy agreement.
Deductions are not permitted for fair wear and tear, the natural, unavoidable deterioration expected from ordinary use over time, or for repairs that would represent an improvement on the original condition. The principle of betterment applies. If an item was already substantially worn at the start of the tenancy, the landlord cannot claim the full replacement cost. Apportionment based on the item's age and remaining useful life at the start of the tenancy is standard in adjudication.
How to make a deposit claim
At the end of the tenancy, the landlord should carry out a check-out report comparing the property's current condition against the check-in report and schedule of condition from the start of the tenancy. This comparison, supported by dated photographs and invoices or quotes for any remedial work, forms the evidence base for any claim.
Proposed deductions should be set out in writing to the tenant promptly after the tenancy ends, with each item itemised and supported by evidence. Most claims are resolved by agreement at this stage. Where agreement cannot be reached, either party can raise a dispute with the scheme holding the funds. All three government-approved schemes offer a free adjudication service for disputed amounts. For a full guide to navigating disputed deductions, see the August guide to how to handle tenancy deposit disputes fairly.
The adjudication process
Once a dispute is raised, the scheme appoints an independent adjudicator to review evidence submitted by both parties and make a binding decision on how the disputed amount should be split. The adjudicator's primary consideration is the quality and contemporaneity of the evidence, a detailed inventory with dated photographs at check-in and check-out is the single most important document a landlord can produce. Vague descriptions, undated photographs, and claims unsupported by quotes or invoices are routinely rejected.
Adjudication decisions are final within the scheme process. Either party can pursue the matter through the courts if they believe the decision was wrong in law, but the cost and time involved mean this is rarely worthwhile for residential deposit disputes. The practical consequence is that the adjudicator's decision is the effective endpoint for almost all disputed deposits.
Frequently asked questions
How long does a landlord have to protect a tenancy deposit?
30 days from the date of receipt. Both the protection of the deposit in a government-approved scheme and the service of the prescribed information on the tenant must be completed within the same 30-day period. Failure to comply exposes the landlord to a court-ordered penalty of between one and three times the deposit amount, payable to the tenant.
What is the maximum tenancy deposit a landlord can take?
Five weeks' rent for tenancies where the annual rent is £50,000 or less, calculated as annual rent divided by 52 multiplied by five. For tenancies where the annual rent exceeds £50,000, the cap is six weeks' rent. Taking more than the cap is a criminal offence under the Tenant Fees Act 2019.
What happens if a landlord does not protect the deposit?
The tenant can apply to the county court for a financial penalty of between one and three times the deposit amount, payable by the landlord. The court has discretion over the exact multiplier. From 1 May 2026, failure to protect the deposit also prevents the landlord from using most Section 8 grounds for possession until the breach is remedied.
What can a landlord deduct from a tenancy deposit?
Unpaid rent arrears, damage beyond fair wear and tear, the cost of replacing missing or broken inventory items, professional cleaning costs where the property is returned in materially worse condition than at the start, and other reasonable costs arising from breach of the tenancy agreement. Deductions cannot be made for fair wear and tear, and the betterment principle applies, landlords cannot claim the full replacement cost of items that were already substantially worn at the start of the tenancy.
What are the three government-approved deposit protection schemes?
The Tenancy Deposit Scheme (TDS), the Deposit Protection Service (DPS), and MyDeposits. Each offers both custodial protection, where the scheme holds the deposit, and insured protection, where the landlord or agent holds the funds and pays a scheme fee. All three offer a free adjudication service for disputed deposits at the end of tenancy.
Also read our landlord blog articles including:
End of tenancy inventory checks and cleaning: a landlord's guide
What's the difference: tenancy deposit vs a holding deposit?
