Deposit Cap and the Tenant Fee Ban – ENGLAND ONLY

From 1st June 2019 landlords in England are limited to 5 weeks’ (rent equivalent under £50,000 per annum) deposit for new and renewed tenancies (or 6 weeks if the annual rent is £50,000 or more).

There are limitations on what landlords and agents can charge tenants.

We have put together this resource centre with all you need to know about the changes.


The Tenant Fees Act 2019 commenced 1st June 2019 and applies to all assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England. The Act limits the amount a tenant can be charged for a holding deposit and security deposit and defines what a tenant can be charged in addition to rent.

Certain fees and charges are permitted under the Act, whereas others are defined as prohibited payments. You can find out more on this under our ‘Before vs after’ tab in the left-hand menu.

The main changes include:

  • Capped holding deposits and set timeframes for repayment;
  • Capped security deposits;
  • A set list of permitted payments which can be taken during the tenancy; and
  • A set list of prohibited payments which cannot be charged under the Act in any circumstances.

This resource centre includes all the information and guidance agents and landlords in England need to comply with the legislation and understand the changes made. We’ve also included a section on how to repay deposits which exceed the cap in the event that you renew a tenancy agreement from 1st June 2019.

Here’s an overview of the changes made by the legislation:

  • Holding deposits are capped at one week’s rent;
  • Security deposits will be capped at five weeks’ rent where the annual rent is less than £50,000 and six weeks’ rent where the annual rent is £50,000 or more;
  • Default fees (fees which can be charged during the tenancy) are limited to the reasonable costs incurred in replacing a key or lost security device or interest on rent overdue by 14 days or more, capped at 3% above the Bank of England base rate.

2nd May 2018: The Bill entered the House of Commons for first reading. 

12th February 2019: The Bill received Royal Assent.

1st June 2019: The Act came into force meaning all new tenancy agreements, or renewed tenancies arising on after this date, will be subject to the provisions of the legislation.  Agents and landlords could continue charging fees on tenancies which came into effect before 31 May 2019 until 31 May 2020.

1st June 2020: The one-year transitional period came to an end meaning the legislation is now binding all on tenancies, even those which commenced before the legislation came into effect.

Where a tenancy which was signed prior to 1 June 2019 becomes a statutory periodic tenancy on or after the 1 June 2020 then any amount of the deposit held that exceeds the applicable five- or six-week limit must be refunded. The Act states that security deposits must be capped at five weeks’ rent where the annual rent is less than £50,000 and six weeks’ rent where the annual rent is £50,000 or more.

By ‘excess deposit’ we mean the difference between a tenant’s outstanding tenancy deposit, and the maximum tenancy deposit they could legally be asked to provide under the terms of the Tenant Fees Act 2019, were the tenancy to be agreed today. For example, if a tenant paid a tenancy deposit of £1,500 in January 2019, and renewed their tenancy on 16 June 2019 at a weekly rent of £200, the excess deposit would be £500.

A deposit is usually returned only at the end of a tenancy and when the tenant does not intend to remain at the property. Otherwise, an excess deposit is generally only repayable when the tenant agrees a new tenancy. There is one exception to this general rule, which is where the fixed term of a tenancy expires, and the tenancy converts automatically to a statutory periodic tenancy, on or after 1 June 2020 and the deposit is above the deposit cap.

We have developed easy to use functionality to reduce the deposit in the Custodial Scheme and repay the excess to the lead tenant, and to update the protected amount in the Insured scheme, where you have repaid the excess directly.

Our guide to our Deposit Cap Solution outlines how members of each scheme can reduce the deposit using our deposit management system.

Read guide


Deduction Pre Tenant Fees Act Post Tenant Fees Act
Holding deposit Uncapped with no legal requirements around the timeframe to return during tenancy. Capped at a maximum of one week’s rent. The holding deposit must be refunded within 7 calendar days of the tenancy not being entered into (unless it’s agreed to be used towards rent or the security deposit) or 15 calendar days from receipt of the deposit deadline being reached.
Security deposit Uncapped. The refundable tenancy deposit is capped at no more than the equivalent of five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the annual rent is £50,000 or more.
Pet deposit Frequently taken in addition to the uncapped security deposit when a landlord accepts a tenant’s request to keep a pet during the tenancy. The total deposit taken cannot exceed five or six weeks’ equivalent rent (as set out above). This means that if you have taken the maximum security deposit, the agent or landlord cannot take any further monies towards a pet deposit.
Interest on rent Uncapped. An agent or landlord can charge interest on rent which is more than 14 days overdue. This can be charged at a maximum of 3% above the Bank of England base rate.
Late payment of rent fee Charged when a tenant falls into arrears due to the administration costs involved in pursuing payment from the tenant. Prohibited under the Act.
Deposit deductions for dilapidations Charged where the tenant breaches an obligation under the agreement. Evidence must be provided to show an obligation has been breached, that the deposit can be used for the breach, and a loss has been suffered. Agents and landlords will still be able to make deposit deductions for breach of obligations. As is now, evidence must be provided to show an obligation has been breached, that a loss has been suffered, and that the deposit can be used against that loss.
Deposit deductions for rent arrears Charged at the end of the tenancy where the tenant has fallen into arrears, as long as the tenancy agreement obligates the tenant to pay the rent and the deposit-use clause allows for it to be used for rent arrears. No change – this can still be claimed.
Check-in/check-out fee Sometimes one fee is paid by the landlord and the other is paid by the tenant, with the cost being passed on to the tenant through a contractual obligation. Prohibited under the Act.
Early termination costs Often charged to the tenant in the event that they vacate the property before the end of the fixed term. Agents and landlords can charge an early termination fee which does not exceed the financial loss that the landlord has suffered in permitting the tenant to leave early, or the reasonable costs that have been incurred by the agent in arranging for the tenant to leave early.
Payment for changing or assigning a tenancy where requested by the tenant Uncapped. Capped at a maximum of £50 unless the landlord can show that greater costs were incurred.
Lost keys Uncapped. Permitted under the Act but restricted to the reasonable cost of replacement.  

Example 1: Loss of key or security device.

The tenant loses a key during the tenancy and is charged for replacement.

Is this a permitted payment? What action can be taken? What evidence is required?
Yes.
Reasonable cost of replacement is allowed.
Legal action to recover is possible during tenancy. Claim against tenancy deposit can be made at end of tenancy. If disputed, can be referred to TDS or Court. Invoice and evidence to show reasonable, e.g. comparable quotations.

Example 2: Interest on overdue rent

Rent is not paid for more than 14 days, interest is charged under terms of tenancy agreement.

Is this a permitted payment?If it is unpaid or disputed, what further action can be taken?What evidence will be required?
Yes.
Limited to 3% above Bank of England base rate.
Interest calculated on a daily basis from the date when payment should have been made until the date payment is made.
Legal action to recover is possible during tenancy.
Claim against deposit can be made at end of tenancy.
If disputed, can be referred to TDS or Court.
Rent statement including interest calculation.

Example 3: Fee for making changes to a tenancy after it has been entered into

Permission is granted to a tenant to keep a pet after the tenancy agreement was entered into.

Is this a permitted payment? If it is unpaid or disputed, what further action can be taken? What evidence will be required?
Yes.
Fee is limited to the greater of:
(a) £50.00 Inc. VAT or
(b) the reasonable cost of making the change to the tenancy agreement.
Legal action to recover is possible during tenancy.
Claim against deposit can be made at end of tenancy.
If disputed, can be referred to TDS or Court.
Invoice, and evidence to show reasonable if over £50.00.

Example 4: Early termination fees (other than in relation to the exercise of a break clause)

Agent/landlord agrees to early termination on the condition that replacement tenants are found. Costs include those associated with re-advertising the property or referencing new tenants, payment of rent until the new tenancy has started and rent payments that the outgoing tenant should have paid to the extent that the replacement tenant will be paying a lower amount.

Is this a permitted payment?If it is unpaid or disputed, what further action can be taken? What evidence will be required?
No.No legal action to recover is possible during tenancy.
Claim against deposit can be made at end of tenancy.
If disputed, can be referred to TDS or Court.
Rent statement, fee invoice, and evidence to show reasonable.

Example 5: Breaches of tenancy agreement

Tenant fails to clean property to a professional standard as required by terms of tenancy agreement. Check-in and check-out report confirm cleaning shortfall.

Is this a permitted payment? If it is unpaid or disputed, what further action can be taken? What evidence will be required?
During the tenancy, no. No legal action to recover is possible during tenancy.
Claim against deposit can be made at end of tenancy.
If disputed, can be referred to TDS or Court.
Estimate or invoice. The amount claimed must be reasonable and the landlord must do what they can to keep that loss to a minimum.

After you have returned the excess deposit to the tenant(s), follow these steps to update the deposit protection.

Step 1: Find the deposit in your dashboard and select ‘Edit Tenancy Details’.

Step 2 : Enter the new deposit amount and monthly rent amount for the new tenancy agreement and select ‘Update tenancy’. 

Step 3 : Select ‘End Tenancy’.

Step 4 : Under the section asking how the tenancy ended, select ‘Renewed’ then ‘Submit’

Success : The protected amount is now updated – you do not have to do anything more.

Step 1 : Find the deposit in your dashboard and select ‘View/Edit’.

Image of an Apple Mac computer showing the TDS Deposit Management page.

Step 2 : Select ‘Edit’ from the deposit details page.

Image of an Apple Mac computer showing the TDS Deposit Details page.

Step 3 : Enter the new deposit amount and rent amount for the new tenancy agreement and select the rental period.

Image of an Apple Mac computer showing the TDS Edit Deposit Totals page.

Success : We will now contact the tenant for their payment details – you do not need to do anything more.

Image of an Apple Mac computer showing the TDS Edit Deposit Totals page.

Guide to TDS’ Deposit Cap Solution

We have developed functionality to reduce the deposit in the Custodial Scheme and repay the excess to the lead tenant, and to update the protected amount in the Insured scheme, where you have repaid the excess directly.

Our guide to our Deposit Cap Solution outlines how members of each scheme can reduce the deposit using our deposit management system.

Tenant Fees Act 2019 Guidance for Landlords and Agents

Tenant Fees Act 2019 Guidance for Landlords and Agents have been prepared by the Ministry of Housing, Communities and Local Government to help inform landlords and letting agents of their rights and obligations under the Act, including: a list of permitted and prohibited payments, and consequences of a breach of the Act.

Tenant Fees Act 2019 Explanatory Notes

These Explanatory Notes have been prepared by the Ministry of Housing, Communities and Local Government in order to assist the reader in understanding the Act. They do not form part of the Act and have not been endorsed by Parliament.