Finding the money for the deposit on a new tenancy can be extremely difficult for many private renters. Not only does this make the cost of moving even more stressful but it also makes it harder for tenants to move out of an unsuitable property and puts tenants who face eviction at risk of homelessness.
But the good news is that the cap on deposits introduced in June 2019 means renters now have an average of £113 more in their pockets.
The Tenant Fees Act 2019 made most fees to tenants in England illegal, and placed restrictions on other charges made by landlords and letting agents. This includes the security deposit for a new tenancy being capped at five weeks’ rent.
According to Freedom of Information requests we made to to the Ministry of Housing, Communities and Local Government, the average deposit value before the cap came in was £1,108 and this fell to £1,025 in March 2021.
However, if there had been no cap, and deposits had increased at the same rate as rents in those two years (2.69%), the average deposit would have been £1,138 - £113 more than the actual average.
You might be owed money back yourself. If your landlord holds more than five weeks’ rent as a deposit, you could get a refund or be protected from eviction.
Tenants are only entitled to a refund if their tenancy began after the Tenants Fees Act came into force, from 1 June 2019, or if it has been renewed since then. Landlords and letting agents are required to repay the amount of the deposit held which is over the five week cap. (Also note that the cap on deposits is six weeks' rent if you pay more than £50,000 per year.)
If your landlord or agent has not already refunded you, you can ask them to return the payment. If they do not, you can contact your Council's trading standards department or your letting agent's redress scheme, or apply to the First Tier Tribunal. Until the excess deposit is repaid to you, you will be protected from a Section 21 'no fault' eviction.
The government has promised a Lifetime Deposit to reduce the barriers to moving between tenancies. At present several schemes offer a “deposit-free option” which lets tenants pay a lower non-refundable premium instead of a refundable deposit, but this costs households with no savings more in the long run.
As the government finalises its Lifetime Deposit proposals it must standardise and speed up the deposit disputes process, which currently allows unscrupulous landlords to waste tenants’ time with spurious claims.
Read the Government's full advice for tenants on the Tenant Fees Act here - information about excess deposits can be found on page 40.
Read more about claiming back your deposit here.