- LANDLORDS WANTED – REFERENCED TENANTS WAITING!
Can a Letting Agent Keep My Deposit?
With different legal processes, requirements and terminology, renting a property can feel daunting, to say the least. One subject often questioned is deposits – why is a deposit taken? How much of a deposit is required? Can my deposit be kept? How can I raise a dispute over my deposit?
At Peninsular Property, we recognise this confusion and are here to break down the rules around tenancy deposits in the UK so that you can make much more informed decisions and be confident of your tenancy rights.
Table of Contents
What Is a Deposit?
A “rent deposit” is an amount of money paid by a tenant to a landlord at the start of a tenancy. This deposit serves as a financial security for the landlord against potential damages to the property, unpaid rent, or breaches of the tenancy agreement.
The deposit is typically refundable at the end of the tenancy, provided the property is returned in good condition and all terms of the lease have been met.
In the UK, landlords are legally required to place this deposit in a government-approved tenancy deposit protection scheme and provide the tenant with information about the scheme used.
Why Does a Letting Agent Take a Deposit?
When you choose to rent, you will be required to pay a deposit of a given amount, which can vary. The purpose of this deposit, also known as a ‘holding fee’, is to secure the property. It also acts as a safety net for the landlord/landlady in the unfortunate event that the terms and conditions in the tenancy agreement are not followed.
This could involve the tenant not paying their last month’s rent or damaging the property. A deposit should only be a temporary hold and will be released back to you if you decide to move out, provided you’ve followed the correct procedure.
If you’re choosing to rent a property, check out our rental checklist to ensure you have everything you need.
Does a Landlord Need to Hold a Deposit in a Deposit Protection Scheme?
Yes, but it depends on the type of tenancy agreement.
If you’re renting under an assured shorthold tenancy (AST) that began after 6 April 2007, your landlord or letting agent is legally required to protect your deposit in a government-approved tenancy deposit protection (TDP) scheme.
There are two main types of schemes:
- Custodial scheme – The deposit is held securely by the scheme itself until the end of your tenancy.
- Insured scheme – The landlord or letting agent keeps the deposit but pays a fee to the scheme for insurance protection. If there’s a dispute when you move out, the deposit must then be handed to the scheme for resolution.
It’s worth noting that holding deposits (i.e. the small payment you make to reserve a property before moving in) don’t need to be protected. Only the tenancy deposit (paid once your rental agreement starts) must be registered.
If your tenancy isn’t an AST, such as a company let or a different type of agreement, your landlord isn’t required to use a protection scheme. In some rare cases, landlords might even accept valuable items (like a car, art, or a watch) as security instead of cash, although this is a less common option.
What Is a Deposit Protection Scheme (TDS)?
A Tenancy Deposit Scheme (TDS) is a government-approved scheme designed to protect tenants’ deposits. When you rent a property, you usually pay a deposit to cover potential damages, unpaid rent, or breaches of the tenancy agreement.
A TDS ensures that this deposit is kept safe and can be returned to you at the end of your tenancy, provided you meet the terms of your lease. The scheme provides a clear process for resolving any tenancy deposit disputes.
What Tenancy Deposit Schemes Are Available in the UK?
In England and Wales, there are three government-approved Tenancy Deposit Protection (TDP) schemes, which include:
- The Tenancy Deposit Scheme (TDS): this offers both custodial and insured options to ensure all deposits are protected and disputes are handled efficiently.
- The Deposit Protection Service (DPS): this provides a custodial scheme where deposits are held by the DPS for free and an insured scheme where the landlord or agent holds the deposit and pays a fee for insurance.
- MyDeposits: this also provides both custodial and insured options to give landlords and agents flexibility in how they manage tenants’ deposits.
How Long Does a Landlord Have to Protect a Tenancy Deposit?
Once you’ve paid your deposit, your landlord or letting agent has 30 days to register it with an approved tenancy deposit protection scheme.
During this time, they’re also required to give you full details about how your deposit is being handled. This information should include:
- The total amount of your deposit and the date it was received
- The full address of the rented property
- Which government-approved deposit scheme it is protected under and how it works
- The name and contact details of the protection scheme and its dispute service
- How to request your deposit back at the end of your tenancy
- Clear reasons why some or all of your deposit could be withheld (e.g., unpaid rent or damage beyond fair wear and tear)
- Contact details for the landlord or letting agent
- Who to contact if the landlord isn’t available when your tenancy ends
- What steps to take if there’s a disagreement about the deposit return
- Information on what to do if your landlord fails to protect your deposit
How Do I Get My Tenancy Deposit Back From My Landlord?
If it’s your first time renting a property, you’re going to need to know what is required of you to receive the full amount of your deposit back. Yes, you read that right – it’s possible to only receive a partial amount, or none at all.
Before we get into that, here’s what you’ll need to do to get your tenancy deposit back:
- Clear all rent payments and bills due
- Give the requested leave notice
- Leave the property in a similar condition to when you moved in
For more information on how to get your deposit back, click here.
So, Can a Letting Agent Keep My Deposit?
Yes and no.
Regardless of the amount that you pay as a deposit, if you follow the terms and conditions of the contract, you should receive the whole amount when you leave the property. However, there are various reasons that could result in you not receiving your full amount.
What Reasons Can a Landlord Keep My Deposit?
Your landlord can only keep any amount of your deposit if they can prove that your actions during your stay at the property (e.g. damage to the walls) have caused them a financial loss.
A letting agent/landlord/landlady can keep your deposit if:
- You’ve broken your tenancy agreement or leaving early
- You have any unpaid rent and/or bills
- There is cleaning, gardening or decorating required to restore the property
- There is damaged and/or missing items that will need replacing (e.g. curtains, sofa, bed frame etc)
However, be mindful that wear and tear must be factored in.
What Counts as Fair Wear and Tear?
It’s important to note that we are only humans and life happens! Fair wear and tear, such as small marks and scratches on the walls, faded furniture and curtains, frayed carpets and worn flooring, are not reasons for your deposit to be kept.
There can be a lot of unease when it comes to paying deposits, especially if it’s a large sum of money. Because of this, knowing your rights is essential and also allows you to live with more peace of mind.
Rent Confidently With Peninsular Property
Here at Peninsular Property, we’ve been making renting simple and hassle-free for more than 30 years, and our team of experts are committed to helping you along every stage of your renting journey.
We’re passionate about helping you secure your dream home in your ideal location in and around the Wirral, Liverpool. So, if you have any questions about renting a property or investing in a rental property, get in touch today by:
Mobile: +44 7501 928060
Telephone: 0151 378 1074
Email: info@peninsularproperty.net
Tenancy Deposit FAQs
You’ll be protected by the scheme if you’re renting a home from a private landlord or letting agent on or after 6 April 2007. If your tenancy started before 6 April 2007 and you made a deposit, then you will not normally be protected by the scheme.
If there is a dispute about your deposit, you can use an Alternative Dispute Resolution (ADR) service, which is cheaper, faster, and less stressful than going to court. If your landlord refuses ADR, you may need to take them to small claims court.
To protect yourself, take photos of the property before moving out, keep receipts for professional cleaning, get a check-out inventory signed by your landlord, and save any correspondence about unresolved issues.
Yes, but if a landlord decides not to go ahead with the tenancy after taking your holding deposit, they usually have to refund it in full. The only time they can keep it is if you gave false information, failed to take reasonable steps to move forward, or pulled out of the agreement yourself.
It depends on the reason. If you fail referencing because of honest mistakes or circumstances beyond your control, some landlords or agents may still refund your deposit. However, if you lied or withheld information, they can legally keep the holding deposit.
