Most private landlords or estate agents managing properties on behalf of landlords, usually ask for a deposit to be paid before you move into a property.
What is a tenancy deposit?
Tenancy deposits, also known as rent deposits and security deposits, act like a security to cover the landlord in the event that you cause the landlord any financial loss whilst living in the property.
Financial loss can occur through rent arrears, unpaid bills or damage to the property.
How much can you be asked to pay?
Until recently, most rent deposits were usually equivalent to one or two months’ rent and in some cases more, as there was no limit on what landlords could charge. This has now changed in England and under the new Tenant Fees Act 2019, as of 1 June 2019, the maximum rent deposit payable by a tenant for new and renewed tenancies is the amount equal to 5 weeks’ rent. This limit applies to assured shorthold tenants, lodgers and students in halls of residence whose annual rent is less than £50,000.
If your annual rent is £50,000 or more, then the maximum deposit payable is the amount equivalent to six weeks’ rent.
How to calculate your maximum tenancy deposit:
Your monthly rent x 12 ÷ 52 x 5 = maximum tenancy deposit
What if you are overcharged?
If you are overcharged for your rent deposit, i.e., you are asked to pay more than the equivalent of five or six weeks’ rent, you can complain to:
- The Trading Standards team at your local council.
- A letting agent redress scheme that your estate agent is a member of