Help with your first months rent and deposit?

Paying A Tenancy Deposit

What is a Tenancy Deposit?

Most private rent landlords or agents will ask for a deposit at the start of a tenancy in addition to your first month’s rent. This is also referred to as a security deposit and applies in the case of joint tenancies as well.

The tenancy deposit is used by the landlord to cover the incidence of rent arrears or property damage. Unless your landlord has a reason or need to use this money for either of these situations, the amount should be returned to you in full once your tenancy ends.

Note that a holding deposit and tenancy deposit are different payments. A holding deposit is paid to reserve a property for your occupation.

How Much is a Tenancy Deposit?

The maximum tenancy deposit your landlord may require you to pay is a total sum of 5 weeks’ rent.

If you are overcharged you can lodge a complaint to the Trading Standards office at your local council or to a letting agent redress scheme if the agent in question is a member of one.

To calculate the maximum tenancy deposit use the following formula:

Monthly Rent Amount x 12 ÷ 52 x 5 = Maximum Tenancy Deposit

This deposit limit applies to assured short-hold tenants, lodgers, and students in halls of residence if the yearly rent is below £50,000.

Insurance Schemes

If you have an assured short-hold tenancy your landlord (or agent) is required to protect your deposit with an authorised scheme. Scheme providers run an insurance and a custodial scheme.

Custodial schemes

With a custodial scheme, the landlord or agent will pay your received deposit amount into the scheme when they receive it. The scheme will then keep the deposit during your tenancy and refund your deposit with your landlord’s approval once the tenancy ends.

If your landlord does not approve the release of your deposit or decides to make deductions, you can make use of the scheme’s dispute resolution service to determine how much money you are entitled to get back.

If you are unable to get in touch with the landlord once the tenancy has ended you can approach the scheme directly to get the deposit back and may be able to avoid going to court.

What if I Cannot Afford a Deposit?

If you are unable to pay the required deposit you can apply for assistance from a local bond or rent deposit scheme. These schemes are usually run by councils or charities.

Some councils allocate DHPs to assist with deposits and rent in advance. You can apply for DHP if you already claim Universal Credit housing element or housing benefits. Get more information on how we can help you get a FREE grant that will assist with your first month’s rent and deposit.

Deposit Replacement Insurance

As an alternative to paying a tenancy deposit, some agents or landlords will suggest deposit replacement insurance, also referred to as a zero deposit option. This involves paying a non-refundable amount at the beginning of your tenancy, usually equal to one week’s rent. This fee is used to take out an insurance policy either by your landlord or yourself.

If the landlord wants to charge for cleaning, damage, or arrears at the end of the tenancy, they can make a claim through the insurance company who will then approach you for the payment. If you refuse to pay it can result in a court case.

Although you can dispute charges with the insurance company, you will be charged a fee if they rule in favour of the landlord or determine that you raised the dispute without a satisfactory reason.


A landlord or agent cannot force you to pay deposit replacement insurance but can only offer it as an alternative to paying a tenancy deposit. Although it means paying less upfront it can cost more if problems arise at the end of your tenancy.

If your letting agent or landlord told you that you were obligated to pay deposit replacement insurance or did not explain that you’d still have to pay for matters normally covered by a deposit you can lodge a complaint with a redress scheme or to the insurance company. If the policy is in your name, you can escalate your complaint to the Financial Ombudsman Service.