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Tenancy Deposits – what are the options?

Long gone are the days when a landlord could decide the amount of deposit a tenant must pay. Nor can they even hang onto the cash themselves anymore. It’s now mandatory for deposits to be kept in a protected scheme, and the amount which can be held now has strict limits.

Since 2019, the maximum amount a tenant can be asked to pay is an amount equivalent to five weeks’ rent (where the total rent is less than £50,000 a year - or six weeks if the total annual rental payments are more than £50,000).

Normally, rents are charged on a Per Calendar Monthly  basis (pcm); therefore, to establish the maximum deposit amount means the total annual rent needs to be calculated, before being converted to a weekly amount and then multiplied by either five or six.

For example, looking at the average rents across the UK of £1,029 per month:

Monthly rent   £1,029.00
Annual rent Monthly rent multiplied by 12 £12,348.00
Weekly rent Annual rent divided by 52 £237.46
Maximum deposit Five times the weekly rent £1,187.37

Deposit Protection Schemes

There are three deposit protection services available for landlords: Deposit Protection Service, My Deposits and Tenancy Deposit Scheme. 

The deposit must be put into one of three schemes within 30 days of receiving it from a tenant; and the tenant must be informed about which scheme has been used.


"Failing to secure a deposit in one of the three schemes could prevent a landlord from evicting a tenant under the Section 21 notice process."


Deposit Replacement Schemes

There is another option open to landlords. Schemes which enable the tenant to hold onto their savings, rather than use the cash for a deposit; and these schemes also increase the level of protection a landlord has. After all, if the deposit on average rents is just £1,187, it won’t go very far if there is serious damage at the end of the tenancy.

haart works with flatfair. Under the flatfair deposit replacement scheme the tenant simply pays a one-off membership fee which is equal to just one week’s rent (plus VAT) instead of a deposit.

The tenant commits to pay any lawful claims at the end of the tenancy – and that’s it. There are no other fees, and no costs for renewing. This service is particularly useful for tenants moving from one private rented home to another as their cash deposit is probably already tied up in their previous rental.

However, the scheme is even better for landlords too because the maximum protection is equivalent to 10 weeks rent, rather than five.

That means the average protection (based on average rents) is £2,375, which going to be far more useful in the event it is needed.

When the tenancy ends

Typically, at the end of the tenancy, the landlord would retain some or all of the deposit if the tenant has damaged the property or has left with arrears.

Under the standard schemes, the tenant and landlord need to agree how much of the deposit is to be returned. If the landlord and tenant can’t agree this between them, then the Protection Scheme would step in. However, if there is damage and the landlord is trying to resolve the issue before reletting then this process could mean the property is empty for longer than necessary.

But, the flatfair service has been designed to reduce the risk of void periods, thus speeding up any end of tenancy claims and releasing the funds to make any necessary repairs or replacements. 

If you have any questions about protecting your tenant’s deposit, or about flatfair please speak to your local haart branch.