How the deposit cap and holding deposit are worked out
The Tenant Fees Act caps a tenancy deposit at five weeks' rent when the annual rent is under £50,000, and six weeks' rent when it is £50,000 or more. A holding deposit, taken to reserve a property while checks are done, is capped at one week's rent for the whole property, and only one can be taken at a time.
A worked example
Rent is £900 a month. The annual rent is £10,800, which is under £50,000, so the cap is five weeks. One week's rent is £10,800 divided by 52, which is £207.69. Five weeks is £1,038.46, so that is the most you can take as a deposit. The most you can take as a holding deposit is £207.69.
Other rules that go with them
- Protect it. A tenancy deposit must be protected in an authorised scheme and the prescribed information given to the tenant within 30 days.
- Holding deposit deadlines. The deadline for signing is 15 days unless you agree another date in writing, and the money must be refunded within 7 days in the cases the law lists.
- Our own deposits. We take two weeks' rent for a room in a house share and five weeks' rent for a whole home, always protected with the Deposit Protection Service.
The full rules are in our tenancy deposit protection guide and our tenant fees guide. If you let in Tameside and want a letting agent who handles deposits properly, see our lettings and full management at 12% with no VAT and no set-up fee.