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Deposits & Fees

Tenancy/security deposit
can be paid to a landlord and is used in the case of;

  • Rent arrears
  • Damages
  • Unpaid utilities

Security deposits can be no more than the equivalent of 5 weeks rent (or 6 weeks in cases where the contract exceeds £50k per year which can occur in joint tenancy of larger properties)

Holding Deposits
Holding deposits are limited to 1 weeks rent and are intended to help all parties craft their agreement in an expected timeframeof about 15 days for a contract to be signed.

You may lose the holding deposit if you

  • provide misleading information,
  • withdraw from negotiations,
  • fail a right to rent checks (which is run for immigration purposes),
  • or you are too slow at responding in a reasonable time i.e. landlord tries their best to get the information needed but you fail to provide it within the 15 days

Holding Deposits must be repaied if

  • the agreement is concluded before the deadline,
  • the landlord withdraws before the deadline,
  • or there is no tenancy agreement before the deadline.

Holding deposits must be returned within 15 days from and including receipt of the deposit.
You and the Landlord or Agent can agree a different date if you need to extend talks.

‘Mutant Deposits’ are permissible, by which after signing a contract the holding deposit could be used towards the tenancy deposit or the rent if you agree.

Deposits for Pets
If you have signed a contract after the 1st of June 2019, you cannot be charged an additional deposit for having a pet. However the landlord might not agree to let you have one or may offer a higher rate of rent if you wish to take on a pet.

If you have signed a contract before the 1st of June 2019, you can be charged an additional deposit for having a pet- after the 31st of May 2020 you cannot be charged an additional deposit for having a pet. However the landlord might not agree to let you have one or may offer a higher rate of rent if you wish to take on a pet.

If you signed a contract before the 1st of June 2019 you may have paid a fees (which is not refundable) when signing up to a property. Common fees included;

  • Booking/Holding fee
    • used to ensure you are serious about renting; normally this will be deducted from your rent when you first move in. If you pull out before moving in you may lose the fee. If you are rejected you might get the fee back. Always ask for details if you have been asked for a booking/holding fee
  • Referencing fee
    • used to run credit checks to make sure you can afford to rent the property. In many cases this will be included in the cost of admin fees so you will normally only see referencing fee’s with organisations that do not charge admin fees
  • Admin fee
    • used by the letting agent or landlord to run credit checks on you and/or any guarantors, as well as covering costs involved in draft legal contracts, sending out letters to tenants etc.

You can’t be charged fees to;

  • view a property,
  • see their list of properties, or
  • register your interest

If you signed a contract from the 1st of June 2019 you can not be charged fees for

  • Charging for a guarantor form
  • Credit checks
  • Inventories
  • Cleaning services
  • Referencing
  • Professional cleaning
  • Having the property de-flead as a condition of allowing pets in the property
  • Admin charges
  • Requirements to have specific insurance providers
  • Gardening services

If you have signed a contract before the 1st of June 2019 your contract should outline what you can be charged for and how much. If your contract extends beyond the 31st of May 2020 your Landlord will only be able to charge fees as per the new rules after the 31st of May 2020. 

If you have signed a contract after the 1st of June 2019 you can be charged for;

  • Lost keys-
    The fee cannot exceed the actual cost of the replacement, the landlord must be able to provide proof that it cost the amount they’re charging.
  • Late Rent Fees- Landlords or agents are able to charge a fee if a rent payment is more than two weeks late. The amount is a small percentage of the amount, no more than 3% above the Bank of England base rate in interest, on any outstanding rent owed.
  • Payments can be made to the landlord in respect of Council Tax.
  • Payments can be made to the landlord (but this must be explicit in contract) in respect of
    • Utilities such as gas, electricity and water
    • TV Licence
    • Communication services e.g. telephone, internet, cable/satellite TV
  • Breach of contract-
    whilst fixed fees are banned, landlords or agents can still seek damages for breaches of contract, damages in the legal context meaning any loss suffered by the landlord.
  • Payment for a change in contract- i.e. variation, assignment, novation
    The landlord or agent does not need to agree changes (such as changing rooms, adding someone to the contract or changing the agreement) but if they do any fees associated will be capped at £50 or the reasonable costs (whichever is the greater)
  • Payment for Early Termination-
    if you wish to end a fixed term tenancy or end a periodic tenancy without full notice the Landlord could seek to recover any loss suffered, and the Agent (if the landlord has one) may seek payment capped at ‘reasonable cost’. Whilst a Landlord or Agent could accept a ‘deal’ with you, the loss suffered will usually be equivalent of the rent lost due to the unforeseen void period.

Contracts signed from the 1st of June 2019 cannot disguise fees as rent by having a period in where the effective rent is higher than normal. For instance if you pay monthly you can't have your 1st month being £200 more than any other month's payment.

If the period of the contract is a fixed single period (such as 44 week period) and the rent is described as a fixed figured for that entire period, then the payment dates are not consequential. Advance rent (prior to moving in) could be included in the payment dates specified but the total cost should be as advertised. Some providers may advertise an effective weekly or monthly rent but the contract should outline the total cost for the period.

If the contract has several periods within the contract length (e.g. monthly/weekly) and the rent in the contract is described as being monthly or weekly then those payments cannot simply go up and down period to period- you may find provision for increasing rent on an annual basis.

“The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.” Robinson v Harman

If you fail to pay for damages the landlord or agent may deduct those damages from the deposit or seek legal action.

Damages in this context does not necessarily mean physical damage. If for instance you fail to pay your rent, those are damages that the landlord could seek to recover that loss.

Landlords or agents can stipulate that you must get particular services such as possessions insurance, but in any contracts signed from the 1st of June 2019, they can’t force you into a contract with a specific company. It is likely that Landlords or agents who have deals with service providers such as insurers will simply include the cost of the rent.

If you are liable to pay bills you have the right to change providers if you wish.

Remember that if you have signed a contract with joint liability, all tenants may be liable for deductions in some cases, especially where damages have occurred in communal areas and there is no admission of liability from the individual(s) who caused the damage.

Joint contracts normally make everyone who signs the contract responsible for the whole rent on the house if a housemate owes rent at the end of a tenancy, their deposit might not be enough to cover the arrears. In this situation, landlords could make deductions from deposits paid by other joint tenants. When this happens, it is possible for the joint tenants to take legal action against the person who has caused the problem.

If you have an assured shorthold tenancy your landlord has 30 days from when you pay your deposit to;

  • Protect your tenancy deposit
  • Tell you which scheme they've used
  • Give you certain information about the scheme

If you are unsure if it has been protected you can ask the landlord what scheme they have used or check the 3 tenancy deposit scheme providers websites:

You'll need to supply your postcode, tenancy start date, deposit amount and surname.

We recommend speaking to shelter as well as the students’ union if you are having issues with deposits.

There is helpful information on the shelter website for;

During the tenancy, there are some things you can do to help increase your chances of getting your deposit back at the end of the tenancy.

  • Clean the house thoroughly before you leave,
  • Remove and properly dispose of all rubbish.
  • If you have an inventory or check in report, use this to compare how the property looks now to what it was like when you moved
  • On the day you leave, take dated photographs or a video of every room.
  • Pay your rent on time every time
  • Report any repair issues, you might be held liable if you fail to report something which later becomes a massive issue. Take photos of issues and keep records of emails raising concerns.
  • Avoid or consider carefully contracts where there is joint liability- if your housemate breaks something you could be liable-particularly if this is in a communal area and they deny causing the problem.

A guarantor takes on all the legal obligations of the tenant in the contract but essentially gets nothing from it. Most students have no or limited credit history. Guarantors however are likely to have borrowed and repaid or have a mortgage and therefore would be considered to be more financially secure / economically active. This is why some agencies and landlords require guarantors.

Your guarantor must sign to say that they would cover the cost of the rent if you default on your payments. This must be in signed writing. Credit checks on your guarantor will usually take place. If your guarantors are overseas credit checks can be difficult.

If you are signing a joint tenancy you have joint liability for the entire property. Therefore your guarantor is taking on the risk of owing the total rent for while property. If each tenant’s rent is £400 a month, that £4,000 for a 10 month of the contract per person, if you are in a five bedroom house that is a total liability of £20,000.

Page last reviewed: 11/06/2019
Next review due: 31/08/2020