Deposit cap

Schedule 1 paragraph 2 of the Tenant Fees Act 2019 (in force 1 June 2019 in England) puts a hard ceiling on the amount of cash a landlord or letting agent can take as a tenancy deposit. The cap depends solely on the total annual rent: under £50,000 the maximum is five weeks’ rent, at £50,000 or above it rises to six weeks. Anything above the cap is a "prohibited payment" under section 1, and the tenant can apply to the First-tier Tribunal to recover it (section 15). It does not stop a Section 8 possession order: the Act’s only possession bar, section 17, applied to Section 21 notices and was removed with them on 1 May 2026.

The mechanic is calendar-week based. The Act defines weekly rent as the annual rent divided by 52. So for a £1,500/month tenancy the annual rent is £18,000, the weekly rent is £346.15 and the five-week cap lands at £1,730.76. This is where landlords trip. Think in months and "£2,000: call it six weeks" sounds modest against the historical six-week norm, but the lawful ceiling on this tenancy is FIVE weeks, so £2,000 is £269.23 over the cap and every pound of the excess is a prohibited payment. Always price the deposit from the weekly figure (annual rent ÷ 52), never from the monthly rent.

The £50,000 threshold is annual rent for the property, not per tenant. A four-bedroom HMO let on a single joint tenancy at £4,200/month annualises to £50,400 and qualifies for the six-week cap (£5,815). Convert the same flat to per-room tenancies of £1,050/month each and every tenancy individually annualises to £12,600: under the £50k threshold and capped at five weeks (£1,211). The total deposit pool drops from £5,815 to £4,846 even though the rent collected is identical. This is why HMO and student-let portfolios typically anchor on the per-room arithmetic when sizing wear-and-tear risk.

Enforcement sits with the local authority’s Trading Standards team, with civil penalties up to £5,000 for a first breach and unlimited fine plus prosecution for repeat offending. The tenant has independent rights: they can apply to the First-tier Tribunal under section 15 to recover the over-cap excess, and the tribunal can order it repaid within 7 to 14 days. The breach does not in itself stop a Section 8 claim; the bar in section 17 covered only Section 21 notices and went with them on 1 May 2026. A landlord who took a six-week deposit on a sub-£50k tenancy in 2019 and renewed the AST in 2022 without refunding the excess is still on the hook in 2026: the breach does not expire on tenancy renewal.

Holding deposits sit under the same Act but in a separate cap. Schedule 1, paragraph 3 limits a holding deposit to one week’s rent. It must be repaid within 7 days of the tenancy agreement, of the landlord deciding not to let, or of the deadline for agreement, unless the tenant agrees it goes towards the first rent or the tenancy deposit; a landlord who keeps it must give written reasons within that time (Schedule 2). Quoting a "£500 holding fee" on a property where weekly rent is £346 is over-cap and a prohibited payment in its own right. Charging over the cap is a prohibited payment, with a financial penalty of up to £5,000 for a first breach (Tenant Fees Act 2019, s.8).

The cap also interacts with the Renters’ Rights Act 2025. The RRA does not move the cap itself, five and six weeks remain, but it does change how often you set it. Every tenancy from 1 May 2026 starts as a periodic assured tenancy. There is no fixed term to renew, so the only event that can prompt a recalculation is a Section 13 rent increase that pushes annual rent across the £50,000 threshold. If you take a five-week cap on a tenancy at £4,000/month and increase the rent to £4,200/month two years later, you can take an additional one week’s rent as deposit (top-up). Conversely, a downward variation does not entitle you to refund the difference automatically, the deposit can stay as-is provided it remained lawful when collected.