A tenancy deposit is a returnable payment taken by the accommodation provider, and is capped at 5 weeks rent (if the annual property rent is £50,000 or more, then this is capped at 6 weeks rent). The tenancy deposit is taken to compensate the provider in the event that there are any arrears on the rent at the end of the tenancy, or to pay for the cost of repairing unreasonable damage or cleaning at the end of the term of the tenancy. The deposit should not be used to cover the cost of reasonable fair wear and tear.

You may also be asked to pay a holding deposit (i.e. money to reserve a property before you sign a tenancy agreement), capped at 1 weeks rent. Upon receipt of a holding deposit:

• An accommodation provider should stop advertising the property.
• Providers and tenants have 15 days to enter in to a tenancy agreement (although a different deadline can be agreed in writing).
• If the tenancy does not go ahead then the deposit must be repaid in full within 7 days of the deadline being reached or the accommodation provider backing out.
• Repayment does not need to be in full if the tenant backs out of the tenancy agreement themselves, fails right to rent checks, has provided false or misleading information, or where the accommodation provider tries their best to get the information needed but the tenant fails to provide it within the 15 days.
• If the tenancy does go ahead, the holding deposit can either be returned within 7 days of agreeing the tenancy, or put towards the security deposit (at which point it must be protected) or the first rent installment.

Source: Shelter: holding deposits.

Any tenancy deposit taken in relation to Assured Shorthold Tenancies created after April 6 2007 must be protected with a government authorised deposit protection scheme. The schemes protect the deposit and offer a means to resolve disputes between accommodation providers and tenants in the event of any dispute. If you pay a holding deposit, then this does not have to be protected. However once you enter into a tenancy, your holding deposit can either be returned within 7 days of agreeing the tenancy, or put towards the security deposit (at which point it must be protected) or the first rent installment.

The following are government authorised deposit protection schemes:

Deposit Protection Service (DPS)

Tenancy Deposit Scheme (TDS)                            

My Deposits 

The accommodation provder must protect the deposit with one of the above schemes within 30 days of the deposit being paid to them. They must then supply you with the following information:

• Amount of deposit.
• Address deposit relates to.
• Accommodation provider contact details.
• Scheme name and contact details.
• Leaflet on how the scheme works.
• Repayment procedure.
• Dispute procedure.
• What happens if either party cannot be contacted.
• Details of when all/part of the deposit can be retained.

If the accommodation provider fails to protect the deposit with one of the government authorised schemes or provide the deposit scheme details within 30 days of receiving the deposit, then you can apply to the county court for the deposit to be protected or returned to you. The court also has discretion to award you compensation of up to 3 times the amount of the deposit.

At the end of your tenancy your provider will inform the scheme that is protecting the deposit that the tenancy has come to an end and how much deposit they think should be returned to you. You will then have a choice whether to accept this or to dispute it through your tenancy deposit protection scheme.

An accommodation provider may want to take some of the deposit to pay for rent arrears or damage to the property which occurred during the tenancy. You should check your tenancy agreement carefully to ensure that you understand what maintenance you are responsible for during your stay and what the provider is responsible for.

If you and your landlord agree on the amount that will be returned then they must return your deposit within 10 days of agreement. If however, you are in a dispute over the amount of deposit to be returned, then it will be protected in the deposit scheme until the issue is resolved.

If there is a dispute between both parties as to how much deposit should be returned, then you can use the alternative dispute resolution (ADR) process operated by your tenancy deposit protection scheme. Please note, you have 90 days to raise a dispute with your deposit protection scheme from the date your tenancy agreement ends. The ADR will look at the evidence provided by you your accommodaiton provider and then make a final decision on how much deposit is to be repaid to you. If you or the provider do not agree to use the ADR process then the dispute must usually be resolved by the county court. In the case of a dispute, the deposit will be returned within 10 days of the scheme being notified of the ADR or county court's decision.

Check your inventory at the start of the tenancy to ensure any damage in the property or missing items are accurately recorded. If your accommodation provider does not provide an inventory, then write to them detailing any damage or faults.

• During your tenancy, always report disrepair or breakages to your provider immediately, preferably in writing.
• Try to keep your property clean and tidy during the tenancy as it is very difficult to remove 9 months of rubbish and grime in one last big clean!
• Check your tenancy agreement. Does it say the carpets need to be deep cleaned, or that all picture hooks need to be removed and filled in? If so, make sure these are sorted.
• Ensure nothing is missing or broken. Check the inventory thoroughly to make sure everything is as it should be, and replace or fix where required.
• Take dated photos as proof you have left the property in good order. These could be useful evidence later if a dispute arises over your deposit.
• Have a thorough deep clean.
• Take final meter readings to make sure that you only pay for what utilities you have used while you were living in the property. If you are unsure of the location of your meters, ask your provider.
• Return the keys to the provider and ask for a receipt or return the keys as per the conditions of the tenancy agreement.