How Much Deposit Can I Charge Under the Renters' Rights Act 2025?

If you are letting a property in London and trying to work out what you can ask for at the start of a tenancy, the deposit is usually the first figure people reach for. The good news is that the rules here are clear and have not been rewritten by the Renters' Rights Act 2025. The cap on what you can take is set by the Tenant Fees Act 2019, and that remains in place. What has changed is the wider tenancy framework around the deposit, and a few habits that landlords used to rely on are no longer available. This guide sets out the limits plainly and points to the things that quietly catch people out.

The deposit cap depends on the annual rent

There are two figures to know. Where the annual rent is under £50,000, the maximum security deposit you can take is five weeks' rent. Where the annual rent is £50,000 or more, the maximum is six weeks' rent. The threshold is the yearly rent, not the monthly figure, so it is worth doing the arithmetic carefully before you agree anything with a tenant.

To convert a monthly rent into a weekly figure for the cap, multiply the monthly rent by 12 and divide by 52. Round down rather than up if you want to stay comfortably inside the limit. Taking more than the cap is not a grey area; it is a breach, and it can affect your ability to recover possession later, so it pays to get the number right at the outset.

A holding deposit is a separate, smaller figure

Before the tenancy itself begins, you may take a holding deposit to reserve the property while references are carried out. This is capped at one week's rent and is distinct from the security deposit. It is the only other payment of this kind the law permits at this stage. Under the Tenant Fees Act 2019 you cannot charge tenants for referencing, administration or other set-up fees, so the holding deposit and the security deposit are effectively the whole picture.

If the tenancy goes ahead, the holding deposit is normally put towards the first rent or the deposit. If it does not go ahead, the rules on when you may retain it are specific, and you should follow them rather than assume the money is yours to keep.

Protecting the deposit is not optional

Once you hold a security deposit, you must protect it in one of the three government-approved schemes: the Deposit Protection Service, MyDeposits or the Tenancy Deposit Scheme. You have 30 days from receiving the money to protect it and to give the tenant the prescribed information that explains where it is held and how it can be returned.

Missing this step is one of the more expensive mistakes a landlord can make, because it can lead to a financial penalty and can also block certain possession routes. Getting deposit protection right sits alongside your other core duties, and it is worth reviewing it as part of your wider legal obligations as a London landlord rather than treating it as a one-off task.

What the Renters' Rights Act 2025 actually changes around deposits

The Act, in force from 1 May 2026, did not move the deposit cap. What it changed is the shape of the tenancy itself. Fixed-term assured shorthold tenancies have been replaced by periodic tenancies that roll month to month, and Section 21 'no-fault' eviction has been abolished, with possession now available only through the Section 8 grounds. That reframes how you think about the deposit, because it now sits against an open-ended tenancy rather than a fixed contract.

There is also a related point worth flagging. The amount of rent a landlord can ask for before a tenancy begins is now restricted, broadly to no more than one month's worth, and rental bidding is banned, meaning you must advertise an asking rent and cannot invite or accept offers above it. The deposit therefore cannot be quietly inflated, and the figures you set out at the start need to do the work on their own. If you want the fuller picture of how the new regime fits together, our overview for London landlords on the Renters' Rights Act 2025 walks through it in plain terms.

How the deposit fits into setting up a tenancy properly

The deposit is one item on a longer checklist. Before a tenancy begins you will also need a valid Energy Performance Certificate, a current Gas Safety Record from a Gas Safe engineer, an Electrical Installation Condition Report, and the right alarms fitted on every storey. You must also carry out a Right to Rent check on the tenant before letting. The deposit cap is easy to state, but it only protects you if the rest of the foundations are in place.

It also helps to keep an honest inventory at check-in. The deposit only does its job at the end of a tenancy if you can evidence the condition the property was let in. A clear inventory, supported by dated photographs, is what turns a deposit from a number on a contract into something you can actually rely on if there is a dispute.

A note on tax and getting advice

If you are an overseas landlord, the deposit rules are the same, but there are separate tax considerations under the Non-Resident Landlord Scheme that sit outside the deposit question entirely. The deposit cap itself does not change based on where you live. This is general information rather than tax or legal advice, and for anything specific to your circumstances a qualified professional or solicitor is the right port of call.

Deposits are one of the more settled parts of letting in London, which is a relief given how much else is in flux. If you would like a second pair of eyes on the numbers, or help making sure the deposit, protection and prescribed information all line up before a tenancy starts, we are always happy to talk it through with no obligation. You can read more about how a letting agent supports landlords if you are weighing up whether to handle it yourself or have someone manage it for you.