The deposit cap: five weeks rent explained

Why it matters

An overcharged deposit is a prohibited payment, which can trigger a financial penalty from the local authority and blocks certain possession steps until it is repaid.

Legal requirements

• Five weeks rent is the cap where annual rent is under fifty thousand pounds.
• Six weeks applies where annual rent is fifty thousand pounds or more.
• The excess above the cap is a prohibited payment and must be repaid.
• Holding deposits are capped separately at one week of rent.

Common mistakes

• Dividing monthly rent by four to reach a weekly figure.
• Charging a higher deposit because the tenant has a pet, which the cap does not permit.
• Adding a separate cleaning or key deposit on top of the capped amount.
• Failing to refund the excess promptly once an error is spotted.

Practical guidance

• Calculate as monthly rent multiplied by twelve, divided by fifty two, multiplied by five.
• Round down rather than up so you stay safely inside the cap.
• Use insurance and stronger referencing rather than a bigger deposit for higher risk lets.
• Record the calculation in the tenancy file so it can be shown on request.

Worked calculation

For rent of twelve hundred pounds a month, the annual rent is fourteen thousand four hundred pounds. Divided by fifty two that is roughly two hundred and seventy six pounds and ninety two pence a week. Multiplied by five the cap is about one thousand three hundred and eighty four pounds. Taking one thousand five hundred pounds because it is a round number puts you over the cap and creates a prohibited payment.

Managing risk without a larger deposit

Since you cannot take more money, manage risk in other ways. Reference properly, use a guarantor with a written guarantee where affordability is tight, consider rent guarantee insurance, and inspect regularly so problems surface early. Under the reformed regime you also cannot charge more because a tenant has a pet, although pet damage insurance arrangements are part of the policy discussion, so keep an eye on the commencement detail.