Tenancy deposits in 2026: 8 rules landlords must know

Most landlords know they have to protect a tenant's deposit. Far fewer know exactly how the rules have shifted since the Renters' Rights Act took effect in May 2026, or how much a small paperwork slip can now cost them.

Deposit protection was never optional, but it has become higher stakes. Tenancies no longer end on a fixed date, possession claims now hinge on it in ways they did not before, and the penalties for getting it wrong are still severe. Here are eight rules every landlord letting a property in England needs to have straight.

1. You must protect the deposit within 30 days

Any deposit taken for an assured shorthold tenancy, or the assured periodic tenancies that have replaced them, must go into one of the three government-backed 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”, which explains which scheme holds the deposit and how disputes are resolved. Miss the deadline and you are already in breach, even if you protect it late.

2. The cap is still 5 weeks' rent, or 6 for higher-value lets

The maximum deposit you can take is 5 weeks' rent for tenancies where the annual rent is under £50,000, rising to 6 weeks above that threshold. Charging more is unlawful, and any excess has to be refunded. This cap has not changed under the new Act, but it is worth checking against your tenancy agreement if it was drawn up some time ago.

3. Holding deposits are a separate pot with their own rules

A holding deposit, taken to reserve a property while referencing is completed, is a different thing from the tenancy deposit and is capped separately at one week's rent. It must be refunded or credited towards the first month's rent once the tenancy starts, and can only be withheld in limited circumstances, such as a prospective tenant providing false information. Our guide to holding deposits sets out exactly when a landlord can and cannot keep one.

4. Non-compliance carries a real financial penalty

If a deposit is not protected, or the prescribed information is not served within 30 days, a tenant can apply to court for compensation of between one and three times the deposit amount, paid to them directly. This has not softened under the Renters' Rights Act. If anything, courts have less patience for landlords who treat deposit protection as a formality, given how central it now is to the wider system.

5. Deposit protection now gates most Section 8 claims

This is the change that has caught out the most landlords since May 2026. With Section 21 gone, possession now has to go through Section 8, and the Act added a new condition: you cannot get a possession order under almost any Section 8 ground unless the deposit is protected and the prescribed information has been served, whatever the reason for seeking possession. The only exceptions are the anti-social behaviour grounds. Our Section 8 guide covers how the grounds work in practice, but the short version is that a paperwork oversight at the start of a tenancy can block you from recovering the property later, however good your grounds are.

6. Rolling tenancies make good record-keeping more important, not less

Assured periodic tenancies have no fixed end date, so there is no natural point at which a check-out inspection is triggered. That makes it easy to lose track of the property's condition over what might be a tenancy running for several years. A detailed check-in inventory, dated photographs, and periodic condition updates (agreed with the tenant, not sprung on them) are the evidence that actually decides a deposit dispute. Without them, adjudicators tend to give the tenant the benefit of the doubt.

7. Disputes go to free adjudication, not court

If landlord and tenant cannot agree on deductions at the end of a tenancy, either side can refer the dispute to the relevant scheme's free alternative dispute resolution service rather than going to court. An adjudicator reviews the evidence, including the inventory, photos and any correspondence about damage or arrears, and makes a binding decision on how the deposit is split. This only works well if there is evidence to review, which is another reason rule 6 matters.

8. Deductions have to reflect genuine loss, not routine wear and tear

A deposit cannot be used to cover fair wear and tear, or to leave a property in better condition than it started in. Common mistakes include charging for full redecoration after normal use, or deducting cleaning costs without receipts or a professional clean at check-in to compare against. Tenants are increasingly aware of this distinction thanks to wider publicity around the Renters' Rights Act, so deductions that would once have gone unchallenged are now more likely to end up in dispute. Our explainer on tenant rights and responsibilities is a useful one to share with tenants at the start of a tenancy so expectations are clear from day one.

What this means in practice

None of these rules are new in principle, but the margin for error has shrunk. A missed 30-day deadline used to mean a compensation claim; it can now also mean losing a possession claim you might otherwise have won. For a full picture of how the wider Act affects your tenancies, our Renters' Rights Act landlord guide is kept up to date as each stage comes into force.

If you're managing deposit protection, inventories and disputes alongside everything else that comes with letting a property, it may be worth handing the admin over. Moovehub's tenant find service gets a compliant tenancy set up correctly from the outset, and our fully managed service takes care of deposit protection, inventories and dispute support for the life of the tenancy, so a paperwork slip never becomes a bigger problem than it needs to be.