A tenancy deposit is a standard part of renting a home. It gives landlords some peace of mind if damage occurs or rent goes unpaid. But as a landlord in Lancaster, getting it wrong can be expensive and stressful.
Mistakes around tenancy deposits are one of the most common reasons for disputes and legal trouble.
Whether you’re self-managing or working with a letting agent in Lancaster, these are the three most common tenancy deposit mistakes – and some straight-talking advice on how to fix them before they snowball into bigger issues.
- Not protecting the deposit on time
One of the biggest pitfalls for landlords is failing to protect the deposit within the 30-day legal window. If you’re late or miss a step, you could face:
- Fines of up to three times the deposit amount
- Losing the right to serve a valid Section 21 notice
- A prolonged and costly dispute with your tenant
Here’s what you need to do:
- Use a government-approved scheme (like TDS, DPS, or MyDeposits)
- Protect the deposit within 30 calendar days of receiving it
- Give the tenant a copy of the Prescribed Information, including:
- Deposit protection certificate
- Scheme leaflet or terms
- How the scheme works
- What happens at the end of the tenancy
Quick fix: If you’ve missed the 30-day window, act fast. Protect the deposit straight away and serve the Prescribed Information. You may still be penalised, but a court could look more favourably if you show you’ve rectified the mistake.
- Returning the deposit late, or not at all
Once a tenancy ends, some landlords are unsure what to do next, especially if there’s some wear and tear or damage. Dragging your feet can backfire. Tenants are entitled to have their money back quickly, and if they don’t, they can raise a dispute with the deposit scheme, which means time, stress and paperwork for you
Avoid this with a clear process:
- Carry out a thorough check-out inspection
- Compare the check-out report with the original inventory
- Note any damage beyond fair wear and tear
- Calculate and propose any fair deductions
- Return the undisputed portion of the deposit within 10 days
Top tip: Make sure your inventory is detailed and includes photos. Without this, it’s hard to justify deductions, and you could lose a dispute by default.
Quick fix: Already in a dispute? Provide as much evidence as you can including before and after photos, inventories, tenancy agreements and communications. This helps your case.
- Holding too much deposit
Since the Tenant Fees Act came into effect in 2019, deposit amounts are capped:
- Up to 5 weeks’ rent for properties under £50,000 annual rent
- Up to 6 weeks’ rent if annual rent is £50,000 or more
This rule applies to most Assured Shorthold Tenancies (ASTs) in England.
What to do:
- For new tenancies: Stick to the deposit cap, or risk penalties
- Refund any amount over the cap
Quick fix: If you’re unsure, check the tenancy start date and terms.
How to stay on the right side of deposit laws
A quick recap to keep things simple:
- Protect the deposit within 30 days using a government scheme
- Give the tenant all required paperwork (Prescribed Information)
- At the end of the tenancy, carry out a thorough check-out
- Make fair deductions and return the rest quickly
- Stick to the deposit cap rules (and refund any excess if needed)
Looking for help with the management of you tenancies?
At Property23 we help landlords manage tenancies, all day every day, avoiding headaches and staying on the right side of the law. Whether you’re letting out one property or a whole portfolio, we’ve got your back.
Get in touch on 01524 969778 or send us an email: hello@property23.co.uk. We’ll help you stay compliant and confident with every tenancy.
In the meantime, we’ve answered some common questions about tenancy deposits.
Frequently Asked Questions
What if my tenant refuses the deposit deductions?
You’ll need to raise a dispute with the deposit protection scheme. They’ll act as an impartial adjudicator and ask for evidence from both sides.
Can I keep the deposit if the tenant owes rent?
Yes but only if you’ve documented it properly. Always send a written breakdown showing what’s owed and how the deposit covers it.
Do I need to protect a holding deposit?
No, holding deposits aren’t protected under the same rules. But if it’s converted into a tenancy deposit once the tenancy starts, that’s when protection rules kick in.