#AskTDS: How do tenancy renewals affect the deposit cap?

AskTDS_12.06.2020 (1)

A year ago, the new Tenant Fees Act came into effect in England banning landlords from charging fees for anything other than rent, tenancy deposits and contract default.

On the 1st September 2019, landlords in Wales were also prohibited from charging some fees in the Renting Homes (Fees etc.) (Wales) Act 2019. You can see the full differences between the two laws in the TDS Fees Ban Matrix.

With the Tenant Fees Act came the deposit cap (in England only) that set a limit on how much landlords could charge tenants for a deposit. The cap was set at five weeks’ rent for properties with an annual rent up to £50,000 or six weeks’ rent where the annual rent is £50,000 or more.

As of the 31st May 2020, the transition period for the fees ban ended in England. This means that from the 1st June 2020, the fees ban applies to all tenancies.

So, how does this affect renewals and tenancy deposit protection?

Firstly, landlords and letting agents in England can no longer charge renewal fees – even if the tenancy was entered into before 1st June 2019.

If you now find yourself in the situation of renewing a tenancy and you’re confused about how that affects the deposit cap, here’s what you need to know:

In the case of renewals, if the deposit is now higher than the five or six-week cap, you will need to calculate the difference between the deposit you are holding and the capped limit, and refund that back to the tenant.

On the Tenancy Deposit Scheme (TDS) Website, there is a handy Deposit Cap Calculator to simplify this for you.

How to calculate the deposit cap for renewals

If you protect your tenant’s deposit in the TDS Custodial scheme, it’s easy to calculate and action the renewal. Simply login to your account and go to the deposit summary page. Choose the ‘change deposit amount’ option and use the instant calculator to check how much the new deposit should be in accordance with the deposit cap.

You can also refer to the online Deposit Cap Guide from Tenancy Deposit Scheme, which shows what you need to do after the 31st May 2020. You’ll find the instant online Deposit Cap Calculator on the tab in the footer of the guide too.

If you aren’t a member of TDS Custodial and would like to know more about the benefits of joining the free tenancy deposit protection scheme, you can read more here: Why Switch to TDS Custodial?


About Tenancy Deposit Scheme (TDS)

Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.

We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.

Join TDS Custodial for FREE today

TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.

These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.

NRLA: If you are a landlord and would like to keep up to date with any changes that may affect you or your responsibilities, you can receive 25% off your first year’s membership when joining here.