buy-to-let rental contract rental yields

Tenant deposits could be capped at three weeks under Labour

Opinions across the housing industry are decidedly mixed on the upcoming Tenant Fees Bill, which proposes a six-week cap on tenant deposits as well as a letting fees ban – but Labour wants deposits reduced even further.

The Tenant Fees Bill is expected to cause a major shake-up in the private rented sector (PRS) for both tenants and landlords, as well as letting agents, with the aim of making the whole process fairer and more transparent.

Some of the measures, such as banning letting agency fees altogether and capping tenant deposits at six weeks’ rent, have been controversial in parts of the sector, while others have praised the proposals for providing a fairer deal to tenants.

However, Labour has come forward with a further suggestion to the current Bill, arguing that deposits should actually be capped at a maximum of three weeks’ rent.

Melanie Onn, shadow housing minister, said in a tweet last week: “Labour is fighting for a new three-week limit for rent deposits.

“The current deal for private renters is unacceptable – Labour in government would do more to protect them.”

Landlords might be worse off under this proposal

But the issue many have with Labour’s proposal is that it is too extreme, and unfair on landlords who need the security of a full tenant deposit to cover the costs if the tenant leaves the property without paying the last month’s rent, or leaves it in a state of disrepair – or both.
[crb_image link=”” image=”” align=”left”]
Having a six-week deposit goes some way towards mitigating this risk for landlords. Furthermore, with many expecting letting agents to pass on the cost of the fees ban to landlords by upping their bill, hitting landlords with a reduced security deposit, although making things cheaper and potentially fairer for tenants, could be a step too far in the opposite direction.

David Cox, ARLA Propertymark chief executive, said: “As I laid out to the Public Bill Committee on Tuesday, the purpose of the deposit is to mitigate against unpaid rent and damage to the property. Many tenants do not pay the last month’s rent which is then covered by the security deposit.

“This amendment won’t allow for that, which risks leaving a landlord without the full final month’s rent or repairs for any damage. It’s not clear how this proposal of three weeks’ deposit has been worked out.”

The Bill is currently at committee stage having passed a second reading by Parliament, and is receiving submissions until 12 June.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:


Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment


Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:


+44 (0) 333 123 0320

Open from 9am-6pm GMT


+852 6699 9008

Open from 9am-6pm HKT