"The changes introduced under the Renters' Rights Act may appear relatively minor operationally, but they create a genuine compliance risk for agents if internal processes haven't been updated accordingly"
- Chris Mason - The Letting Partnership
Letting agents in England are now responsible for handling almost 70% of all protected tenancy deposits, and new rules introduced under the Renters' Rights Act could be creating a significant compliance gap around how and when those deposits are registered. That is the warning from The Letting Partnership, whose analysis of deposit protection data across England points to a growing risk that registration deadlines are being missed.
The firm estimates that agents handled 2.98 million protected deposits in 2025 alone, representing 69.5% of all deposits protected during the year. The number registered by agents has grown at an average annual rate of around 3% since 2021, concentrating an increasing volume of client money within the agency sector.
The compliance concern centres on changes to tenancy completion processes that came into force on 1 May 2026. Under the new rules, agents can no longer collect rent before a tenancy agreement has been signed by all parties. Deposits, however, can still be taken before signature, creating a new operational sequence in which agents may receive a deposit before the tenancy agreement is executed and before the tenancy formally begins.
The problem is that the 30-day deadline for tenancy deposit registration runs from the moment funds are received, not from the tenancy start date. If an agency's software or internal workflows are set up to trigger registration from tenancy activation or commencement dates, the deadline could be missed without anyone realising.
The risk is most acute where there is a gap between deposit receipt, agreement execution and tenant move-in, a scenario that The Letting Partnership expects to become more common under the new process.
"The changes introduced under the Renters' Rights Act may appear relatively minor operationally, but they create a genuine compliance risk for agents if internal processes haven't been updated accordingly," said Chris Mason, chief operating officer at The Letting Partnership.
"Where agencies are now taking deposits before tenancy agreements are signed, there is a risk that deposit registration deadlines are being triggered earlier than some systems or workflows are designed for. If those triggers are linked to tenancy start dates rather than receipt of funds, agents could find themselves breaching registration requirements without immediately realising it.
"Given that letting agents are now responsible for handling almost 70% of all protected deposits across England, this is fundamentally a client money handling issue. The agencies that avoid problems will be those that have reviewed their workflows, software processes and accounting controls to ensure they reflect the new tenancy timeline under the legislation."
The Letting Partnership says the issue represents a material compliance risk for the sector if processes are not reviewed and updated quickly, particularly given the volume of client money now flowing through agency hands.
