Only one in nine landlords believe the five-week deposit cap gives them adequate financial protection, and nearly four in ten tenants say they do not know they can formally challenge deposit deductions, according to research from LRG.
Property services group LRG drew on responses from 717 landlords and 860 tenants across England and Wales for its latest Lettings Report. The report found deposits a pressure point on both sides of the market, with landlords seeking greater security and tenants unaware of rights that already protect them.
The Tenant Fees Act 2019 introduced the five-week deposit cap. Landlords surveyed gave the following views on it:
- 11% say it provides sufficient protection
- 34% say it covers most tenancies but not all
- 30% say it is not enough in any circumstances
A further 14% say the cap falls short where a pet is involved, and 12% say they now rely more heavily on rent guarantee insurance as a result.
Deposits have risen in value over the same period. The Tenancy Deposit Scheme’s 2024/25 statistical briefing reports that 4.7 million deposits are now protected in England and Wales, with the average deposit rising to £1,175 as rents climbed. The deposit cap remains at five weeks regardless of property or risk.
For tenants, the deposit is a significant upfront cost at the point of moving. Of those surveyed, 44% said raising their last deposit was manageable but required planning. Another 21% borrowed money or delayed other spending to cover it, and 11% said it nearly stopped them moving. Only 24% found it straightforward.
Deposit replacement products, where tenants pay a smaller non-refundable fee in place of a full cash deposit, could ease that pressure. However, 26% of tenants did not know the option existed. Among those who did, 31% said they would possibly consider one depending on cost, 17% would actively prefer it, and 13% have already used one. LRG’s report concludes that awareness, rather than appetite, is limiting uptake.
The largest knowledge gap in the survey concerned dispute rights. While 38% of tenants said they did not know they can formally challenge deductions through a government-backed scheme, a further 25% had partial awareness without the full details.
Landlords fared better but not fully, with 22% unaware that tenants hold this right and 32% holding only partial knowledge of the process. Disputes are rare in practice. The Tenancy Deposit Scheme reported that just 1% of protected deposits needed formal adjudication in the twelve months to March 2025, with cleaning the most common source of dispute at 54% of cases.
“Deposits sit at the heart of the landlord-tenant relationship, and the data shows both sides have legitimate concerns that are not always being addressed,” said Allison Thompson, chief lettings officer at Leaders (pictured).
“Landlords feel the five-week cap leaves them exposed, particularly where pets or higher-risk tenancies are involved. Tenants often do not know they can challenge deductions or that alternatives to a full cash deposit exist.
"That is a gap agents are well placed to close. Clear communication at the start and end of every tenancy – about rights, responsibilities and the options available- could resolve a significant number of concerns before they ever become disputes.”
