Tenancy deposits in Britain and international comparison

Overview

Rent rises across the private rented sector (PRS) have meant increasingly high costs at the beginning of a tenancy, with rents increasing by around £300 on average over the past five years. Along with upfront rent and moving costs, the tenancy (or ‘security’) deposit adds considerable strain to renters’ finances when moving home. Generation Rent estimates these costs can total around £2,200. The tenancy deposit typically represents four weeks’ rent, totalling an average of £1,118 in England and Wales in 2024. Deposits are capped at a maximum of five weeks’ rent in England and two months’ rent in Scotland. However, most of those moving from a previous rented home have paid another deposit, which is usually not returned in time to cover their new tenancy.

While it is a legal requirement for these deposits to be protected in a deposit protection scheme, evidence from the English Private Landlord Survey shows that a minority of landlords and agents continue to flout the law. Even where deposits are protected, tenants can often experience long waits for the return of their money, or face claims upon it from landlords that they feel are unreasonable. Disputes relating to these claims is an area on which little research exists, with anecdotal evidence showing varied experiences. Generation Rent is finding out more about tenants’ experiences of paying deposits, including a survey of its supporters and a series of focus groups with renters across Britain. This report presents the findings of this element of the research.

Key findings

Affordability and costs

Tenants face significant financial pressure at the beginning of a tenancy, with rent, deposits and other moving costs contributing to high upfront costs. In our survey, tenants were asked how they met these costs at the beginning of their current tenancy. Nearly a third (32%) of respondents had to dip into their savings to cover these expenses, while a quarter of tenants had to borrow money from friends or family. For 14% of tenants, credit became a lifeline, whether through credit cards, overdrafts, or loans. Only 29% of tenants were in a position to comfortably cover these costs from their current account.

Upfront costs at the beginning of a tenancy were a common problem amongst focus group participants also. Many tenants said that these costs were stopping them being able to move within the PRS, with the deposit being a significant burden that adds to rent and other fees.

Rent rises in recent years, and the consequent increased deposit costs, were also repeatedly noted as a significant concern. As one participant in their late 30s said, ‘with rent rises [deposits are] just more and more money each time, and it just feels insurmountable’.

End of tenancy deposit deductions

The tenancy deposit remains a significant proportion of upfront costs for many renters, particularly as most will be beginning a new tenancy before they have received their previous deposit back. 74% of tenants responding to our survey reported that, for their previous tenancy, they paid the full deposit. 3% reported that they paid a smaller one-off fee or a regular payment instead of a deposit. 82% of tenants reported they paid a deposit at the beginning of their current tenancy, while 4% paid an alternative. Deposit ‘alternatives’ include Financial Conduct Authority-backed insurance products, however, most schemes are unregulated. Many deposit ‘alternatives’ require tenants to pay an upfront fee (often equivalent to one week’s rent) or a monthly fee instead of a deposit. These fees are predominantly non-refundable.

While more than half (56%) of renters who had paid the full deposit for their previous tenancy received their full deposit back, others faced various challenges. Almost a quarter of tenants did not get all of their deposit back and did not think the deductions were reasonable. Of these, over one in five renters used the deposit scheme’s dispute resolution service.

Deposit disputes

Since 2012 in England and Wales, and 2017 in Scotland, landlords have been legally required to protect most tenants’ deposits with a deposit protection scheme. In the survey, PRS tenants who had previously rented and paid the full deposit were asked if their landlord protected their deposit in a protection scheme. 62% said that their landlord had protected it, while 17% said they had not, and 20% said they didn’t know or couldn’t remember.

The survey asked why those private tenants who had previously rented in the PRS, and who paid the full deposit, did not dispute unfair deposit deductions. 34% of respondents in this group did not dispute claims on their deposit because they didn’t think they had enough evidence, because they thought it would take too long, or because they thought it would be unfair, highlighting a lack of faith in the process. 5% of tenants did not dispute because their landlord threatened to make larger deductions, while 8% said that their landlord refused to use the dispute process. Concerningly, 18% of respondents could not dispute deductions because their landlord had not protected their deposit.

The survey asked why those private tenants who had previously rented in the PRS, and who paid the full deposit, did not dispute unfair deposit deductions. 34% of respondents in this group did not dispute claims on their deposit because they didn’t think they had enough evidence, because they thought it would take too long, or because they thought it would be unfair, highlighting a lack of faith in the process. 5% of tenants did not dispute because their landlord threatened to make larger deductions, while 8% said that their landlord refused to use the dispute process. Concerningly, 18% of respondents could not dispute deductions because their landlord had not protected their deposit.

International policy comparison

Wider evidence, as well as research by Generation Rent, clearly demonstrates that private rental tenants continue to struggle with meeting housing costs, particularly at the beginning of a tenancy. A large part of these high upfront costs consists of the tenancy (or ‘security’) deposit, with the average deposit in England and Wales totalling £1,118. The deposit is set at a maximum of five weeks’ rent in England and two months’ rent in Scotland. The average private rented sector (PRS) rent in Britain was £1,332 at the beginning of 2025, while almost 60% of landlords reported having increased rents in their most recent tenancy. Finding the money for deposits, the impact of their cost on other parts of life, and the delays and deductions that can occur in the return process, all create significant difficulties for tenants. Despite this, deposits and their protection are rarely the focus of research. With the deposit schemes for England and Wales under review, ministers have an opportunity to look to other countries for policies that overcome the hurdles tenants face in exercising our rights, and to make the most of tenants’ locked-up wealth.

This report presents the results of the first phase of Generation Rent’s research into the system of tenancy deposit protection in Britain. This seeks to understand what changes could be made to minimise costs and financial uncertainty for tenants when moving home and starting a new tenancy in the PRS. Employing a mixed-methods framework, the research takes stock of how well the system serves tenants, as well as what can be learnt from other jurisdictions in order to improve outcomes in Britain. The report first provides an overview and background to Britain’s current deposit protection system, as well as issues with it identified from the literature. The report then examines policies relating to tenancy deposits in other countries: some with similar rental markets to the UK such as Australia, New Zealand/Aotearoa, Canada, USA and Ireland; some which are less similar (Netherlands and Germany). Results of the second phase of the research, based on a survey of over 1300 of Generation Rent’s supporters and a series of focus groups with tenants, is published alongside this report.