Using the deposit to cover rent arrears

A deposit deduction for rent arrears is made through your deposit protection scheme's process, usually when the tenancy ends, and any dispute goes to the scheme's dispute service. It depends on the tenancy agreement and the prescribed information you gave the tenant, which had to set out the reasons you may keep some of the deposit. Because a deposit is capped at 5 weeks' rent for most lets, it rarely covers serious arrears, so plan to claim the rest separately.

This page covers private landlords in England. For the wider steps, see the rent arrears guide.

How a deposit deduction for rent arrears works

1. Confirm the tenancy has ended. A tenant moving out doesn't end an assured tenancy by itself; it ends by valid notice, surrender or an enforced possession order.
2. Draw up a final rent schedule to the end date: rent due, payments made, running balance. Since 1 May 2026 you must repay rent paid for days after the tenancy ended, so apportion the last period.
3. Check what you're allowed to deduct. Your tenancy agreement and the prescribed information list the reasons you may keep some of the deposit.
4. Propose the deduction to the tenant in writing, with the schedule.
5. If you agree, release the deposit through the scheme with the agreed split.
6. If you don't agree, use the scheme's dispute service and send your evidence.

Each scheme sets its own procedure and timescales. Follow your scheme's current rules.

Scheme	Website
Deposit Protection Service (DPS)	depositprotection.com
MyDeposits	mydeposits.co.uk
Tenancy Deposit Scheme (TDS)	tenancydepositscheme.com

Why the deposit rarely covers serious arrears

Under the Tenant Fees Act 2019, a deposit can't be more than:

• 5 weeks' rent where the annual rent is under £50,000; or
• 6 weeks' rent where the annual rent is £50,000 or more.

Compare that with the Ground 8 threshold for serious arrears:

Rent	Maximum deposit (5 weeks)	Ground 8 threshold
£250 a week	£1,250	£3,250 (13 weeks)
£400 a week	£2,000	£5,200 (13 weeks)

With monthly rent the cap is still 5 weeks' rent, a little more than one month's rent, while Ground 8 needs 3 months'. By the time arrears are serious, the deposit covers only part of them. And if you also need to deduct for damage or cleaning, less is left for rent. While the tenant is still there, the rent arrears calculator shows how far the arrears are from the Ground 8 threshold.

Worked example

Rent is £250 a week and you hold a protected deposit of £1,250. The tenancy ends with £3,900 of rent unpaid.

	Amount
Rent arrears at the end of the tenancy	£3,900
Deduction agreed with the tenant through the scheme	− £1,250
Balance still owed	£2,650
Money claim issue fee for £1,500.01 to £3,000 (from 13 July 2026)	£115

The balance can be pursued with a letter before claim and a money claim; see recovering arrears after the tenant has left.

Check your deposit was protected properly

Before relying on the deposit, check you met the rules in the Housing Act 2004:

• Protected in an authorised scheme from the moment you received it.
• The scheme's initial requirements met within 30 days of receipt.
• The prescribed information given to the tenant, and anyone who paid on their behalf, within 30 days.
• No non-money deposit (these are banned).

If you got this wrong, two things follow:

• A penalty claim. On the tenant's application, the court must order you to pay not less than 1 and not more than 3 times the deposit, and deal with its repayment. Former tenants can apply after the tenancy has ended.
• A bar on possession. Since 1 May 2026, the court can only make a possession order on most grounds if the deposit is protected, the scheme's initial requirements are met (even if late) and the prescribed information has been given. Grounds 7A and 14 are the exceptions.

The possession bar lifts if the deposit is returned in full or with agreed deductions, or if a tenant's penalty claim has been decided, withdrawn or settled. So if protection went wrong and you're seeking possession, agreeing a deduction for arrears and returning the rest can clear the way for the order. Take advice on the penalty risk at the same time. See deposit protection and prescribed information.

If the tenant is still in the property

While the tenant is still in the property, you can add the arrears to your possession claim, with no extra court fee. If you still hold the deposit at the hearing, GOV.UK says you must prove it is protected, that you're following the scheme rules and that the prescribed information was given. When the tenancy ends, deduct what you can through the scheme and enforce the money order for the balance only.

Common mistakes

• Deducting without the tenant's agreement or the scheme's process.
• Counting charges that aren't rent under the tenancy agreement as rent arrears.
• Forgetting to apportion the final rent period and repay any overpaid days.
• Missing the scheme's deadlines for raising a dispute.
• Assuming an unprotected deposit can simply be kept against the arrears.

What to do next

Check your deposit paperwork against deposit protection and agree the deduction through your scheme. For any balance, read Money Claim Online for rent arrears, or the wider guide to recovering arrears after the tenant has left.