Government sets rules on deposits and rent-in-advance for landlords in Renters’ Rights Act

The government has issued guidance to help landlords understand the rules they must follow when requesting rent at different stages of a tenancy under the Renters’ Rights Act.

Under new rental bidding guidance, landlords need to be aware of the types of deposits they are allowed to request from tenants.

The government warns landlords they could face fines of up to £7,000 for asking for rent in advance.

Renters’ Rights Act does not change what will count as a valid deduction from a deposit

Under the guidance, the government says landlords and letting agents will be able to ask the tenant for the following deposits:

• a holding deposit (this can be up to one week’s rent), to reserve the property while you carry out checks
• a tenancy or security deposit before the tenancy agreement is signed

The maximum tenancy or security deposit you will be able to ask for is:

• up to 5 weeks’ rent if the rent for the year is less than £50,000
• up to 6 weeks’ rent if the rent for the year is £50,000 or more

However, the government says that if your tenant has paid a deposit, a court will only grant a possession order to evict them if you have put the deposit into a government-approved tenancy deposit scheme.

In a clarification from the Ministry of Housing, Communities and Local Government, they told Property118: “The Renters’ Rights Act will allow a court to award possession if the landlord has stored a tenancy deposit in a government-approved scheme (and complied with related legal requirements), or returned the deposit to the tenant, either in full or with deductions as agreed between the tenant and landlord.

“The court can also award possession if a separate, specific court process has been undertaken to determine whether the deposit was stored appropriately.

“The Renters’ Rights Act does not change what will count as a valid deduction from a deposit, which includes unpaid rent and bills.”

Only in certain circumstances landlords can ask for more than one month’s rent in advance

Before the tenancy starts, the government guidance says that if a tenant will be paying their rent monthly, landlords will be able to ask them to pay their first month’s rent at any time during the ‘pre-tenancy’ period.

If the tenant will be paying their rent weekly, landlords will be able to ask them to pay rent for up to the first 28 days of the tenancy.

Landlords will not usually be able to ask the tenant to pay more than these amounts.

However, landlords will be able to ask the tenant for more than one month’s or 28 days’ rent in advance after the tenancy agreement has been signed.

Landlords will only be able to do this if:

• The tenancy was agreed by the local council because the tenant was legally homeless
• The property will be let as either social or supported housing

Landlords could face fines of up to £7,000

Landlords need to be aware that they could face hefty fines of up to £7,000 if they ask tenants for rent in advance, as councils can take action against landlords who request rent before the tenancy agreement has been signed.

Landlords and letting agents could still be reported if the tenant:

• Did not agree to pay rent in advance despite being asked, invited, or encouraged to do so
• Offered to pay rent in advance, which the landlord then accepted
• Has already moved in

The government has drafted guidance on what landlords and letting agents must do when advertising a property, including how much rent will be charged. After publishing an advertised rent, landlords will not be allowed to:

• Ask for offers above the advertised rent
• Publish a price range and ask tenants to bid within or above that range
• Ask for best and final offers
• Encourage someone to offer more than the advertised rent
• Tell someone that other bids have been received to encourage higher offers
• Act in any way that leads someone to believe they need to offer more than the advertised rent
• Accept an offer to pay more than the advertised rent

If someone offers more than the advertised rent:

• You cannot accept it
• You may be reported to the local council, even if the tenancy agreement has already been signed

If a report of ‘rental bidding’ is made, the council may request:

• Evidence of the advertised rent
• The tenancy agreement
• A statement from the landlord

If the council determines that rental bidding has occurred, they may issue a civil penalty notice of up to £7,000 for a first offence.

Landlords could face additional fines for a ‘repeated breach’ if the same offence is committed within five years:

The government has given this example as guidance: A landlord advertises a property without including the rent in the advert and is fined up to £7,000. Two years later, the same landlord advertises another property without including the rent. They could be fined up to £7,000 for the second breach and another £7,000 for a repeated breach, potentially paying a total of £21,000 for the two offences.

It is not considered a repeated breach if the reports relate to different types of offences.

Property118 commercial reality check

The new guidance adds yet another layer of rules around deposits, rent-in-advance and advertising conduct. The volume feels excessive for landlords already running tight, compliant operations. The commercial reality is that councils now have sharper enforcement tools and landlords must protect themselves through documentation, precision and consistency.

What serious landlords should do next

Create a verification file for each tenancy. Bring the advert, tenancy agreement, deposit certificate, rent schedule and key pre-tenancy communication together so you can evidence compliance instantly.

Strengthen your advertising controls. Confirm the rent figure, confirm the absence of bidding language and confirm all text matches the final rent you intend to charge. This prevents avoidable penalties and protects your credibility.

Define your rent-request protocol. Record the moment rent is requested, agreed and received. Clear sequencing avoids disputes and shows you operated within the rules.

Set clear expectations for agents and staff. Provide written instructions on deposits, rent-in-advance rules and advertising standards. Check their execution. Delegating does not remove accountability.

Advantage through professionalism

Regulatory noise is constant, yet the landlords who stay organised, documented and commercially alert outperform those who rely on informal routines. Structure protects income and reduces unnecessary confrontation.