There’s no need to reiterate how the Renters’ Rights Act is reshaping the private rental sector. While some changes are upfront and obvious, there are more subtle ripples into different corners, including deposits.

Although Matt Trevett, of the DPS, believes the Renters’ Rights Act will have a minimal impact on rental deposit protection, there is a clear shift in risk management – especially when it comes to addressing issues early and evidencing condition.

For starters, it’ll be hard to ignore what might happen at check-out if tenancies run for four or five years, or even longer. There’s the potential for fair wear and tear to become an even greyer area than it already is.

“The principle of fair wear and tear is consistently applied regardless of tenancy length,” says Trevett, but there is recognition that extended tenancies will blur the line.

“The DPS’s online guidance is published to help letting agents assess fair wear and tear relating to deposit deductions, and includes the lifespans of fixtures and fittings.”

The end to fixed-term tenancies has definitely brought residency durations into the spotlight.

The most recent English Housing Survey found private renters stay in the same property for an average of 4.7 years. It’s a figure that has been steadily rising and is expected to increase further, with anecdotal evidence suggesting landlords and tenants will stick together to avoid a now more complicated ‘churn’.

Savvy about the system

“Longer, periodic tenancies may actually reduce the number of tenancy endings each year,” comments Eddie Hooker at mydeposits.

“While this could reduce the number of deposits reaching the dispute stage, the Renters’ Rights Act is likely to make tenants more aware of their rights, and more confident in raising issues during and at the end of a tenancy.”

Hooker’s thoughts point to a new breed of empowered renters keen to question a deposit deduction they believe is unfair. This portent should shape how letting agents approach property management.

“Where disputes do arise, tenants are likely to be better informed and more willing to ask for evidence,” adds Hooker.

Evidence as the first line of defence

Agents know meticulous record keeping is good practice but perhaps there’s been room for laxness and leeway until now. As Hooker points out, deposit dispute adjudication is evidence-based, so vague descriptions or assumptions are unlikely to be enough moving forwards.

He says: “If a landlord wants to make a legitimate deposit deduction, they’ll need to show what the property was like at the start, what changed, why the tenant is responsible and how the amount claimed has been calculated.

“For letting agents, the answer is not to become more defensive but more professional and consistent. The strongest protection for landlords is clear evidence in the form of detailed check-in and check-out reports, dated photographs, mid-tenancy visits, and clear records of repairs and tenant communications. This helps build a reliable audit trail.”

In addition, Hooker says there must be good communication, fair decision-making throughout the tenancy, not just at check-out, and a commitment to discuss issues early so disputes can be resolved before they escalate.

Another adjudicator in the mix

The importance of evidence and audit trails will soon move up a notch as there will be another set of eyes examining deposit management. Although there is a question mark hanging over the role of the new PRS landlord ombudsman – specifically its position alongside the existing redress services offered by deposit protection schemes – letting agents should prepare for another layer of scrutiny.

Steve Harriott, of TDS, provides some clarity, saying: “Although the Government has not yet confirmed who will operate the new ombudsman, how it will work, what powers it will have or the full scope of disputes it will cover, existing tenancy deposit schemes will continue to provide resolution services where disagreements arise over the return of deposits.”

Harriott does say the new ombudsman could be given responsibility for complaints relating to whether deposit protection rules have been followed: “The ombudsman may handle deposit issues that currently fall to the courts but this has not yet been confirmed.”

Setting expectations from the start

Extra inspection and educated tenants leave no room for error, meaning letting agents need to handle deposits – and associated disputes – by the book, starting with tenancy agreements.

Contracts need to be clear and watertight. Model assured periodic tenancy agreements are a good starting point but Harriott cautions that clause additions and embellishments should only be undertaken to clarify statutory processes, rather than override them.

“Clauses should reaffirm that deposits must be protected in an approved scheme, that disputes are resolved through that scheme’s adjudication service and that deductions must be supported by appropriate evidence, such as inventories or invoices.

“The key principle is alignment with all legislation and deposit‑scheme rules. TDS recommends clear, plain‑English explanations that help landlords and tenants understand how the process works in practice. We have updated our suggested clauses via the Renters’ Rights Changes webpage and the TDS Help Centre.

“TDS will also work closely with Government, drawing on its extensive experience of resolving tens of thousands of disputes each year, to help ensure that any new arrangements are effective and well-co-ordinated with existing schemes,” adds Harriott.

Less admin, more cover

Ben Grech, of Reposit, acknowledges that letting agents find themselves in a more complex and compliance-driven sector, where even a minor administrative error can have far greater consequences than before. As such, the benefits of switching to a deposit-free renting system are emphasised, especially as Reposit recently integrated with mydeposits.

The starting point is Reposit’s cover for landlords worth up to eight weeks’ of rent, which compares to the five-week cap on traditional cash deposits.

“This provides greater reassurance at a time when longer tenancies may present more frequent condition disputes, and when regaining possession may take longer and rely solely on Section 8,” says Grech.

“And because no deposit is held, the regulations designed to protect a tenant’s money being held on account are not required, removing much of the admin and compliance risk at the start of a new tenancy.”

There’s also a simplification of the tenant onboarding process when you drop the deposit: “Reposit creates a clearer separation between pre-tenancy payments and the first month’s rent. This reduces the risk of tenants sending funds at the wrong time, which with the ban on rent in advance is another prominent compliance concern.”

It’s no wonder Grech has seen Reposit Switch become more popular in recent months. Letting agents can use the service to transition traditional cash deposit tenancies into deposit-free ones, using a non-refundable fee equivalent to one weeks’ worth of rent. Although the tenant pays the fee, they receive their much larger initial cash deposit back – a welcome injection of funds in a cost of living crisis.

Reducing letting agent administration is a theme shared at Zero Deposit, with quicker matches with tenants, faster move ins and simpler check outs. Of course, disputes can still happen with deposit-free renting so Zero Deposit has partnered with TDS, who will step in and adjudicate when the letting agent can’t find a resolution.

“Deposit alternative products are becoming increasingly more attractive, especially as agents face less predictable tenancy lifecycles,” comments Zero Deposit’s Sam Reynolds. “The extended cover provided by deposit-free alternatives, when compared to cash deposits, is a smart way to manage risk and we are seeing strong growth in demand as a result.”

Appealing to tenants too

Reynolds adds that deposit-free renting supports stronger commercial outcomes for letting agents and helps bridge the gap in lost revenues.

“When tenants are given the choice, more than 80% choose our product thanks to the reassurance of a fully-regulated product and the radically lower upfront cost of our monthly pricing option. This keeps deals moving and broadens the applicant pool for agents.”

The 80% is based on internal company data relating to 2025 conversion rates from introduction to sale.