Agents warned about deposit registration risk in new tenancy rules
The Renters’ Rights Act has created a compliance risk for agents if deposit processes aren’t updated, warns The Letting Partnership’s Chris Mason.
Almost 70% of all protected tenancy deposits in England are being handled by letting agents, raising concerns that some companies could inadvertently breach deposit registration rules under the Renters’ Rights Act.
Analysis by The Letting Partnership estimates agents handled 2.98 million protected deposits in 2025, accounting for 69.5% of all deposits protected during the year.
Changes introduced on 1 May prevent agents from collecting rent before a tenancy agreement has been signed by all parties, although holding deposits can still be taken beforehand.
The accounting and client money protection specialist says the changes could create problems for agencies where systems and workflows have not been updated to reflect when holding deposits are allocated towards tenancy deposits.
Genuine risk
Chris Mason (pictured), Chief Operating Officer of The Letting Partnership, says: “The changes introduced under the Renters’ Rights Act may appear relatively minor operationally, but they create a genuine compliance risk for agents if internal processes haven’t been updated accordingly.
“Where agencies are now taking deposits before tenancy agreements are signed, there is a risk that deposit registration deadlines are being triggered earlier than some systems or workflows are designed for.
If those triggers are linked to tenancy start dates rather than receipt of funds, agents could find themselves breaching registration requirements without immediately realising it.”
“If those triggers are linked to tenancy start dates rather than receipt of funds, agents could find themselves breaching registration requirements without immediately realising it.”
The company adds that the risk is likely to increase where there are delays between deposit receipt, agreement signing and tenant move-in under the new tenancy process.
It is advising agents to review software workflows and accounting controls to ensure deposit registration deadlines are linked to receipt of funds rather than tenancy start dates.
Landlords and agents shouldn’t be taking tenancy deposits before a tenancy agreement is entered into. The maximum amount that can be taken before a tenancy agreement is entered into is 1 week’s rent – the holding deposit. I think you are getting confused with what the holding deposit should be considered as once the tenancy agreement is entered into. is it towards rent or the tenancy deposit. If it goes towards the tenancy deposit then it has to be protected within 30 days from when the tenancy agreement was entered into. The danger being that if a tenancy agreement is entered into more than 30 days before the tenancy starts, after which the tenant pays the remainder of the deposit money effectively the holding deposit amount was not protected when it should have been.
Thanks for your input. I have given the text a tweak to make it clearer.