For Landlords, Tenants & Letting Agents to understanding Tenancy Deposits, Fair Wear & Tear and Deposit Disputes under TDS, MyDeposits & DPS
Introduction
One of the most common causes of disagreement at the end of a tenancy concerns the return of the tenancy deposit. Many landlords believe they are entitled to deduct money whenever a property is not returned in exactly the same condition as when the tenancy began. Many tenants believe they are automatically entitled to receive their full deposit back. In reality, neither assumption is entirely correct.
In England and Wales, tenancy deposits for most residential tenancies must be protected in a government-approved tenancy deposit protection scheme. The three approved schemes are:
• Tenancy Deposit Scheme (TDS)
• MyDeposits
• Deposit Protection Service (DPS)
Although these schemes are administered independently, the principles they apply when assessing deposit deductions are broadly the same. This guide explains those principles and provides practical guidance for landlords, tenants and letting agents.
What Is a Tenancy Deposit?
A tenancy deposit is money paid by the tenant at the beginning of a tenancy as security against any breach of the tenancy agreement. It is not an additional payment to the landlord. The deposit remains the tenant’s money unless the landlord can demonstrate that a legitimate financial loss has occurred and that any proposed deductions are reasonable, proportionate and supported by appropriate evidence. For most Assured Periodic Tenancies (APTs), landlords are legally required to protect the tenancy deposit in a government-approved tenancy deposit protection scheme within the statutory time limits.
How Much Can a Tenancy Deposit Be?
Following the implementation of the Renters’ Reform changes from 1 May 2026, most residential tenancies are now Assured Periodic Tenancies (APTs). For most APTs in England, the maximum tenancy deposit is limited by the Tenant Fees Act 2019.
• Annual rent below £50,000: maximum deposit is five weeks’ rent.
• Annual rent of £50,000 or more (up to £100,000): maximum deposit is six weeks’ rent.
These limits apply to most residential APTs. If the tenancy is not an APT—for example, a Company Let—or where the annual rent exceeds £100,000, the statutory deposit cap does not apply. The deposit is generally a matter of negotiation between the parties.
When Can a Landlord Make Deposit Deductions?
To justify a deduction, landlords should normally demonstrate:
• The tenancy agreement has been breached.
• A financial loss has been suffered.
• The amount claimed is reasonable.
• Appropriate supporting evidence is available.
Common Reasons for Deposit Deductions:
- Cleaning
- Damage
- Missing Items
- Unpaid Rent
- Gardening
- Rubbish Removal
Fair Wear and Tear – The Most Common Area of Dispute
A property is expected to show signs of normal use over time. Landlords cannot expect a property to be returned in exactly the same condition as it was on the first day of the tenancy.
Adjudicators will usually consider:
• Age of the item
• Original quality
• Expected lifespan
• Length of tenancy
• Number of occupants
• Normal everyday use
Examples include minor scuff marks, carpet flattening, fading from sunlight, minor scratches to wooden flooring, furniture ageing naturally and normal wear to worktops.
Betterment and Depreciation
Landlords should not receive betterment.
Example:
A carpet costing £1,500 with an expected lifespan of 10 years that is damaged after 7 years would normally not justify claiming the full replacement cost. Compensation would normally reflect only the remaining three years of value.
The same principle may apply to carpets, sofas, mattresses, curtains, dining furniture, white goods, wooden flooring and other fixtures and furnishings.
Why Evidence Matters
Useful evidence includes:
• Check-in Inventory Report
• Check-out Report
• Dated photographs
• Contractor invoices
• Repair quotations
• Cleaning invoices
• Correspondence
• Signed tenancy agreement
A Practical Guide for Landlords
Arrange a professional inventory, complete a detailed check-in report, carry out regular inspections, retain photographs and invoices, maintain written communication and arrange a professional check-out inspection.
A Practical Guide for Tenants
Leave the property clean, remove belongings, return keys, repair tenant damage where appropriate, take dated photographs, attend check-out where possible and retain receipts.
If a Dispute Cannot Be Resolved
Where agreement cannot be reached, the relevant tenancy deposit protection scheme may offer Alternative Dispute Resolution (ADR). The adjudicator’s decision is based on the evidence presented.
Can an ADR Decision Be Appealed?
An ADR decision is generally final and binding. There is normally no right of appeal simply because one party disagrees with the outcome.
If there is evidence that the scheme has made a procedural or professional error, a formal complaint may be made and, in appropriate circumstances, a claim against the scheme may be considered after obtaining independent legal advice.
SJW Practical Tip
Deposit disputes are best prevented—not won. Good tenancy documentation, inventories, inspections and communication remain the best protection for both landlords and tenants.
SJW Insight
Professional property management is about setting clear expectations, maintaining accurate records and providing objective evidence throughout the tenancy.
Official References
• Tenancy Deposit Scheme (TDS)
• MyDeposits
• Deposit Protection Service (DPS)
• Tenant Fees Act 2019
• Housing Act 2004 (England & Wales)
• Renters’ Reform legislation (effective from 1 May 2026)
Author: SJW Property Management
Brand: SJW UK Properties
Last Updated: July 2026
Disclaimer: This guide is intended for general information only and does not constitute legal advice. Deposit disputes are determined based on the individual facts of each case.