The rental market is already tough for millions of people across the UK. Rising rents, stagnant wages, and a lack of affordable housing options have placed an enormous strain on tenants. Now, a recent report from Generation Rent reveals another critical challenge renters face: one in four tenants do not get their deposit back in full—a staggering finding that highlights the imbalance of power between landlords and renters.
According to the study, 23% of renters reported unfair deductions from their deposits, even when they believed they had left the property in good condition. For many tenants, losing hundreds of pounds is not just frustrating—it’s financially devastating.
The True Cost of Rental Deposits
Rental deposits are meant to act as a safety net for landlords, covering damage beyond normal wear and tear. However, the average deposit of £1,118 in England and Wales and £793 in Scotland is an immense sum for most households to save.
Key facts from the report include:
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£5.4 billion in deposits is currently held in protection schemes across the UK.
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25% of renters rely on family or friends to pay their deposits.
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14% turn to credit cards or loans to cover the cost.
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Only 29% of tenants have the savings readily available for a deposit.
This financial strain means that when landlords unfairly deduct from a deposit, the consequences can ripple into other aspects of a tenant’s life—making it harder to pay for a new rental, cover moving costs, or simply manage day-to-day expenses.
The Deposit Dispute Paradox
One of the more surprising findings is that tenants who dispute deposit deductions often win. According to Generation Rent, more than half of renters who go through a formal dispute process recover at least part of their money.
So why don’t more tenants challenge landlords? The answer lies in the complicated, time-consuming, and often intimidating process of filing disputes. Many tenants feel powerless or fear retaliation from landlords or letting agents, leading them to accept losses they shouldn’t have to bear.
What Generation Rent Proposes
Generation Rent is calling for a complete overhaul of the deposit system. Their recommendations are designed to give tenants more security, transparency, and flexibility:
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Passported Deposits
Tenants could transfer their existing deposit directly to their next landlord, instead of scraping together another large sum while waiting for the first deposit to be refunded.-
This system is already in place in New Zealand and parts of Australia and has been praised for reducing financial stress.
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Stricter Return Deadlines with Penalties
In Canada, landlords who miss the deadline to return a deposit can be required to pay tenants double the deposit amount. A similar rule in the UK would incentivize landlords to act fairly and promptly. -
Interest Sharing
Currently, deposits earn interest while sitting in protection schemes—but tenants rarely see a penny of it. Generation Rent argues that this interest should be shared with the tenant, since it’s their money in the first place.
The Human Impact
Ben Twomey, Chief Executive of Generation Rent, emphasized how the deposit system is stacked against tenants:
“Too many of us are still getting a raw deal on deposits, which leaves many tenants with less money every time we move. It’s not right that tenants are forced into debt or relying on family to pay for something that’s meant to protect landlords—not punish renters.”
For many renters, the struggle doesn’t end when they leave a property. Waiting weeks—sometimes months—for a deposit to be returned makes it harder to move on, especially if they need to pay another deposit for a new home.
Why Reform Is Urgent
The deposit system is just one part of a much larger problem. With rents rising faster than wages and homeownership increasingly out of reach, renters face a cycle of financial insecurity. Being forced to borrow or use credit cards for deposits only worsens this situation.
If the UK adopted passported deposits and stricter rules, tenants would not only feel more protected, but the rental market would also function more fairly.
Tips for Tenants to Protect Their Deposit
While systemic change is needed, renters can take certain steps to safeguard their deposits:
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Document everything – Take photos and videos when moving in and out, focusing on the condition of walls, floors, and fixtures.
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Get written records – Request written confirmation of property condition from landlords or letting agents.
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Keep receipts – Any repairs or cleaning services you pay for should be documented with receipts.
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Know your rights – If a landlord withholds money unfairly, use the deposit protection scheme’s dispute process—it’s free, and tenants often win.
Final Thoughts
The Generation Rent report sheds light on a broken deposit system that needs urgent reform. With billions locked away, countless tenants borrowing money, and a quarter of renters losing deposits unfairly, the current approach fails to protect those it’s meant to serve.
It’s time to reimagine deposits—not as a financial burden, but as a fair and transparent system that works for everyone.