Lodger deposits in England: limits, holding deposits and deductions
You can take up to five weeks' rent as a deposit from a lodger, and hold it yourself rather than in a scheme. Give a receipt, record the room's condition, and only deduct for real damage or unpaid rent.
A deposit gives you some cover if something gets broken or the rent stops. When you're letting a room in your own home, some of the rules are lighter than a full landlord's, and some still apply. Here's which is which, with the paperwork to go with it.
How much you can ask for
The cap applies to lodgers too: five weeks' rent, or six if the rent comes to £50,000 a year or more. To work it out from a monthly rent, multiply by 12, divide by 52, then multiply by 5 (mydeposits). On a £700-a-month room, that's £700 × 12 ÷ 52 × 5 = £807.69. You also can't charge extra for references, admin or an inventory.
The three kinds of deposit
| Holding deposit | Lodger's deposit | Tenant's deposit | |
|---|---|---|---|
| What it's for | Reserving the room before the agreement is signed | Damage and unpaid rent, for someone living in your home | Damage and unpaid rent, where the landlord doesn't live there |
| Most you can take | One week's rent | Five weeks' rent (six above £50,000 a year) | Five weeks' rent (six above £50,000 a year) |
| Where it's held | With you | With you | In a government scheme, within 30 days |
| Disputes | Written reasons within 7 days if you keep it | Between you, then the small claims court | The scheme's free dispute service |
Holding deposits
If you take one to reserve the room, you have 15 days to sign the agreement unless you both agree a different deadline in writing. You can keep it if they pull out, or fail the Right to Rent check. You can also keep it if they gave you false or misleading information that's relevant to whether they're suitable to rent the room. A harmless slip, like a typo in their address, isn't enough. And if the deadline passes because they didn't go ahead, even though you took all reasonable steps to get the agreement signed, you can keep it then too. If you do keep it, you must tell them why in writing within 7 days. Otherwise, if you decide not to go ahead, or the deadline passes for any other reason, you must return it within 7 days (Gov.uk). Once they've signed, you can put it towards their deposit or first month's rent, with their agreement.
You can hold it yourself
A tenant's deposit has to go into a protection scheme. A lodger's doesn't. It's still their money, though, so keep it separate rather than spending it, and give them a receipt:
Received from [lodger's name] on [date]: £[amount] as a deposit for the room at [address]. It will be returned when they leave, less any deductions for damage beyond fair wear and tear, or unpaid rent, with reasons in writing. Signed: [your name].
Record the room on day one
- Dated photos of the room and the shared spaces
- A short list of the furniture and its condition
- Any marks, stains or damage that are already there
- Meter readings, if bills are shared
- Both of you sign the list and keep a copy
What you can fairly keep back
The deposit covers real damage and unpaid rent, not the ordinary wear of someone living there. A cracked basin or a burn in the carpet is fair to deduct for, and so is rent that never came. A faded wall or a few scuffs by the light switch aren't. And if something was already old, charge a fair share of its remaining life, not the cost of a brand-new one.
If your lodger disputes a deduction
There's no scheme to decide it for you. Put each deduction in writing, with the reason, the photos and what it cost to fix, and try to agree a figure. If you can't, your lodger can send you a formal letter and then claim through the small claims court. Clear evidence from move-in day is what protects you if that happens.
Giving it back
Return it promptly once you've agreed the amount. A clear note at the start and a quick, fair settlement at the end are usually what make a lodger leave on good terms.
Before any of this, choose the right person. Our guide to choosing a lodger covers that, and our guide to taking in a lodger explains the wider rules. On Among Our People, applicants can attach references and some carry an ID-verified badge, which helps you get to know someone before they move in.
Take a fair deposit, hold it properly, and it does its job quietly in the background while you both get on with living. ✦
General information, not legal advice. Always check your own situation.