Campaign group Generation Rent has voiced serious concerns over how tenancy deposit schemes are working in practice, claiming that current rules allow dishonest landlords to hold onto tenants’ money unfairly. In a recent statement to The Guardian, the group criticised the system for failing to protect renters and allowing what they describe as widespread abuse.
They argue that millions of pounds may be ending up in the hands of landlords who make unjustified deductions from deposits, with little consequence. Generation Rent believes that the official deposit schemes are not doing enough to prevent this, leaving many tenants at a disadvantage when their tenancy comes to an end.
A major issue identified by the group is that a large number of renters are unaware of their rights. Their research revealed that 46% of private tenants didn’t realise they could challenge deductions from their deposit if they believed them to be unfair. This lack of knowledge leaves many vulnerable to being taken advantage of.
Even more concerning is the fact that only a very small proportion of renters—just 4%—have actually used the formal dispute process to try and recover money from deductions they considered unfair. This low uptake, according to Generation Rent, reflects a deeper problem with the system’s accessibility and effectiveness.
Dan Wilson Craw, the deputy chief executive of Generation Rent, explained that the entire deposit scheme is currently falling short in protecting renters. He said the rules are often unclear and confusing, and many tenants are discouraged from making a complaint due to fear of landlord retaliation or unnecessary delays in getting their money back.
He added that some landlords use threats or delaying tactics to stop tenants from challenging deductions. Because of this, many renters choose to accept a reduced refund, even if it’s unfair, simply to avoid conflict or to recover any money they can without further stress.
This practice, Wilson Craw argued, ultimately means that millions of pounds are being unfairly kept by landlords who exploit the system. The unclear guidance and lack of enforcement are failing renters, many of whom are already under financial strain, especially during a cost-of-living crisis.
Generation Rent conducted a study involving 2,000 private tenants, which uncovered more worrying behaviour. A quarter of renters who didn’t challenge deductions said their landlords either made threats to charge more if they disputed it, refused to cooperate with the dispute process, or hadn’t even placed the deposit in a protection scheme in the first place.
These findings suggest that not only are many landlords avoiding scrutiny, but that some are ignoring their legal obligations entirely. By not protecting deposits or refusing to engage with adjudication, they leave tenants with little to no practical recourse.
Data from the Tenancy Deposit Scheme (TDS) supports the idea that renters can benefit from challenging unfair deductions. According to their figures, 77% of tenants who disputed a deduction received some of their money back, and 32% had the full amount returned.
Further analysis by Generation Rent revealed that, on average, tenants who raised a dispute recovered 79% of the amount they were contesting. This demonstrates that renters often have valid claims, and it’s clearly worth challenging landlords when deductions seem excessive or unjustified.
Wilson Craw emphasised that despite these odds, many renters still feel it’s not worth the hassle. He said that hundreds of pounds are being lost by individuals who either don’t know their rights or feel intimidated by the process. He urged the government to act swiftly and reform the system to make it fairer and more transparent.
By law, landlords in England must place a tenant’s deposit in a government-approved tenancy deposit scheme, which provides protection for both parties. There’s also a free dispute resolution service available if a tenant believes they are not receiving the correct amount back. However, Generation Rent argues that these services are underused due to lack of awareness and confidence.
The group is now calling for major reforms, including a new 14-day deadline for returning deposits once a tenancy ends. They also want to make it mandatory for landlords to take part in the dispute resolution process when a tenant initiates it, with a clear rule that disputes must be resolved within 10 days.
In addition, Generation Rent wants landlords and letting agents who repeatedly break the rules or make excessive, unjustified deductions to face meaningful penalties. A government spokesperson responded by stating that withholding deposits unfairly is unacceptable. They confirmed that the upcoming Renters Rights Bill will give councils stronger powers to act against rogue landlords, including improved access to financial data during investigations.