THE PROPERTY FILTER TAKE
The Renters' Rights Act 2024, now in force in England, abolished Section 21 no-fault evictions and converted all assured shorthold tenancies to periodic tenancies.
Sales of deposit replacement products rose 58% in the first half of 2026 compared with the same period in 2025, suggesting landlords and tenants are turning to alternatives as the tenancy framework shifts.
You may wish to check whether a deposit replacement product suits your portfolio, and confirm any product you use is compliant with the Tenant Fees Act 2019 before offering it to tenants.
Sales of deposit replacement products rose 58% in the first half of 2026 compared with the same period in 2025, according to Letting Agent Today. The Renters' Rights Act 2024, which came into force in England in 2026, appears to have accelerated demand from landlords and tenants for alternatives to the traditional upfront cash deposit.
What is a deposit replacement product?
Instead of a conventional deposit, capped at five weeks' rent under the Tenant Fees Act 2019, tenants using a deposit replacement product pay a smaller recurring fee. This is typically equivalent to one or two weeks' rent per year and is non-refundable. The landlord receives financial protection equivalent to a full cash deposit.
In practice this means a tenant with limited savings can move in without providing several thousand pounds upfront. For the landlord, the trade-off is that protection is provided by the replacement product rather than held in a government-approved deposit scheme.
These products are legal in England when structured correctly under the Tenant Fees Act 2019. Landlords thinking through how deposit alternatives fit their overall rental investment approach should treat compliance as a prerequisite, not an afterthought.
How does the Renters' Rights Act 2024 change the picture?
The Renters' Rights Act 2024 applies in England. It abolished Section 21 no-fault evictions and converted all assured shorthold tenancies to periodic tenancies. Both changes took effect in 2026.
Periodic tenancies remove the certainty that fixed-term contracts once offered landlords. That change has made the speed and flexibility of deposit replacement products more attractive. A tenant who can move in quickly, without raising a large lump sum, can reduce a landlord's void period.
The Act did not change the deposit cap. It remains five weeks' rent for tenancies where the annual rent is under £50,000. Traditional protected deposits and deposit replacement products are both available under the current framework in England.
To stress-test how different vacancy rates or deposit structures affect your rental income, the Property Filter stress test calculator lets you model the numbers before committing.
What do landlords in England need to do now?
The one step landlords can take right now is to verify that any deposit replacement product they adopt is compliant with the Tenant Fees Act 2019. Products that are not correctly structured may constitute a prohibited payment. The penalty for non-compliance is up to £5,000 for a first offence and up to £30,000 for a subsequent offence.
Ask the provider for written confirmation of compliance. Check that the fee is fixed and disclosed in writing before the tenancy begins. You must not pressure a tenant into using a specific provider. Doing so risks the transaction being treated as a prohibited payment.
Further guidance on the lettings framework is available through Property Filter's free resources hub.
Key takeaways
• Deposit replacement product sales rose 58% in H1 2026 compared with H1 2025, according to Letting Agent Today.
• The Renters' Rights Act 2024 abolished Section 21 and converted all assured shorthold tenancies to periodic tenancies in England.
• The deposit cap (five weeks' rent for annual rents under £50,000) was not changed by the Act.
• Deposit replacement products are legal in England when correctly structured under the Tenant Fees Act 2019.
• The penalty for a prohibited payment under the Tenant Fees Act 2019 is up to £5,000 (first offence) or £30,000 (subsequent offence).
Sales of deposit replacement products rose 58% in the first half of 2026 compared with the same period in 2025, according to Letting Agent Today. The Renters' Rights Act 2024, which came into force in England in 2026, appears to have accelerated demand from landlords and tenants for alternatives to the traditional upfront cash deposit.
What is a deposit replacement product?
Instead of a conventional deposit, capped at five weeks' rent under the Tenant Fees Act 2019, tenants using a deposit replacement product pay a smaller recurring fee. This is typically equivalent to one or two weeks' rent per year and is non-refundable. The landlord receives financial protection equivalent to a full cash deposit.
In practice this means a tenant with limited savings can move in without providing several thousand pounds upfront. For the landlord, the trade-off is that protection is provided by the replacement product rather than held in a government-approved deposit scheme.
These products are legal in England when structured correctly under the Tenant Fees Act 2019. Landlords thinking through how deposit alternatives fit their overall rental investment approach should treat compliance as a prerequisite, not an afterthought.
How does the Renters' Rights Act 2024 change the picture?
The Renters' Rights Act 2024 applies in England. It abolished Section 21 no-fault evictions and converted all assured shorthold tenancies to periodic tenancies. Both changes took effect in 2026.
Periodic tenancies remove the certainty that fixed-term contracts once offered landlords. That change has made the speed and flexibility of deposit replacement products more attractive. A tenant who can move in quickly, without raising a large lump sum, can reduce a landlord's void period.
The Act did not change the deposit cap. It remains five weeks' rent for tenancies where the annual rent is under £50,000. Traditional protected deposits and deposit replacement products are both available under the current framework in England.
To stress-test how different vacancy rates or deposit structures affect your rental income, the Property Filter stress test calculator lets you model the numbers before committing.
What do landlords in England need to do now?
The one step landlords can take right now is to verify that any deposit replacement product they adopt is compliant with the Tenant Fees Act 2019. Products that are not correctly structured may constitute a prohibited payment. The penalty for non-compliance is up to £5,000 for a first offence and up to £30,000 for a subsequent offence.
Ask the provider for written confirmation of compliance. Check that the fee is fixed and disclosed in writing before the tenancy begins. You must not pressure a tenant into using a specific provider. Doing so risks the transaction being treated as a prohibited payment.
Further guidance on the lettings framework is available through Property Filter's free resources hub.
Key takeaways
• Deposit replacement product sales rose 58% in H1 2026 compared with H1 2025, according to Letting Agent Today.
• The Renters' Rights Act 2024 abolished Section 21 and converted all assured shorthold tenancies to periodic tenancies in England.
• The deposit cap (five weeks' rent for annual rents under £50,000) was not changed by the Act.
• Deposit replacement products are legal in England when correctly structured under the Tenant Fees Act 2019.
• The penalty for a prohibited payment under the Tenant Fees Act 2019 is up to £5,000 (first offence) or £30,000 (subsequent offence).
Frequently asked questions
Frequently asked questions
Is a deposit replacement product the same as no deposit?
Does the Renters' Rights Act 2024 apply in Scotland, Wales, and Northern Ireland?
Can a landlord require a tenant to use a deposit replacement product?
What is the deposit cap in England in 2026?
