Letting agents are being warned to urgently review their deposit registration processes following changes introduced under the Renters’ Rights Act that could leave some firms exposed to compliance breaches.
Analysis from The Letting Partnership found that agents are now responsible for handling almost 70% of all protected tenancy deposits across England, with the number of deposits registered by agents increasing at an average annual rate of 3% since 2021.
In 2025 alone, letting agents handled an estimated 2.98 million protected deposits, accounting for 69.5% of all protected deposits registered across England.
However, The Letting Partnership says recent tenancy process changes introduced under the Renters’ Rights Act on 1 May 2026 could create operational problems for firms whose internal systems have not been updated.
TENANCY FRAMEWORK
Under the new rules, agents can no longer collect rent before all parties have signed the tenancy agreement, although tenancy deposits can still be taken beforehand.
The concern is that the legal 30-day deadline for protecting a deposit begins from the moment the funds are received – not from the tenancy start date or agreement completion date.
The Letting Partnership warns that some agency software systems and workflows may still trigger deposit registration from tenancy activation or move-in dates instead, creating a risk that registration deadlines could be missed.
The issue is expected to become more significant where there are delays between deposit receipt, tenancy signing and tenant move-in – something the firm believes is likely to become more common under the new tenancy framework.
COMPLIANCE RISK
Chris Mason (main picture, inset), Chief Operating Officer at The Letting Partnership, says: “The changes introduced under the Renters’ Rights Act may appear relatively minor operationally, but they create a genuine compliance risk for agents if internal processes haven’t been updated accordingly.
“Where agencies are now taking deposits before tenancy agreements are signed, there is a risk that deposit registration deadlines are being triggered earlier than some systems or workflows are designed for.”
REGISTRATION BREACH
He adds: “If those triggers are linked to tenancy start dates rather than receipt of funds, agents could find themselves breaching registration requirements without immediately realising it.
“Given that letting agents are now responsible for handling almost 70% of all protected deposits across England, this is fundamentally a client money handling issue. The agencies that avoid problems will be those that have reviewed their workflows, software processes and accounting controls to ensure they reflect the new tenancy timeline under the legislation.”
