For renters

Do I get my money back from a zero deposit scheme?

Guide · about 12 min read · Covers the law in England as at November 2026 · Last checked on 2 November 2026

Usually not, and it helps to keep two different things apart. The first is what you pay for the product. Shelter describes the two usual arrangements as a monthly premium or a non-refundable fee at the start, so in the ordinary case that money is the zero deposit company's and is not returned the way a deposit is. Whether anything comes back if you cancel, or if the tenancy never starts, depends on that zero deposit company's terms and on which consumer rules apply, and which rules apply turns on what the product actually is rather than on what it is called. Read the cancellation terms and take advice before you accept a refusal. The second is what can happen at the end. Your landlord can still make a claim for the things a deposit would normally cover, such as cleaning, damage or rent arrears. If the zero deposit company pays that claim, Shelter says it will then seek the money from you.

This guide covers England only and is general information, not legal advice. It describes how these products work and what the published guidance says about them. It does not tell you whether one is right for your own tenancy. If you are deciding now, the questions to ask before you sign are in the list further down.

What is a zero deposit option?

It is a guarantee or an insurance policy sold by a private company, offered instead of paying a traditional tenancy deposit. Shelter describes it that way, and notes that each company sets its own terms and conditions, so two products sold under the same label can behave differently.

Two things follow from that, and both matter more than the marketing. The first is that you are buying a product, not lodging money. The second is that the terms do most of the work: what counts as a claim, how a dispute is handled and what you can be asked to pay are set by that contract rather than by the tenancy deposit scheme rules. That is not the same as saying the contract decides everything. Under section 62 of the Consumer Rights Act 2015 an unfair term is not binding on a consumer, so a charge is not enforceable simply because it appears in the agreement. Whether a particular term can be looked at that way, and whether it is unfair, is for a court.

Shelter also notes that some agents receive commission from these companies. That is worth knowing, and it says nothing about any particular agent's advice. It is a reason to read the terms yourself rather than rely on the recommendation alone.

Why does the money not come back?

Because it was never a deposit. A tenancy deposit is your money, held for the tenancy, and returned to you at the end to the extent nothing is properly deducted. A zero deposit fee or premium is what you pay for the product. Shelter sets out the two usual shapes: a monthly premium, or a non-refundable fee at the start of the tenancy.

So the comparison people make at the point of signing, lower cost now against the same cost later, is not the comparison they are actually facing. A deposit is capable of coming back. The product cost, in the ordinary case Shelter describes, is not, and any exception to that comes from the company's terms or from consumer law, not from the deposit rules. Keep that separate from a deduction or a claim, which is a different question again.

Is a zero deposit option protected like a tenancy deposit?

No, and the reason is mechanical rather than a gap in the rules. Section 213(1) of the Housing Act 2004 applies to a tenancy deposit paid in connection with an assured tenancy, and section 212(8) defines that as money intended to be held, by the landlord or otherwise, as security for the tenant's obligations or liabilities under the tenancy. It does not matter who receives it. GOV.UK states it must go into a government-approved scheme, the Deposit Protection Service, mydeposits or the Tenancy Deposit Scheme, within 30 days of receipt. The Renters' Rights Act 2025 extended section 213 to assured tenancies on 1 May 2026. Paragraph 11 of Schedule 6 keeps the earlier position for a tenancy that was already an assured tenancy other than an assured shorthold tenancy immediately before that date. Section 213 applies despite any agreement to the contrary, so whether money under a particular arrangement meets the section 212(8) definition is for a court, not for the name on the product.

Where no deposit is held, there is nothing for a scheme to protect, and none of the scheme machinery is in play: no prescribed information about where the money sits, and no access to the scheme's own dispute service at the end. Our guide on how deposit protection works in England sets out what that machinery actually does, which shows what is absent here.

Can I still be charged when I move out?

Yes. Shelter states this plainly: the landlord can make a claim if they want to charge you for things like cleaning, damage or rent arrears when your tenancy ends, and if the company pays the landlord's claim, they will reclaim the money from you.

A claim is not the same thing as a settled bill. It is what the landlord asks for. The company's own claims process is usually where it is assessed first, and that process decides what the company pays out and what it then asks you for. Shelter says each company sets its own terms, so the detail differs between products. It does not by itself settle what you are legally liable for, which is covered below. What the product changes is whether anything is being held as security. With a protected deposit, a refundable sum you handed over at the start is the thing in dispute. With a zero deposit option you have already paid the fee or the premiums, and none of it is held against a future claim, so any further amount is asked of you at the end rather than taken from a sum already lodged. Shelter says the company can take you to court if you do not pay it.

Can a letting agent make me use a zero deposit company?

No. Sections 1(3) and 2(3) of the Tenant Fees Act 2019 say a landlord or a letting agent must not require you to enter into a contract with a third party for a service or of insurance in connection with a tenancy, and GOV.UK's guidance for tenants names a deposit replacement product as one of the things you can choose but cannot be made to take. The Act does not count it as requiring you where you are offered it as an alternative to another requirement, but that exception falls away if the other requirement is itself banned, or if it would be unreasonable to expect you to comply with it. So being shown two options is not the end of the question, and which side of the line a particular offer falls is for Trading Standards or a court on the facts. Shelter puts it as: an agent can only offer it as an alternative, and if you are forced to pay it could be a banned fee.

Shelter also sets out two grounds for complaining to a redress scheme: if the agent told you that you must use a zero deposit company, or did not explain that you would still have to pay for anything normally covered by a deposit. Keep what you were told in writing, because a complaint turns on what was said at the time.

What happens if I disagree with a claim at the end?

You use the company's own process, which is why its terms are worth reading before you agree rather than after. Shelter suggests asking the company for its dispute resolution policy and whether it uses an independent dispute resolution service.

Two further points from Shelter are worth knowing in advance. You may have to pay a fee if the company decides the landlord is right, or if it thinks you raised a dispute without a good reason. And Shelter says you can complain to the Financial Ombudsman Service if the policy is in your name. That Service deals with complaints about firms the Financial Conduct Authority regulates, and whether it can take any particular complaint is subject to its own eligibility rules. Shelter also advises choosing a company authorised by the Financial Conduct Authority, which you can check on the FCA's Financial Services Register.

If you are weighing that against the alternative, our guide on the evidence you need for a tenancy deposit dispute describes what a scheme adjudication asks for.

Is it cheaper than a traditional deposit?

It can be cheaper on the day, and after that the two costs are not the same kind of thing. What a zero deposit option changes is how much cash you need on the day you move in: Shelter's point is that you do not have to pay a deposit up front, and that you could end up paying more in the longer term, especially if there are problems at the end of your tenancy. A deposit is money that is capable of coming back. A product fee, in the ordinary case Shelter describes, is not. Which works out dearer depends on the fee, the deposit it replaces and what is claimed at the end, and none of that is settled on the day you sign.

That is a real trade, and for someone who cannot raise a deposit it may be what makes a particular property affordable on the day. Under the Tenant Fees Act 2019 neither a landlord nor an agent can require you to take one, though being offered it as an alternative to another requirement counts differently, unless that other requirement is itself banned or it would be unreasonable to expect you to comply with it. The difference you can see on the day you move in is cash flow. What it comes to in the end depends on the arrangement in front of you.

What should I ask before I agree?

Seven questions, all better asked before you sign than after you move out. The first is for whoever is offering it to you. The next five are answered by the contract and the company's own policy. One half of the last one is not: check the FCA authorisation on the FCA's Financial Services Register rather than taking it from the company, while whether the policy is in your name is in the contract.

Is paying a deposit still an option on this property, and can it be paid in instalments?
Is the payment a one-off non-refundable fee or a monthly premium, and what is the total over the expected length of the tenancy?
What can the landlord claim for, and is there a cap on what I can be asked to repay?
What is the dispute resolution policy, and does it use an independent service?
Is there a fee if a dispute is decided against me?
If I cancel, or the tenancy never starts, what comes back to me?
Is the company authorised by the Financial Conduct Authority, and is the policy in my name?

If you are also being asked for money before anything is signed, the rules on holding deposits are separate and do cap what can be taken.

Shelter also lists other routes for people without a deposit, including applying for a housing payment from the council, the Crisis Help to Rent database and the Turn2us grant search.

Does VEYLO X run a zero deposit scheme?

No. VEYLO X is a software platform for renting and letting in England. It does not hold deposits or rent, does not sell a deposit replacement product, and takes no part in a claim or a dispute between a landlord and a renter. Where money is taken that is a tenancy deposit, protecting it in an authorised scheme is the landlord's duty, and that scheme's rules apply.

Common questions

The short answers, in one place.

Do I get my money back from a zero deposit scheme?

Usually not. A zero deposit option is a guarantee or insurance product from a private company rather than a deposit, so no money is being held on your behalf. Shelter describes the two usual shapes as a monthly premium or a non-refundable fee at the start of the tenancy, and in the ordinary case that cost is not returned at the end. Whether you have any refund or cancellation right depends on that company's terms and on which consumer rules apply, and which rules apply turns on what the product actually is rather than on what it is called. Separately, the landlord can still make a claim for things like cleaning, damage or rent arrears, and Shelter says that if the company pays the claim it will then seek the money from you.

Is a zero deposit scheme protected by a tenancy deposit scheme?

No, because section 213 of the Housing Act 2004 attaches to a tenancy deposit paid in connection with an assured tenancy, whether the landlord or the letting agent receives it. Section 212(8) defines a tenancy deposit as money intended to be held as security for the tenant's obligations or liabilities under the tenancy. GOV.UK states it must go into a government-approved scheme, the Deposit Protection Service, mydeposits or the Tenancy Deposit Scheme, within 30 days of receipt. Where no such money is taken there is nothing for a scheme to protect, so the scheme's prescribed information and its dispute service do not apply.

Can a letting agent make me use a zero deposit company?

No. Under sections 1(3) and 2(3) of the Tenant Fees Act 2019 a landlord or letting agent must not require you to enter into a contract with a third party for a service or of insurance in connection with a tenancy, and GOV.UK's guidance for tenants names a deposit replacement product among the things you can choose but cannot be made to take. Being offered it as an alternative to another requirement is not treated as requiring it, unless that other requirement is itself banned or it would be unreasonable to expect you to comply with it. So a choice on paper does not settle it, and which one a particular offer is will turn on the facts. Shelter also says you can complain to a redress scheme if the agent told you that you must use one, or did not explain that you would still have to pay for anything normally covered by a deposit.

What happens if I disagree with a claim under a zero deposit scheme?

You use the company's own process rather than a tenancy deposit scheme's adjudication, and that process is not the last word on what you are legally liable for. Shelter suggests asking the company for its dispute resolution policy and whether it uses an independent dispute resolution service, and warns that you may have to pay a fee if the company decides the landlord is right or thinks you raised a dispute without a good reason. Shelter also says you can complain to the Financial Ombudsman Service if the policy is in your name, subject to that Service's own eligibility rules.

Sources

The legislation this guide quotes and the published guidance it summarises. Where a summary and the legislation disagree, the legislation is what counts.

This article is general information, not legal advice. It covers England only and reflects the position as at November 2026. For the current rules, see the GOV.UK Tenant Fees Act guidance for tenants, and consider free advice from Shelter or Citizens Advice for your own situation.

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