Landlords will have the amount they can set for a security deposit for a privately rented home in England capped at the value of five weeks’ rent.
The measure is part of the Tenants Fees Bill going through Parliament.
The cap will apply to rents under £50,000 a year – homes attracting rents of more than £50,000 will have a six-week rent cap.
Communities Secretary James Brokenshire explained the change in England was part of his mission to create a fairer housing market for renters moving into a new home.
His department calculates capping security deposits will save a third of renters a total of £64 million a year while still allowing landlords to recoup money to pay for rent arrears or damage to their properties.
“The amendments will make renting a home of your own more affordable, fairer and more transparent – enabling tenants to keep more of their cash and stopping unexpected costs,” said Brokenshire.
“Everyone deserves a home to call their own. Yet for some renters, moving to a new house can be difficult due to high upfront costs and letting fees.
“This is unacceptable. I want to see a housing market that truly works for everyone and one which provides a better deal for renters.”
The cap means throughout a tenancy, landlords can only charge tenants for changing locks or to catch up with rent arrears. Any fee for damage to a property will be dealt with at the end of a tenancy.
The Bill will limit charges for damage by stopping landlords and letting agents charging tenants default fees or excessive amounts for damage that costs just a few pounds to put right.
The Bill is expected to become law in spring or summer 2019.