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Damage deposits, AirCover and card holds: what a UK holiday let can actually take

Dmitrij Sitki · lead engineer at ReceptionGO
Published 1 November 2026 · 5 min read

General information, not legal or tax advice. Check your own case with your local council, HMRC or the relevant revenue authority, or an accountant.

A genuine holiday let is not an assured tenancy, so you do not protect a damage deposit with TDS, DPS or mydeposits. Airbnb usually allows no separate cash deposit; claims go through AirCover. On a direct booking, a card hold must be shown before the guest pays. If the stay is really someone’s home, the tenancy rules apply instead.

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A broken sofa is a straightforward loss. Getting the money for it is not, because the three ways a UK guest books give you three different tools, and the tenancy-deposit industry does not apply to the one case hosts assume it does.

Holiday let or tenancy

Schedule 1 to the Housing Act 1988 keeps a genuine holiday letting outside assured-tenancy status. The deposit-protection duty in the Housing Act 2004 is built for assured shorthold tenancies. A week in a cottage is not one of those, so you do not register the deposit with TDS, DPS or mydeposits, and you do not serve prescribed information.

That freedom has a border. If you let the house as someone’s home — no other address, a stay measured in months, rent instead of a holiday price — you can create an AST without meaning to. Then the deposit must be protected within 30 days, and the guest has security of tenure you did not price for. Treat “winter lets” as a legal category, not a way to fill November.

What each channel lets you hold

Insurance sits beside all four. A guest who burns a hole in a sofa is sometimes an insurance claim, sometimes a deposit, sometimes neither, because the policy excluded it or the deposit was £150. The insurance guide is the wording to check before you promise guests that “the deposit covers everything”.

How to take one on a direct booking

1. Choose a number you can explain — a mid-stay clean and a piece of furniture, not three months’ rent.
2. Say it before they pay, next to the total, with the date you release it. That is also what the price-transparency rules expect of a sum they cannot discover later.
3. Take it by card with the balance, into your own Stripe account, not as a bank transfer to a personal account the week they arrive.
4. Photograph the condition at changeover, before the next guest, and keep the photos with that booking. A claim without a before-and-after is an argument.
5. Release it when you said you would. Holding it “in case” for a month after they have gone home is how a fair deposit becomes a review.

House rules that the guest accepted — no parties, no extra guests, no smoking — are what make a deduction explicable. Rules in a laminated folder they never opened are harder. Build the acceptance into check-in.