Philip Hammond, who earns more than £10,000 a year in rental income as a landlord himself, had objected to the move.
But Sun columnist James Forsyth today reveals that Housing Secretary James Brokenshire has won a Cabinet battle to overrule the Chancellor to implement the new cap.
The move will reduce the maximum number of weeks’ rent a landlord can charge tenants from six weeks to five.
Mr Hammond tried to block the lower deposit cap in a letter to Cabinet colleagues.
He wrote: “I cannot agree to the proposed concession to lower the deposit cap from six weeks’ rent to five weeks’ rent.
“Six weeks’ rent was already placing landlords at risk of uncovered loss for damage to property, as well as risk of loss of rent.
“This bill was always a high risk measure. A cap of six weeks’ rent was already a major concession and I believe we have to hold the line at this level.”
The move is seen as a crucial policy to win back key voters at the next General Election.
The Tories won more private renter voters than Labour in 2010 but in a remarkable turnaround Labour had a 23-point lead over Theresa May’s party among the 5 million voters.
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