Microsoft has confirmed a new policy that will eventually delete files sitting in OneDrive accounts that have lost their licence and stayed unpaid for too long.

• What it is: From July 2026, unlicensed OneDrive for Business accounts move through a staged process: read-only after 60 days, archived after 93 days, and eligible for deletion after 365 cumulative unpaid days.
• Who is affected: Businesses with departed staff, unused licences, or accounts left unlicensed after a plan change. Accounts already unlicensed before July 2026 have until July 2027 before deletion risk begins.
• The risk: Deletion can proceed even where a retention policy, legal hold or eDiscovery case would normally protect the data.
• What to do: Review any unlicensed OneDrive accounts in your tenant, reassign a licence, migrate the content elsewhere, or confirm the account genuinely isn't needed before the clock runs out.

We recommend reviewing unlicensed accounts as part of regular Microsoft 365 housekeeping, well ahead of any deletion date.