Agent Questions
If you rent out property in England or Wales, it is a legal requirement to register any deposit taken from a tenant with an approved deposit scheme, such as the Tenancy Deposit Scheme. Whether you’re a landlord managing one property or a letting agent with a growing portfolio, understanding how to protect deposits correctly is essential to stay compliant.
In this article, we’ll explain how a deposit protection scheme works, outline the steps you need to follow to protect your tenant’s deposit, and share useful resources to help you stay on top of your responsibilities.
What is a deposit protection scheme?
A deposit protection scheme is a government-backed service designed to safeguard tenant deposits. UK law requires that any deposit taken under an AST in England or a standard occupation contract in Wales must be registered with an approved scheme within 30 days of receiving it. Failure to do so can result in:
- Fines of up to three times the deposit amount
- Loss of the right to serve a notice (England) or relevant possession notice (Wales)
There are three authorised protection schemes in England and Wales:
- Tenancy Deposit Scheme
- Deposit Protection Service (DPS)
- MyDeposits
You can find full government guidance on the UK Government’s Tenancy Deposit Protection page.
How to protect a deposit with a deposit protection scheme
Step 1: Choose your deposit protection scheme
Start by selecting one of the government-approved schemes. The Tenancy Deposit Scheme (TDS) is the only UK-owned, not-for-profit deposit protection scheme, trusted by thousands of landlords and letting agents across the UK, and offers both insured and custodial options.
- Custodial Scheme where the scheme holds the deposit for free and returns it at the end of the tenancy.
- Insured Scheme where you keep the deposit but pay a small fee to insure it against disputes.
Both options ensure the tenant’s money is protected, but they work slightly differently.
Find out which one is right for you by visiting our Scheme comparison.
Step 2: Register the deposit
Once you have chosen your protection scheme, you must register the tenant’s deposit within 30 days of receiving it. You’ll need to provide:
- The tenant’s or contract-holder’s details
- The property address
- The deposit amount
- The tenancy or occupation contract start date
- Your contact information
Step 3: Provide prescribed information to your tenants
After registering the deposit, you must give the tenant or contract-holder Prescribed Information, which explains:
- The scheme’s leaflet detailing the scheme rules
- Where their deposit is protected
- How they can contact the scheme
- The process for resolving any disputes
- How and when the deposit will be returned
This information must be provided in writing within 30 days. Failure to do so could result in legal penalties, even if the deposit is protected.
What happens at the end of the tenancy?
When the tenancy (or occupation contract) ends, the deposit must be returned to the tenant or contract-holder promptly, minus any agreed deductions for issues such as unpaid rent or property damage.
If there’s a disagreement, the scheme offers a free dispute resolution service to help resolve the issue fairly, based on evidence provided by both parties. You can learn more about this process in the TDS Guide to Dispute Resolution.
Why use the Tenancy Deposit Scheme?
At TDS, we make deposit protection simple and stress-free with:
- Flexible insured and custodial schemes
- Free dispute resolution service
- User-friendly online portal for managing deposits
- Expert support and resources for landlords and letting agents
As the only not-for-profit deposit protection scheme in the UK, we’re committed to raising standards in the private rented sector.
About TDS
The Tenancy Deposit Scheme is part of The Dispute Service (TDS), the largest tenancy deposit protection (by value) and resolution service provider in the UK making life easier for tens of thousands of agents, landlords, developers, and millions of tenants and homebuyers.
We provide a free Custodial tenancy deposit protection scheme, or join our Insured tenancy deposit protection scheme, which offers the best rates for agents and landlords.
Protecting deposits with TDS is quick and easy.
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