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5 things you need to know about deposit protection

1.  Why you need to protect deposits

Landlords are required to protect deposit as a result of legislation that came into effect on 6 April 2007.  This means that all deposits taken for Assured Shorthold Tenancies after that date must covered by a tenancy deposit protection scheme.

Further legislation came into effect on the 1st of October 2010 which means that tenancies up to £100,000 are now Assured Shorthold Tenancies and must now also be covered by a tenancy protection scheme.

The main risks of not protecting deposits are detailed below.

  • You are unable to serve a section 21 notice should you require possession of your property
  • You may be liable to pay your tenant 3 x the value of the deposit if your tenant gets a court order from the county court

2.  Where you can protect deposits

There are three authorised deposit protection schemes and two types of scheme, custodial and insurance based.

Insurance Based

  • MyDeposits
  • Tenancy Deposit Scheme (TDS)

The benefit of these schemes is that as the landlord you retain the deposit however there is a cost associated with this.  A free Alternative Dispute Resolution service is also provided.

The My Deposits scheme is open to all landlords and has a joining fee of £57.50 and a deposit protection fee of between £17.12 and £29.36 per tenancy agreement.

The Tenancy Deposit Scheme typically tends to be for agents rather than landlords but you can join this scheme if you are a member of a trade association or an accreditation scheme.


  • Deposit Protection Service (DPS)

The benefit of this scheme is that it is free to landlords however you are required to transfer the deposit to the DPS for the duration of the tenancy.  A free Alternative Dispute Resolution service is also provided.

*If you are an overseas landlord you must use the custodial scheme unless you employ a UK registered letting agent to manage the tenancy.

3.  What you need to provide to the tenant

The primary information a landlord must give the tenant the following information within 14 days of receiving the deposit.

  • Name and contact details of the scheme
  • Contact details for the scheme’s dispute resolution service
  • How to apply for the deposit’s release
  • What to do if the landlord or tenant can’t be contacted at the end of the tenancy
  • How the deposit is protected
  • The address of the rented property and the amount of deposit paid
  • The landlord’s or letting agency’s name and contact details
  • The name and contact details of any third party that has paid the deposit
  • Items or services covered by the deposit
  • The circumstances under which the landlord will be able to retain some or all of the deposit
  • What to do if there is a dispute over how much deposit should be returned

This information can be provided to the tenant by completing and providing the prescribed information template for your chosen scheme and the scheme terms and conditions.  These can be downloaded from the relevant scheme website or from our free document download section.

4.  How you can protect yourself

Fully reference every tenant to ensure that their employment, affordability and previous tenancies match your expectations of the kind of tenant you want.

Take a deposit that is greater than the value of one month’s rent. This reduces the risk if a tenant doesn’t pay the last month’s rent.  If a tenant still has funds to be returned from the deposit at the end of a tenancy it is generally easier to get agreement.  If the tenant does not have anything to be returned from a deposit it can be more difficult and the single claim process can be much lengthier and time consuming.

Protect the deposit with one of the three schemes.

Provide the following information to tenants within 14 days, preferably at the tenancy check in

1.    Terms and conditions of the protection scheme

2.    Prescribed information

Get a good photographic inventory carried out at the beginning of the tenancy preferably by a third party.  This will carry more weight should there be a dispute at the end of the tenancy.

Carry out a condition inspection at the beginning and end of each tenancy.

Carry out regular property inspections, it is usually better to resolve issues earlier in the tenancy and to know if a tenancy will require closer management than to find out at a later stage.

If you use a letting agent ensure that they have protected the deposit.  As the landlord you are still responsible if the letting agent has not protected the deposit and goes out of business and in this situation may have to find further funds to protect the deposit.

5.  Where you find further information

The Deposit Protection Schemes

Deposit Protection Service (DPS)


Tenancy Deposit Scheme (TDS)

The government information



Fixed price inventories

Fixed price photographic inventory £75 + VAT

Download Document Templates

Free landlord document downloads

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