Deposit protection

Deposit protection schemes, also called tenancy deposit protection schemes (TDPs), are a legal obligation for landlords.

What is deposit protection?

Deposit protection is a scheme that makes sure a tenant gets their deposit back at the end of a tenancy, as long as they've paid the rent and bills, haven't damaged the property, and have met the other terms of their tenancy agreement.

There are two types of deposit protection: custodial and insured.

In a custodial scheme, the landlord pays the deposit to the scheme and they hold it for free.

In an insured scheme, the landlord holds onto the money, and pays the scheme to insure it. If there's a dispute with the renter when a tenancy ends, the landlord still has to transfer the money to the scheme until it's resolved.

Deposit protection can provide an outside view and independent resolution if there's a dispute between a landlord and their tenants.

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I'm a landlord. Why do I need deposit protection?

If you're renting out an assured shorthold tenancy after April 2007 – which will be most landlords – then you're legally required to use a tenancy deposit protection scheme.

The schemes offer you a free dispute resolution service in case you disagree with your tenants about how much of their deposit should be returned. Otherwise they could take you to court to get their money back, and they might not have to move out at the end of their tenancy.

You don't need a TDPS for a holding deposit before tenants move in – but you will still need one once they do.

Tenants don't have to worry about deposit protection at all, unless they think the landlord hasn't put their deposit in a protection scheme.

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How do I get deposit protection?

Landlords get deposit protection by putting it into one of these three schemes:

• Deposit Protection Service (DPS)
• MyDeposits
• Tenancy Deposit Scheme

You can apply for deposit protection online, through a scheme's website.

In Scotland or Northern Ireland, you may place the deposit in another scheme available locally.

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I'm a tenant. How do I know deposit protection is in place?

Your deposit is only protected if the landlord has put it into a TDPS. You can check whether your landlord has registered your deposit by visiting the scheme's website.

If you believe that your landlord hasn't placed your deposit in a TDPS, you should start by asking your landlord to get information and documents about your deposit.

If your landlord hasn't protected your deposit, you should request they do so immediately.

You could also contact your local county court and start proceedings against your landlord. In this case, your landlord will either have to repay your deposit or place it in a custodial scheme within 14 days.

Author: The AA

Published 22 July 2022