Last updated: February 2026
Every landlord in England and Wales must protect their tenant’s deposit in a government-approved scheme. Get it wrong and you face penalties of up to three times the deposit amount – plus you won’t be able to evict your tenant.
Here’s what you need to do, which scheme to use, and what happens if you don’t comply.
What is Tenancy Deposit Protection?
Since 2007, landlords in England and Wales have been legally required to protect deposits taken for assured shorthold tenancies (ASTs) in a government-approved tenancy deposit scheme.
The rules exist to:
- Stop landlords unfairly withholding deposits
- Give tenants a way to dispute deductions
- Provide a neutral adjudication process for disagreements
Which Deposits Must Be Protected?
You must protect a deposit if:
- The tenancy is an assured shorthold tenancy (AST)
- The property is in England or Wales
- The deposit was taken on or after 6 April 2007
This includes:
- Cash deposits
- Deposits paid by a third party (parents, guarantors, employers)
- “Pet deposits” or additional deposits for pets
- Any refundable payment taken as security
You do NOT need to protect:
- Holding deposits (though separate rules apply under the Tenant Fees Act)
- Rent paid in advance
- Deposits for tenancies that are not ASTs (e.g. company lets, high-value properties over £100,000/year rent)
The Three Approved Schemes
There are three government-approved deposit protection schemes in England:
1. Deposit Protection Service (DPS)
- Type: Custodial (free) and Insured
- Website: depositprotection.com
- Custodial: Deposit held by DPS, free to use
- Insured: Deposit held by landlord, fee applies
2. MyDeposits
- Type: Custodial and Insured
- Website: mydeposits.co.uk
- Custodial: Deposit held by MyDeposits
- Insured: Deposit held by landlord, fee applies
3. Tenancy Deposit Scheme (TDS)
- Type: Custodial and Insured
- Website: tenancydepositscheme.com
- Custodial: Deposit held by TDS
- Insured: Deposit held by landlord, fee applies
Custodial vs Insured – What’s the Difference?
Custodial schemes:
- The scheme holds the deposit
- Usually free to use
- Deposit released at end of tenancy when both parties agree or after adjudication
- Less paperwork for landlords
Insured schemes:
- The landlord holds the deposit
- Annual fee payable to the scheme
- Scheme guarantees the deposit if landlord fails to return it
- Landlord has use of the money during the tenancy
The 30-Day Rule
You must protect the deposit within 30 days of receiving it.
The 30-day deadline applies from whichever is later:
- The date you receive the deposit, OR
- The date the tenancy becomes an AST (relevant for fixed-term tenancies that convert)
Example: You receive a deposit on 1 March. You must protect it by 31 March.
Missing the 30-day deadline triggers penalties – even if you protect it later.
Prescribed Information Requirements
Protecting the deposit is only half the job. You must also give your tenant “prescribed information” within 30 days of receiving the deposit.
The prescribed information must include:
- The name, address and contact details of the scheme
- The name, address and contact details of the landlord
- The name, address and contact details of the tenant
- The address of the rented property
- The amount of the deposit
- How the deposit will be returned
- What to do if there’s a dispute
- The scheme’s dispute resolution process
- Circumstances where the landlord may keep some or all of the deposit
Important: Both the tenant AND anyone who paid the deposit on their behalf (e.g. parents) must receive this information.
Most schemes provide template prescribed information documents. Use them.
Confirmation Required
You must also get confirmation from the tenant that they’ve received the prescribed information. Keep proof – a signed copy or email acknowledgment.
Penalties for Non-Compliance
The penalties for failing to protect a deposit or provide prescribed information are severe:
Financial Penalties
If you fail to protect the deposit or provide prescribed information, the tenant can apply to court for:
- Compensation of 1x to 3x the deposit amount
- The court decides the multiplier based on circumstances
- Plus return of the deposit itself
Example: For a £1,200 deposit, penalties could range from £1,200 to £3,600, plus the £1,200 deposit = up to £4,800 total.
Section 21 Blocked
You cannot serve a valid Section 21 notice if:
- The deposit is not protected in an approved scheme
- You have not provided prescribed information
- You protected the deposit late (even if now protected)
This means you cannot use the “no fault” eviction process until you’ve:
- Returned the deposit to the tenant, OR
- Protected it correctly and served fresh prescribed information
Section 8 Blocked (From May 2026)
Under the Renters’ Rights Act 2025, from 1 May 2026 you will not be able to obtain possession under ANY Section 8 ground (except anti-social behaviour grounds 7A and 14) unless the deposit is properly protected.
This makes deposit protection even more critical going forward.
What to Do at the End of the Tenancy
If You Agree on Deductions
- Conduct a checkout inspection (ideally with the tenant present)
- Agree what deductions (if any) are being made
- Both parties confirm the amount to be returned
- Request release of the deposit through the scheme (custodial) or return it directly (insured)
- Custodial schemes typically release funds within 10 days of agreement
If You Disagree
- Notify the tenant in writing of proposed deductions with evidence
- If they dispute, use the scheme’s free Alternative Dispute Resolution (ADR) service
- An independent adjudicator will review evidence from both parties
- The adjudicator’s decision is binding
Key evidence for disputes:
- Signed inventory at start and end of tenancy
- Dated photographs
- Receipts for cleaning or repairs
- Correspondence about damage during tenancy
Common Mistakes Landlords Make
1. Missing the 30-Day Deadline
Even one day late triggers penalties. Set a calendar reminder the day you receive the deposit.
2. Protecting But Not Serving Prescribed Information
You must do BOTH. Protection alone is not enough.
3. Not Re-Serving After a Renewal
If the tenancy is renewed with a new fixed term, you should serve fresh prescribed information. Check your scheme’s guidance.
4. Wrong Amount Protected
If the deposit changes (e.g. increased at renewal), update the protection to match.
5. Not Protecting “Pet Deposits”
Any refundable security payment must be protected, regardless of what you call it.
6. Forgetting Third-Party Payers
If a parent paid the deposit, they must receive prescribed information too.
Step-by-Step Compliance Checklist
Within 30 days of receiving the deposit:
- Register deposit with an approved scheme (DPS, MyDeposits, or TDS)
- Receive confirmation certificate from the scheme
- Complete prescribed information document
- Serve prescribed information on the tenant
- Serve prescribed information on anyone who paid the deposit
- Get written confirmation of receipt from tenant
- Keep copies of everything
At tenancy renewal:
- Check deposit amount matches protection
- Serve updated prescribed information if required
- Get confirmation of receipt
At end of tenancy:
- Conduct checkout inspection with evidence
- Agree deductions (if any) with tenant
- Initiate return through scheme or direct payment
- If disputed, use ADR service
- Keep records for 6 years
Deposits and the Tenant Fees Act 2019
The Tenant Fees Act 2019 caps deposits at 5 weeks’ rent for tenancies where the annual rent is under £50,000, or 6 weeks’ rent for higher rents.
This applies to:
- New tenancies signed on or after 1 June 2019
- Existing tenancies renewed on or after 1 June 2020
If you’re holding a deposit that exceeds the cap, you must return the excess to the tenant.
Holding Deposits
Holding deposits (taken to reserve a property) are separate and:
- Capped at 1 week’s rent
- Must be returned within 15 days if the tenancy doesn’t proceed (unless the tenant pulls out)
- Do NOT need to be protected in a deposit scheme
Which Scheme Should You Choose?
Choose a custodial (free) scheme if:
- You want to minimise costs
- You don’t need to use the deposit money
- You prefer the scheme to handle returns and disputes
Choose an insured scheme if:
- You want to retain the deposit money
- You have multiple properties and prefer to manage funds yourself
- You’re willing to pay the annual fee (typically £15-30 per deposit)
For most landlords with a small portfolio, the DPS custodial scheme is the simplest and cheapest option.
Frequently Asked Questions
Can I protect a deposit after 30 days?
Yes, but you’ll have breached the law. You should still protect it, but the tenant can claim compensation and you cannot serve a Section 21 notice until you return the deposit or they agree to waive the breach.
What if I inherited a tenant with an unprotected deposit?
You’re still liable. When you become the landlord (e.g. through property purchase), you inherit the deposit obligations. Protect it immediately and serve prescribed information.
Do I need to re-protect when a fixed term becomes periodic?
No, the original protection continues. However, you should serve fresh prescribed information to confirm the tenancy has become periodic.
Can tenants claim penalties after moving out?
Yes, but there’s a time limit. Tenants have 6 years to bring a claim for deposit protection breaches.
What if the tenant refuses to sign the prescribed information?
You don’t need their signature – you need proof you served it. Send by recorded delivery and keep the tracking receipt.
Summary
Deposit protection is not optional. Every AST deposit must be:
- Protected in DPS, MyDeposits, or TDS within 30 days
- Documented with prescribed information served on the tenant
- Confirmed with proof of receipt
Fail to comply and you face:
- Penalties of 1-3x the deposit
- Inability to serve Section 21 notices
- From May 2026, inability to use Section 8 eviction
Get it right from day one and you’ll avoid costly mistakes.
This guide is for general information only and does not constitute legal advice. Laws change – verify current requirements before taking action.
