Tenancy deposit schemes

England & Wales

You're a landlord letting out property in England and Wales, but are you taking damage deposits from your tenants in case they wreck the rental property? If so, then you legally must protect your tenants' deposits using a tenancy deposit protection scheme.

There are two types of tenancy deposit scheme: either a custodial scheme or an insurance-based scheme. The government has awarded contracts to three companies to run its tenancy deposit schemes.

Tenancy deposit schemes only apply to an assured shorthold tenancy; a common law tenancy and assured tenancy are excluded.

The tenancy deposit schemes

  1. The Deposit Protection Service (The DPS) - the only custodial tenancy deposit protection scheme - is free to use and open to all landlords and letting agents letting property. The money for the damage deposit is placed in the custody of the tenancy deposit scheme. The service is funded entirely from the interest earned from damage deposits held. Landlords and letting agents are able to register and make transactions online. Paper forms are also available should internet access be an issue. The scheme is supported by a dedicated call centre and an independent dispute resolution service. For more information, visit www.depositprotection.com or call 0844 472 7000.

  2. mydeposits is a partnership between the National Landlords Association and Hamilton Fraser Insurance. This insurance-based tenancy deposit scheme enables landlords who are letting property, either directly or through agents, to hold the damage deposit themselves. Letting agents can also join the scheme. For more information, visit www.mydeposits.co.uk or call 0844 980 0290.

  3. The Tenancy Deposit Scheme (TDS) is an insurance-backed deposit protection and dispute resolution scheme run by The Dispute Service, which builds on a scheme established in 2003, to provide dispute resolution and complaints handling for the property letting industry. The scheme also enables letting agents and landlords to hold the deposit themselves. For more information, visit www.thedisputeservice.co.uk or call 0845 226 7837.

Information to the tenant

Within 14 days of receiving your tenant's damage deposit (changing to 30 days from 6 April 2012), you (or your letting agent) are required by law to give the tenant details about how the deposit is protected including:

  • The contact details of the tenancy deposit scheme
  • Your contact details of those of your agent
  • How the tenant can apply for the release of the damage deposit
  • Information explaining the purpose of the damage deposit
  • What to do if there is a dispute about the damage deposit

It's important that you give your tenant the right information; otherwise you may find that you're unable to seek possession from the tenant and you may be liable to pay them a sum of money equal to three times the amount of the deposit.

The statement supplied by your tenancy deposit scheme administrator may not be sufficient, but, to make things easier, Lawpack has produced a Tenancy Deposit Protection Form (Section 213 Notice) which ensures compliance. All you have to do is fill in the details, sign it and hand it to your tenant.

Exclusions to the scheme

The law regarding tenancy deposit protection schemes doesn't apply where the tenancy is not an assured shorthold tenancy (i.e. tenancies where the rent is over £100,000 per year or where the landlord is resident in the same dwelling house as the tenant).

The tenancy deposit protection scheme is only applicable in England and Wales, but the scheme will be introduced in Scotland sometime this year.


The law relating to tenancy deposits may be found at these links:

Further information

External links


Tenancy deposit protection came into force in Scotland on 2 July 2012, under the Tenancy Deposit Schemes (Scotland) Regulations 2011. This requires that deposits for all tenancies (not just short assured tenancies) in Scotland need to be placed into one of the approved protection schemes. 

Since 15 May 2013, all tenancies in Scotland must have had the tenancy deposit placed in a protection scheme, irrespective of when they began.  

Currently, the three scheme operators are:

1. The Letting Protection Service Scotland, www.lettingprotectionscotland.com, tel 0844 472 6666

2. SafeDeposits Scotland, www.safedepositsscotland.com, tel 0845 604 4345

3. MyDeposits Scotland, www.mydepositsscotland.co.uk, tel 0845 634 5400

Unlike in England, all the approved schemes are custodial schemes and none of them permits the landlord or agent to retain the deposit monies.

The Scottish regulations require that the deposit be paid into one of the approved schemes within 30 days of receipt. It is also necessary to give the tenant certain information prescribed by regulation 42 of the Regulations. Scheme providers should provide a document for you that serves this purpose.

If the deposit is not protected and the required information not given to the tenant inside the required timescale, or at all, then the tenant is entitled to apply to the Sheriff Court for this to be done, and for financial penalties to be levied against the landlord. Further information about tenancy deposit protection can be found on the Scottish government website at: www.scotland.gov.uk.

Published on: March 28, 2012

Did you like this article? Share it!

Tenancy Agreement - Unfurnished

Unfurnished tenancy agreement advert
  • Solicitor approved
  • Guidance notes in the document
  • PDF format
  • Download now

Read More

Tenancy Deposit Protection

Section 213 notice advert image
  • Solicitor approved
  • Expert guidance notes
  • Download now

Read More