Property and Homes

Tenancy Deposit Protection – Which is right for you?

Since the Housing Act came into effect in 2004, as a landlord, it has been a legal requirement to put your tenants’ deposit into a government-approved tenancy deposit scheme if you rent your home on an assured shorthold tenancy that started after 6 April 2007. In England and Wales your deposit can be registered with:

The schemes are designed to keep the tenant’s money safe and to help make sure they get back what they are owed at the end of your tenancy. There are two types of schemes offered by the government-approved providers, insured and custodial.

Custodial or Insured, which option is best for you?

The custodial deposit protection schemes are ideal for landlords who don’t want to hold the deposit themselves and is usually free for landlords to join and use.

Custodial scheme

A custodial scheme protects a tenant’s deposit because:

  • the scheme administrator holds the deposit until it is required to be paid back
  • the deposit is safe if the landlord or their letting agent goes out of business

Insured deposit protection scheme

The insured deposit protection scheme is completely free to join. As a landlord, you pay a small fee to protect each deposit, which means you can keep your deposit in your bank account for the duration of the tenancy, keeping the accrued interest and at the end of the tenancy, you as the landlord would administer the repayment with the tenant. If the tenant disputes any deductions, the protection schemes you joined would provide a free dispute resolution service.




Deposit held by

Scheme provider




Small fee

Landlord/Agent must provide prescribed information



Can return the agreed deposit without involved scheme



Must involve scheme with disputes



Free alternative dispute resolution



Dispute decision is final



How much should the deposit be?

The tenancy deposit will usually be the same amount as 4 or 5 weeks’ rent as it is now illegal for landlords to force tenants to pay a deposit of more than 5 weeks’ rent (or 6 weeks’ rent if the annual rent is more than £50,000).

It’s all about timing

Landlords or letting agents must put the deposit in the scheme within 30 days of getting it and then provide the tenant with the ‘prescribed information’ which includes details about the property and your deposit. Once you have registered with a scheme will give you the option to print out the ‘prescribed information’. Landlords cannot evict tenants with a section 21 notice if they haven’t given their tenants this information.

At the end of the tenancy

Landlords must return a tenant’s deposit within 10 days of both agreeing how much will be paid back after you have dealt with any issues that may require a deduction from the rent (i.e. unpaid rent, damage to the property etc.).

If the tenants dispute the amount to be paid back then the deposit will be protected in the Tenancy Deposit Protection scheme until the issue is sorted out.

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