Deposit Scheme

From 6 April 2007, all deposits taken by landlords and letting agents for Assured Shorthold Tenancies in England and Wales must be protected by one of the tenancy deposit protection schemes.

The deposit schemes provide tenants with a degree of protection and enable them to get all or part of their deposit back when they are entitled to it. The presence of the schemes also encourage landlords & tenants to make a clear agreement at the start of a tenancy on the condition of the property, usually by way of a formal inventory. The schemes also provide a free dispute resolution service in the event that landlords & tenants cannot agree on how the deposit is to be repaid at the end of a tenancy

There are two types of tenancy deposit protection schemes available for landlords and letting agents:

CUSTODIAL SCHEMES

The tenant pays the deposit to the landlord.

The landlord retains the deposit and pays an insurance premium to the scheme provider.

Within 30 days of receiving the deposit the landlord or agent must provide the tenant with details of how their deposit is being protected, including the contact details of the tenancy deposit scheme selected, the landlord or agent’s contact details, how to apply for the release of the deposit, and what to do if there is a dispute about the deposit.

At the end of a tenancy, if an agreement is reached about how the deposit should be allocated, the landlord (or agent) will return the agreed amount.

If there is a dispute regarding how the deposit should be divided, the landlord must hand over the disputed amount to the scheme provider until the dispute is resolved.

If for any reason the landlord fails to comply with the rules, the insurance arrangements will ensure the return of the deposit to the tenant if they are entitled to it.

There is currently only one custodial scheme, and this is the scheme that PRP use to register tenancy deposits where we are asked to do so on behalf of a landlord.

Use our Deposit Calculator to find out the Deposit you will need to secure your next home

The Deposit Protection Service (The DPS) is free to use and is open to all landlords & agents. The service is funded from the interest earned from deposits held in the scheme. Their contact number is 0330 303 0030.

INSURANCE-BASED SCHEMES

The tenant pays the deposit to the landlord or agent.

The landlord or agent then pays the deposit to the scheme provider.

Within 30 days of receiving the deposit the landlord or agent must provide the tenant with details of how their deposit is being protected, including the contact details of the tenancy deposit scheme selected, the landlord or agent’s contact details, how to apply for the release of the deposit, and what to do if there is a dispute about the deposit.

At the end of the tenancy, if an agreement is reached about how the deposit should be divided, the scheme will return the deposit as agreed by both parties.

If there is a dispute, the scheme will hold the deposit until the dispute resolution service or courts decide what is fair.

The interest accrued on deposits held in the scheme will be used to pay for the running of the scheme and any surplus will be used to offer interest to the tenant, or landlord if the tenant isn’t entitled to it.

Mydeposits is a partnership between the National Landlords Association and Hamilton Fraser Insurance. Their contact number is 0333 321 9401.


Tenancy Deposit Scheme is a partnership between RICS, ARLA, NAEA and Residential Landlord Association. Their contact number is 0300 037 1000.

For more information on Tenancy Deposit Protection, visit the Directgov website or email us at [email protected].