The deposit protection rules in plain English
Every time a landlord takes a tenancy deposit in England, they must follow a strict legal process. The rules are set out in the Housing Act 2004 and have not changed under the Renters’ Rights Act 2025 — but the stakes have. A landlord who cannot prove deposit compliance may be unable to use key Section 8 possession grounds, including Ground 8 for rent arrears.
What counts as a tenancy deposit?
A tenancy deposit is any sum of money taken as security against the performance of the tenant’s obligations. This includes traditional security deposits, damage deposits, and any sum described as a “holding deposit” if it is retained beyond the permitted period. It does not include advance rent payments, provided they are properly documented as such.
The maximum deposit a landlord can take for most tenancies is 5 weeks’ rent (where the annual rent is under £50,000) or 6 weeks’ rent (where the annual rent is £50,000 or more). Taking a deposit in excess of these limits is unlawful under the Tenant Fees Act 2019.
The three approved schemes
Every tenancy deposit must be protected in one of three government-approved schemes:
- Deposit Protection Service (DPS) — custodial and insured options
- myDeposits — insured option
- Tenancy Deposit Scheme (TDS) — custodial and insured options
Each scheme offers a free adjudication service to resolve disputes at the end of the tenancy. The schemes are funded by the interest earned on custodial deposits and by scheme membership fees for insured deposits.
The 30-day deadline
From the date you receive the deposit, you have 30 days to:
- Register the deposit with one of the approved schemes
- Provide the tenant with the “prescribed information” required by law
The prescribed information includes: the amount of the deposit, the address of the property, the name and contact details of the scheme, how to apply for the deposit at the end of the tenancy, the circumstances in which deductions may be made, and how to raise a dispute.
Most schemes provide a template prescribed information form. Fill it in, sign it, and give a copy to the tenant. Keep a copy for your records.
Insured vs custodial: which to choose?
Custodial schemes (DPS Custodial, TDS Custodial) require you to hand the deposit over to the scheme, which holds it for the duration of the tenancy. It is returned at the end, less any agreed deductions. The scheme handles all adjudications. There is no membership fee.
Insured schemes (DPS Insured, myDeposits, TDS Insured) allow you to retain the deposit yourself. You pay a protection fee or membership fee, and the scheme insures the deposit against the risk that you fail to return it. You manage the deposit and the end-of-tenancy process; the scheme adjudicates disputes only.
For most individual landlords, custodial schemes are simpler and free. Letting agents and portfolio landlords often prefer insured schemes for cash flow reasons.
What happens if you get it wrong?
Failing to protect a deposit within 30 days, or failing to serve the prescribed information, triggers serious consequences:
- The tenant can apply to the county court for a penalty of between 1x and 3x the deposit amount
- The court has no discretion — it must award a penalty if the breach is proved
- You cannot serve a valid Section 21 notice (though this is now abolished) and may face difficulties with Section 8 possession grounds
- If you later try to protect the deposit out of time, you avoid further liability but remain exposed for the period of non-compliance
At the end of the tenancy
Within 10 working days of the tenancy ending, you should agree with the tenant how the deposit will be returned. If there are no deductions, return the deposit in full promptly. If you intend to make deductions, you must provide the tenant with an itemised schedule of proposed deductions and supporting evidence (invoices, photographs, inventory comparison).
If the tenant disputes your deductions, the matter goes to the scheme’s free adjudication service. The adjudicator will review the evidence and make a binding decision. Landlords who cannot produce evidence — a check-in inventory, photographs, and contractor invoices — almost always lose.
How Comprent helps
Comprent generates a deposit protection compliance task the moment you add a tenancy, with the 30-day deadline clearly tracked. The task records which scheme you used and the date of registration, giving you an auditable evidence trail for every property in your portfolio.