Tenancy Deposit Schemes

27 May 2023

Deposits where there is an Assured Shorthold Tenancy (AST) are required to be protected under an approved scheme, which is either custodial or insurance-based (or both), and acts independently of agents and landords.

Schemes and Procedures

The landlord or agent must:

• Within 30 days, contact the scheme being used and give details of the deposit, pay the deposit to the scheme (for custodial schemes) or pay the required fee (for insurance-based schemes)
• Within 30 days, give the tenant details of the prescribed information and the scheme being used
• At the end of the tenancy, return any agreed or determined amount of deposit within 10 days of agreement or determination.

The Landlord or agent must give the tenant certain information within 30 days covering, for example:

• Property address and deposit amount
• Contact details of the scheme and the landlord or agent
• Procedures for deposit release
• Dispute procedures.

Restrictions and penalties apply if these rules are not followed.

Tenancy Deposit Protection Schemes

You can use any of the following schemes if your property is in England or Wales:

• Deposit Protection Service
• MyDeposits
• Tenancy Deposit Scheme

There are separate TDP schemes in Scotland and Northern Ireland.

All TDP schemes offer you 2 options:

• the scheme hold the deposit for free - known as a ‘custodial’ scheme
• you or the agent holds the deposit and you pay the scheme to insure it - known as an ‘insured’ scheme

At the End of the Tenancy

The deposit must be returned to your tenants within 10 days of you both agreeing how much they’ll get back.

If you’re in a dispute with your tenants

The deposit is protected in the scheme until the issue is settled.

If you’re in an ‘insured’ scheme, you or the agent must give the deposit to the TDP scheme. They will hold it until the issue is settled.

Disputes

There is a dispute resolution service built into all the schemes which is free to use but not mandatory. Where this is used, the decision is binding on both parties. The custodial scheme continues to hold the deposit until resolution. Once settled, payment is made in accordance with the decision of the dispute service within 10 days. With insurance-based schemes, the landlord or agent hands over to the scheme the disputed part of the deposit, and the scheme will hold this until the dispute is resolved. It is then distributed within 10 days.

Inventories and Schedules of Condition

Having an inventory and schedule of condition at the start of a tenancy, although not mandatory, makes any claim for damages against the deposit much easier to establish as they will be taken as the measure of the state of the property and the landlord’s fixtures and fittings at the start of the tenancy.