Tenant Deposit Protection: Everything UK Landlords Must Know
Deposit protection is one of the most litigated areas of landlord law — not because landlords are trying to cheat their tenants, but because many simply don't know the rules or miss a deadline. The consequences of getting it wrong are severe: a court can award the tenant 1–3 times the deposit amount as a penalty, and you cannot serve a valid Section 21 notice until the situation is remedied.
The Three Rules You Cannot Afford to Miss
Rule 1: Protect the deposit within 30 days of receiving it.
Rule 2: Serve the prescribed information within the same 30 days.
Rule 3: Use one of the three government-approved schemes.
The Three Approved Schemes
| Scheme | Type | Website |
|---|---|---|
| DPS (Deposit Protection Service) | Custodial and insured | depositprotection.com |
| TDS (Tenancy Deposit Scheme) | Custodial and insured | tenancydepositscheme.com |
| mydeposits | Insured only | mydeposits.co.uk |
Custodial vs Insured Schemes
Custodial: You hand the deposit money over to the scheme, which holds it for the duration of the tenancy. Free to use — the scheme earns interest on the money. At the end of the tenancy, you and the tenant agree the allocation and the scheme pays out accordingly.
Insured: You keep the deposit in your own bank account and pay a premium to the scheme, which insures it. You have use of the money during the tenancy. At the end, you repay the agreed amount directly to the tenant — the scheme only steps in if there's a dispute and you don't comply.
The Deposit Cap
Since the Tenant Fees Act 2019, deposits are capped at:
- 5 weeks' rent for properties with annual rent under £50,000
- 6 weeks' rent for properties with annual rent of £50,000 or more
Weekly rent = monthly rent × 12 ÷ 52. For a £1,200/month property: weekly rent = £276.92, 5-week cap = £1,384.60.
The Prescribed Information
Within 30 days of receiving the deposit, you must serve the prescribed information on the tenant. This includes:
- The address of the rented property
- The amount of the deposit
- The name and contact details of the scheme holding the deposit
- How the deposit can be repaid at the end of the tenancy
- What to do if there is a dispute about deductions
- The name and contact details of any third party who paid the deposit (e.g. a guarantor)
- The certificate confirming protection (from the scheme)
Each approved scheme provides its own prescribed information template — use it. Serve it on the tenant by email (keep a record of delivery) or in person with a signed receipt.
What Happens If You Get It Wrong
If you fail to protect the deposit or serve the prescribed information within 30 days, the court can order you to:
- Repay the deposit to the tenant; and/or
- Pay the tenant a penalty of 1–3 times the deposit amount
The penalty is at the court's discretion — 1× is common for administrative errors where the landlord acted in good faith. 3× is reserved for deliberate or repeated failures.
⚠ And critically: You cannot serve a valid Section 21 notice while a deposit is unprotected or the prescribed information has not been served. Even if you later protect it, you may need to repay the penalty before a Section 21 becomes valid.
At the End of the Tenancy
When the tenancy ends, you have up to 10 days to agree the deposit return with the tenant. If there's a dispute:
- Both parties submit their evidence to the scheme's Alternative Dispute Resolution (ADR) service
- A trained adjudicator reviews the evidence and makes a binding decision
- The process is free for both parties
- An inventory report and schedule of condition, taken at move-in and move-out, is the most important evidence you can provide
✓ OwnProperly: The Deposit Protection tab in each property records scheme name, certificate number, protection date and the deposit amount. Never lose track of which scheme protects which property.
Track every deposit in one place
OwnProperly logs deposit scheme, certificate number and protection date for every tenancy — so you always know where each deposit is held.
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