The law

What is tenancy deposit protection?

Landlords and letting agents who rent properties on an assured shorthold tenancy in England or an occupation contract in Wales , are legally required to protect any tenancy deposits taken (also known as security deposits) in a government authorised tenancy deposit scheme.

The tenant will then get the deposit back if they meet all their responsibilities laid out in their tenancy agreement, including not causing damage to the property and its contents, and paying all the rent.

Landlords and letting agents must protect the deposit within 30 days of receiving it.

They must also send ‘prescribed information’ to the tenant and anyone who contributed to the deposit, after they have protected it.

What is the difference between a holding deposit and a tenancy deposit?

A holding deposit is commonly taken by a landlord or letting agent to reserve a property. It should be no more than one week’s rent and when the tenant moves in, can form part of the tenancy deposit.

Holding deposits do not need to be protected in a tenancy deposit scheme but need to comply with the Tenant Fees Act.

Tenancy deposits (or security deposits) are taken by a landlord or letting agent as security against the tenant damaging a property or failing to meet the requirements of the tenancy agreement.

Tenancy deposits for assured shorthold tenancies must be protected in a government approved deposit protection scheme within 30 days of the landlord or letting agent receiving it. It must not be more than five weeks’ rent if the annual rent is below £50,000 and six weeks’ rent if the annual rent is over £50,000. You can find out more in our deposit cap guide.

What is an assured shorthold tenancy?

An assured shorthold tenancy (AST) is the most common type of tenancy from a private landlord or letting agent in England. It is usually an AST if:

• The original tenancy started after 28 February 1997
• The tenant does live with the landlord

It’s not an AST if your rent is:

• More than £100,000 a year
• Less than £1,000 a year in London or £250 a year outside London

If you’re still unsure whether you have an AST, Shelter has a tenancy rights checker to help you find out.

What is an occupation contract?

In 2016 the Welsh Government passed The Renting Homes (Wales) Act that will apply to virtually all rented properties in Wales.

The act will replace most current tenancies and licences with two kinds of “occupation contracts”:

• Secure contract
• Standard contract

The type of occupation contract will depend on whether property is owned by a private landlord or a council or housing association.
The act is not yet in force but it is anticipated that they will be introduced in Spring 2022.

What is the ‘prescribed information’?

The ‘prescribed information’ is the information a landlord or letting agent must give to the tenant and anyone who contributed to the deposit. The landlord or letting agent has 30 days from receiving the deposit to tell the tenant:

• the address of the rented property
• how much deposit has been paid
• how the deposit is protected
• the name and contact details of the tenancy deposit protection scheme and its dispute resolution service

• their name and contact details
• the name and contact details of any third party that’s paid the deposit
• what to do if the tenant can’t get hold of them at the end of the tenancy
• how to apply to get the deposit back
• why they would keep some or all of the deposit
• what to do if there’s a dispute over the deposit

mydeposits provides all the legal paperwork for its landlord and letting agent members. They just need to make sure they give all the information to the tenants.

Can a deposit be paid and protected in instalments?

Yes, a deposit can be paid and protected in instalments, as long as the tenancy deposit regulations requirements are followed. For both the insurance-backed (Fee) and custodial (Free) deposits, the full expected deposit amount should be protected, remembering the overall value of the deposit must not exceed five weeks’ rent (six weeks’ rent if the annual rent is over £50,000).

For our insurance-backed (Fee) members, if the deposit is not fully paid when the tenancy ends, please contact us so we can amend the protection for you.
For our custodial (Free) members, you should log in to your account and add on any amount received in ‘amount protected’ within 30 days of receiving it. The prescribed information will need to be reissued each time a new instalment is protected.

What happens at the end of the tenancy?

When the tenancy ends, the landlord or letting agent has 10 days to tell the tenant if they intend to return the full deposit or propose deductions and return any undisputed amount.

The landlord or letting agent may propose deductions from the deposit if the tenant does not meet the terms of their tenancy agreement, such as leaving damage or outstanding rent or bills.

If no agreement is reached, then you will be able to use the free dispute resolution service offered by your deposit protection scheme. The scheme will ask for evidence to be provided by both sides and make a final decision.

Everyone involved must agree to use the free dispute resolution service or either party can choose the option of going to court to resolve the dispute.

What deductions can be made from the deposit?

There are many reasons why a landlord or letting agent may want to make deductions from a deposit. The tenancy agreement should list all the responsibilities of the tenant and explain in what circumstances the deposit may be withheld. Common reasons for making deductions from deposits include:

• Cleaning
• Damage to the property and its contents
• Missing items that belong to the landlord
• Indirect damage due to neglect and lack of maintenance
• Unwanted belongings left after the keys are returned
• Unpaid rent
• Unpaid bills

Examples of damage that may cause deductions to deposits include:

• Cigarette and hair straightener burns on carpets and upholstery
• Holes in the wall from hanging picture and decorations
• Broken furniture from misuse

How can I check if a deposit is protected?

At mydeposits you can use our deposit checker. If you cannot find your deposit with us, there are two other schemes it could be protected with DPS and TDS. Use our deposit checker here.

What happens if a deposit is not protected?

If a deposit has not been protected the tenant can take the landlord to court and claim compensation. The tenant will have to pay a court fee (currently £308), which can be claimed back from the landlord if they win their case. It may be quicker and cheaper for everyone to reach a mutual agreement and avoid using the court process.

If the tenant wins the court case, the landlord may be required to repay the deposit, pay it into a tenancy deposit scheme within 14 days and/or pay the tenant up to three times the deposit within 14 days.

The court may also decide that the tenant doesn’t have to leave the property at the end of the tenancy which leaves the landlord unable to use a Section 21 notice to end the tenancy.