Deposit protection: the complete landlord guide

What is deposit protection?

Since 2007, every landlord in England and Wales who takes a tenancy deposit for an assured shorthold tenancy must protect it in a government-authorised tenancy deposit scheme within 30 days of receiving it. This is set out in sections 213 to 215 of the Housing Act 2004.

There are two types of scheme: custodial (the scheme holds the money) and insured (you hold the money but the scheme insures it). Both are legally valid.

The three authorised schemes

There are three government-authorised schemes in England and Wales:

• Deposit Protection Service (DPS) - custodial and insured options
• MyDeposits - custodial and insured options
• Tenancy Deposit Scheme (TDS) - custodial and insured options

You must use one of these three. No other scheme is valid. It does not matter which one you choose, but you must protect the deposit with one of them.

The two separate obligations

This is where many landlords get caught out. There are two separate legal obligations, and you must comply with both:

1. Protect the deposit

You must place the deposit in one of the three authorised schemes within 30 days of receiving it. The 30-day clock starts from the day you receive the money, not the day the tenancy starts.

2. Serve the prescribed information

You must give the tenant the prescribed information about the deposit protection within 30 days of receiving the deposit. This is a completely separate obligation from actually protecting the deposit.

Many landlords protect the deposit on time but forget to serve the prescribed information. This is just as serious a breach as not protecting the deposit at all.

What must the prescribed information include?

The prescribed information must tell the tenant:

• The name and contact details of the tenancy deposit scheme used
• The amount of the deposit
• The landlord's name and contact details (or the agent's, if the agent is protecting it)
• The property address
• How to apply for the release of the deposit at the end of the tenancy
• What to do if there is a dispute about the deposit
• The circumstances in which the landlord may retain some or all of the deposit
• Information about the scheme's alternative dispute resolution service

Each scheme provides a template prescribed information form. Use it. Do not try to write your own.

What happens if you fail to comply?

The penalties for failing to protect a deposit or serve the prescribed information are among the harshest in landlord law:

The compensation is mandatory. A court has no discretion to award nothing. The minimum is 1x the deposit amount and the maximum is 3x.

Section 8 possession blocked

If the deposit is not protected or the prescribed information has not been served, you cannot serve a valid Section 8 notice for most grounds. This means you cannot regain possession of your property through the courts until you put the deposit right.

This is often a bigger problem than the financial penalty. If you need to evict a tenant but your deposit protection is not in order, you are stuck.

When to re-serve prescribed information

You must serve the prescribed information again if any of the following change:

• The deposit amount changes (e.g., after a rent increase and corresponding deposit top-up)
• The scheme changes (if you switch from one scheme to another)
• The landlord's contact details change
• The tenancy is renewed (a new fixed term, not just a statutory periodic continuation)

If you are in any doubt, re-serve the prescribed information. There is no penalty for serving it more than once.

Deposit disputes at the end of the tenancy

When the tenancy ends, both landlord and tenant must agree on how the deposit is returned. If there is a dispute, either party can use the scheme's alternative dispute resolution (ADR) service, which is free.

Common reasons for deposit deductions include:

• Damage beyond fair wear and tear
• Unpaid rent
• Cleaning costs (if the property was left significantly dirtier than at check-in)
• Missing or damaged items listed on the inventory

Tip: Always carry out a detailed check-in inventory with dated and timestamped photographs at the start of the tenancy. Without this, you will struggle to justify any deductions.

Common mistakes

• Protecting late. The 30-day deadline is strict. If you protect on day 31, you have breached the rules.
• Protecting but not serving prescribed info. These are separate obligations. You must do both.
• Not re-serving after changes. If you switch schemes or your contact details change, re-serve the prescribed information.
• Holding a "holding deposit" and treating it as a tenancy deposit. If you take money before the tenancy starts and then treat it as the deposit, the 30-day clock may have already started.
• Not keeping proof of service. If the tenant claims they never received the prescribed information, you need evidence. Use recorded delivery or email with read receipt.

How LetShield helps

LetShield tracks both the deposit protection date and the prescribed information service date separately. You can record which scheme you used, the protection reference number, and when the prescribed information was served. The dashboard shows clear status indicators for both obligations, and the audit trail provides timestamped proof of when you served the prescribed information to your tenant.