Tenancy deposit protection schemes: explained

Since 2007, private landlords in England and Wales have been legally required to protect tenancy deposits in a government-approved scheme. Understanding how these schemes work, and what happens when a landlord breaks the rules, can save you money and protect your rights at the end of your tenancy. Below, we cover the three main schemes, the rules landlords must follow, and what you can do if things go wrong.

Why deposit protection exists

Before April 2007, tenants had no formal protection for their deposits. Landlords could retain deposits for dubious reasons, and tenants had no easy way to challenge deductions. The Tenancy Deposit Protection scheme under the Housing Act 2004 changed this by requiring landlords to hold deposits in ring-fenced accounts and providing a free dispute resolution process.

The three government-approved schemes

Deposit Protection Service (DPS): The largest custodial scheme. The DPS holds the deposit itself, it is paid to the DPS, not the landlord. At the end of the tenancy, the landlord requests release of funds and the tenant either agrees or disputes the amount.

mydeposits: An insurance-backed scheme. The landlord holds the deposit themselves but pays a fee to mydeposits for insurance cover. If there is a dispute, mydeposits adjudicates.

Tenancy Deposit Scheme (TDS): Also insurance-backed. The landlord holds the deposit and TDS provides insurance and dispute resolution.

What the landlord must do

Within 30 days of receiving the deposit, your landlord must:

1. Place the deposit in a government-approved scheme (or pay the fee for an insurance-backed scheme)
2. Provide you with "prescribed information", a written document confirming:

• Which scheme protects the deposit
• The scheme's contact details and dispute resolution process
• How to get the deposit back
• The conditions under which the landlord may make deductions
• The steps to take if there is a dispute

This is a legal requirement, not a courtesy. Failure to do either of these things is a breach of the law.

What happens if your landlord doesn't protect the deposit?

If your landlord fails to protect your deposit or fails to provide prescribed information within 30 days, you can apply to the county court. The court can order the landlord to:

• Return the full deposit, or
• Pay it into a scheme, plus

In addition, the court must also award you a penalty of between one and three times the value of the deposit. In practice, courts commonly award three times where the failure is deliberate or persistent.

The claim can be made during the tenancy or up to six years after the tenancy ends.

There is also an important consequence if the landlord tries to serve a Section 21 notice (a no-fault eviction notice): they cannot validly serve a Section 21 notice while the deposit is unprotected or prescribed information has not been given. This is a defence to possession proceedings.

How disputes are resolved

If your landlord wants to make deductions from your deposit at the end of the tenancy and you disagree, you can raise a dispute through the scheme that holds your deposit. Dispute resolution is free and handled by an independent adjudicator.

You do not need a solicitor. The adjudicator considers:

• The check-in inventory (if one was done)
• The check-out report and photographs
• Any written correspondence between you and the landlord
• Evidence of fair wear and tear

Fair wear and tear: Landlords cannot deduct for normal wear and tear, the gradual deterioration of a property from ordinary use. They can only deduct for damage beyond fair wear and tear, or for cleaning that was not carried out at a standard consistent with the check-in condition.

If you did not have a check-in inventory

The absence of a check-in inventory is actually helpful to you in a dispute. Without an inventory, the landlord cannot prove what condition the property was in at the start of the tenancy, making it very difficult to justify deductions for damage.

When should I contact Support for Tenants?

If your landlord has failed to protect your deposit, you may have a significant financial claim. For deposit protection issues, the relevant route is through the county court, this is separate from a disrepair claim. However, if your home also has disrepair, damp, mould, or broken heating, call us on 0800 030 4669 to discuss both issues.

No upfront cost. You only pay if you win, and the fee comes out of the compensation. If you don't win, you pay nothing.

Sources

• Section 213, Housing Act 2004 (tenancy deposit schemes) (legislation.gov.uk)

Related articles

• My deposit isn't protected, what now?
• Holding deposit, not returned, what to do