If you take a deposit from a tenant on an assured tenancy, you are legally required to protect it in a government-approved tenancy deposit protection scheme within 30 days of receiving it and to give the tenant a specific set of information about where the money is held. These are not optional steps and there are significant financial penalties for failing to comply. This guide covers which tenancies are affected, how much you can take as a deposit, the three approved schemes, what prescribed information you must give, how the deposit is handled at the end of the tenancy, how disputes are resolved, and the consequences of non-compliance.
Which tenancies require deposit protection?
The requirement to protect a deposit applies to any assured shorthold tenancy that started after 6 April 2007. Under the Renters Rights Act 2025, all assured tenancies are now periodic and the assured shorthold tenancy type is being removed, but the obligation to protect deposits continues under the new system. The duty applies wherever a landlord takes a deposit in connection with an assured tenancy. (Source: Tenancy deposit protection, GOV.UK; Guide to the Renters Rights Act, GOV.UK, November 2025)
The duty applies even where the deposit is paid by a third party rather than by the tenant directly. If a parent, a local authority rent deposit scheme, or any other third party pays the deposit on behalf of the tenant, you must still protect it in an approved scheme. (Source: Tenancy deposit protection, GOV.UK)
Holding deposits, which are payments made to reserve a property before a tenancy agreement is signed, do not need to be protected. However, once the tenant moves in and the holding deposit converts into a tenancy deposit, the protection obligation begins. (Source: Tenancy deposit protection, GOV.UK)
How much can you take as a deposit?
The Tenant Fees Act 2019 introduced a cap on the amount landlords can require as a tenancy deposit. Where the annual rent for the property is less than £50,000, the maximum deposit is five weeks rent. Where the annual rent is £50,000 or more, the maximum is six weeks rent. You cannot ask a tenant to pay more than this. If a tenant has overpaid, they can request a refund of the excess and report the landlord to the local council if it is not returned. (Source: How to Rent guide, DLUHC, October 2023)
The three government-approved schemes
In England, there are three government-approved tenancy deposit protection schemes. These are the Deposit Protection Service, MyDeposits, and the Tenancy Deposit Scheme. You must use one of these three schemes. No other arrangement qualifies as proper deposit protection for the purposes of the law. (Source: Tenancy deposit protection, GOV.UK)
Each scheme operates in one of two ways. Custodial schemes hold the deposit money on behalf of both parties throughout the tenancy and return it at the end. Insured schemes allow the landlord to hold the deposit themselves, with the scheme providing insurance to guarantee the tenant's money. Both are legally valid. The choice of scheme and type is yours to make, but you must register the deposit within the 30-day deadline whichever approach you use.
The 30-day deadline and prescribed information
You must protect the deposit within 30 days of receiving it. You must also give the tenant a set of prescribed information within the same 30-day period. The prescribed information is a specific list of details you are required to provide in writing. It must cover the address of the rented property, the amount of the deposit you have received, how the deposit is protected, the name and contact details of the scheme and its dispute resolution service, your name and contact details or those of your letting agent, the name and contact details of any third party who paid the deposit, the reasons for which you might make deductions from the deposit at the end of the tenancy, and how the tenant can apply to get the deposit back. You must also tell the tenant what to do if they cannot get hold of you at the end of the tenancy and what happens if there is a dispute about the deposit. (Source: Tenancy deposit protection, GOV.UK)
The prescribed information requirement is separate from the act of registering the deposit. You must do both within the 30-day window. Simply registering with the scheme is not enough if you do not also provide the prescribed information to the tenant in writing.
Returning the deposit at the end of the tenancy
When the tenancy ends and you and the tenant have agreed how much of the deposit should be returned, you must return the agreed amount within 10 days. If you are using a custodial scheme, the scheme holds the money and releases it once both parties confirm the agreed amount. If you are using an insured scheme, you hold the money yourself and must return the agreed portion directly to the tenant within 10 days. (Source: Tenancy deposit protection, GOV.UK)
If there is a dispute between you and the tenant about deductions, the deposit remains protected in the scheme until the issue is resolved. You cannot simply retain the money while the dispute is ongoing without the matter being referred to the scheme's dispute resolution service or the courts.
How deposit disputes are resolved
Every government-approved scheme provides a free alternative dispute resolution service for cases where the landlord and tenant cannot agree on deductions. If you want to make deductions for damage, cleaning, unpaid rent, or any other reason, and the tenant disputes those deductions, either party can refer the matter to the scheme's adjudication service. Both parties must agree to use the service, and both will be asked to provide evidence. The adjudicator's decision is final and binding on both parties. (Source: Tenancy deposit protection, GOV.UK)
The outcome of any adjudication will depend on the evidence you can produce. This is why a detailed, signed inventory at the start of the tenancy, supported by photographs, is essential. Without an inventory, it is very difficult to prove what condition the property was in at the start and therefore difficult to justify deductions for damage. If you do not have an inventory you may lose a dispute even where damage has clearly occurred.
If the tenant cannot contact you at the end of the tenancy and the deposit is held by one of the approved custodial schemes, the tenant can raise a dispute directly with the scheme to recover their deposit without needing your cooperation. (Source: Tenancy deposit protection, GOV.UK)
What happens if you do not protect the deposit
If a tenant applies to the county court and the court finds that you have not protected the deposit or have not provided the prescribed information within the 30 days required, it can order you to either repay the deposit to the tenant or pay it into a scheme's bank account within 14 days. The court may also order you to pay the tenant up to three times the value of the deposit within 14 days of making the order. (Source: Tenancy deposit protection, GOV.UK)
In addition, the court may decide at the end of the tenancy that the tenant is not required to leave the property if the deposit has not been properly protected. This means that failure to protect a deposit can directly affect your ability to regain possession of the property.
Under the Renters Rights Act 2025, failure to protect a deposit also blocks your ability to use most possession grounds. If the deposit is not properly protected, a court will not grant a possession order except where the ground is for antisocial behaviour. The government has confirmed that landlords can rectify the non-compliance to unblock their possession route, but the deposit must be protected and the prescribed information provided before proceedings can succeed. (Source: Guide to the Renters Rights Act, GOV.UK)
Deposit protection and the link to your compliance record
Because unprotected deposits block possession proceedings and expose you to a court order for up to three times the deposit amount, this is one of the higher-consequence compliance failures in residential letting. It is also one of the most straightforward to avoid. The deadline is fixed, the schemes are easy to access online, and the prescribed information templates are available from each scheme.
Keeping a clear record of the date you received the deposit, the date you registered it, and the date you provided the prescribed information to the tenant is essential. In any dispute or court proceedings, you will need to demonstrate that you complied within the 30-day window.
What this means for landlords
You must register any tenancy deposit in one of the three government-approved schemes within 30 days of receiving it. The maximum deposit you can take is five weeks rent where the annual rent is below £50,000, or six weeks rent where it is £50,000 or more. Within the same 30-day period you must give the tenant the full set of prescribed information in writing. At the end of the tenancy you must return the agreed amount within 10 days. If there is a dispute, the scheme's free adjudication service is available to both parties. Failure to protect the deposit can result in a court order requiring you to pay the tenant up to three times the deposit amount, and will block most possession grounds until the non-compliance is remedied.
This guide is for informational purposes only and does not constitute legal advice.