The Law on Deposit Protection
Under the Housing Act 2004 (as amended), any landlord who receives a tenancy deposit for an assured shorthold tenancy (AST) in England and Wales must:
- Protect the deposit with one of three government-approved tenancy deposit protection schemes within 30 days of receiving it.
- Provide the tenant with prescribed information — a certificate from the scheme and the scheme's information leaflet — within the same 30-day period.
Failure to comply is a serious breach of the law. Tenants can apply to court, which can order the landlord to repay the deposit and pay a penalty of between 1 and 3 times the deposit amount on top. A landlord who has not protected the deposit cannot serve a valid Section 21 (no-fault eviction) notice.
These rules apply to most private residential tenancies in England and Wales. Scotland has separate but broadly equivalent rules (see the Scotland section below).
Deposit Calculator: Caps and Requirements
Deposit Protection Checker
Enter your rent to check the maximum legal deposit, holding deposit, and protection requirements for your tenancy.
The Three Government-Approved Schemes
Tenancy Deposit Scheme (TDS)
One of the oldest and largest schemes. Available to landlords and letting agents.
Custodial (Free) Insured (Paid)Website: tenancydepositscheme.com
Deposit Protection Service (DPS)
Government-backed, widely used across England and Wales.
Custodial (Free) Insured (Paid)Website: depositprotection.com
myDeposits
Popular with individual landlords. Partnered with Hamilton Fraser Insurance.
Custodial (Free) Insured (Paid)Website: mydeposits.co.uk
Custodial vs Insured Schemes
| Feature | Custodial | Insured |
|---|---|---|
| Who holds the deposit? | The scheme | The landlord or agent |
| Cost to landlord | Free | £20–£40 premium per tenancy |
| Interest on deposit | Scheme holds in interest account | Landlord may earn interest |
| Tenant's money safety | Secured with scheme | Secured via insurance |
| Repayment at end | Scheme pays direct | Landlord returns (scheme covers if landlord defaults) |
| Dispute resolution | Free ADR service | Free ADR service |
| Best for | Tenant security; simple process | Landlords wanting to hold deposit for referencing |
Deposit Cap: Maximum Deposit Amounts
The Tenant Fees Act 2019 (in force from 1 June 2019 in England, 1 September 2019 in Wales) caps the maximum security deposit a landlord can charge:
- 5 weeks' rent — where the annual rent is under £50,000
- 6 weeks' rent — where the annual rent is £50,000 or more
A "week's rent" is calculated as: monthly rent × 12 ÷ 52. Charging more than this cap is a prohibited payment under the Tenant Fees Act, and landlords/agents who charge excess deposits can face financial penalties.
Holding Deposits
A holding deposit is a payment made before signing a tenancy agreement to reserve a property. The rules under the Tenant Fees Act 2019:
- Maximum: 1 week's rent
- The landlord or agent has a deadline agreement period of 15 calendar days (or longer if agreed in writing) to progress the tenancy.
- If the tenancy proceeds, the holding deposit must be refunded or put towards rent or security deposit.
- The holding deposit is non-refundable only if the tenant: withdraws, provides false or misleading information, or fails a right-to-rent check.
- The landlord cannot keep the holding deposit simply because they chose not to proceed with the tenancy.
Note: a holding deposit is not a tenancy deposit and does not need to be protected under a scheme — it is not a security deposit for the tenancy itself.
Prescribed Information: What Landlords Must Provide
Within 30 days of receiving the deposit, the landlord must provide the tenant with:
- The name and contact details of the deposit protection scheme being used
- Details of how to apply for the return of the deposit at the end of the tenancy
- The scheme's information leaflet (provided by the scheme itself)
- Details of the scheme's dispute resolution service (ADR)
- A statement of the grounds under which the landlord may retain all or part of the deposit
The prescribed information must be given to the tenant and any relevant person (such as a guarantor or parent who paid the deposit). Failure to provide prescribed information — even if the deposit was protected — constitutes a breach and can result in court penalties.
What Landlords Can and Cannot Deduct
Deductions ALLOWED
- Cleaning costs — if property is left dirtier than at the start of tenancy (inventory evidence needed)
- Damage beyond fair wear and tear — for example, broken fixtures, holes in walls, burns
- Unpaid rent or utility bills (if the tenant was responsible)
- Missing items listed on the check-in inventory
- Redecoration where damage is beyond ordinary use (e.g. significant stains, crayon marks)
- Reasonable costs of replacing damaged items (adjusted for age and condition)
Deductions NOT ALLOWED
- Fair wear and tear — normal deterioration through everyday use (faded carpets, minor scuffs)
- Pre-existing damage — present at start of tenancy and documented in inventory
- General redecoration simply because the landlord wants to refresh the property
- Issues the landlord failed to repair during the tenancy (tenant not responsible)
- Replacing items at full new cost without accounting for age and condition (betterment)
- Professional cleaning charges if the property was not professionally cleaned at the start
- Any charge that was already covered by a prohibited payment clause
The Dispute Resolution Process
If you and your landlord cannot agree on deposit deductions, either party can apply to the scheme's Alternative Dispute Resolution (ADR) service. This is:
- Free for both landlords and tenants
- Binding — the adjudicator's decision is final for both parties
- Evidence-based — the adjudicator reviews documents, not oral statements
The process typically works as follows:
- Tenancy ends. Landlord and tenant attempt to agree on any deductions.
- If no agreement, either party applies to the scheme's ADR service within the scheme's timeframe.
- The landlord submits their evidence (typically within 10 days): check-in inventory, check-out report, photos, receipts, quotes.
- The tenant submits their response and counter-evidence (typically within 10 days of seeing the landlord's evidence).
- The adjudicator reviews all evidence and makes a decision, typically within 28 days.
- The scheme distributes the deposit accordingly.
Evidence That Wins Deposit Disputes
- Detailed check-in inventory with photographs (dated and signed by both parties)
- Check-out report compared directly against check-in conditions
- Dated photographs from move-out showing property condition
- Written communications confirming any agreed work or repairs
- Quotes or receipts for cleaning / repair work claimed
Penalties for Non-Compliance
If a landlord fails to protect the deposit or provide prescribed information within 30 days, the consequences are severe:
- The court can order the landlord to repay the deposit to the tenant
- The court can order the landlord to pay a penalty of 1 to 3 times the deposit amount
- The landlord cannot serve a valid Section 21 notice (no-fault eviction) while the deposit is unprotected
- Late protection (after 30 days) does not extinguish the tenant's right to claim a penalty — the breach already occurred
Deposit Protection in Scotland
Scotland has its own mandatory deposit protection rules under the Tenancy Deposit Schemes (Scotland) Regulations 2011. The three approved schemes for Scotland are:
- SafeDeposits Scotland (safedepositsscotland.com)
- myDeposits Scotland
- TDS Scotland
Landlords in Scotland must protect deposits within 30 working days (not calendar days as in England and Wales) and provide tenants with prescribed information. Penalties for non-compliance in Scotland can be up to 3 times the deposit amount.