Holding Piggy Bank

A guide to Tenancy Deposit Protection

Before renting a property, tenants will usually hand over a security deposit to a landlord or letting agent. This money protects the landlord should a tenant break any terms of the rental agreement.

In 2007, the Government introduced tenancy deposit protection (TDP) to make sure this money was safeguarded and that tenants got it back after they moved out.

If you’re currently a tenant or are looking for a property to rent, this guide will help you understand how TDP protects you.

What is Tenancy Deposit Protection?

If you sign-up to an assured shorthold tenancy (AST) the law says that your security deposit must be protected in one of three government-authorised TDP schemes. Your money will be held in this scheme until you move out.

If the landlord is out of pocket at the end of the tenancy, for example, if the rent hasn’t been paid or the property needs any cleaning or repairs, the deposit money is used to pay for this.

How does Tenancy Deposit Protection work?

After you’ve handed over a security deposit, the landlord or letting agent needs to pay it into a TDP scheme within a certain period of time. They also need to provide you with some important documentation called the Prescribed Information. This includes:

  • Information about the scheme (usually a leaflet)
  • Information about the tenancy (each scheme will provide a template for this information to be completed by the landlord or letting agent)

Always keep these documents in a safe place as you may need them at the end of the tenancy.

Bedroom

Why is an inventory important?

Before you move in, your landlord or letting agent should ask you to attend a ‘check-in’ (otherwise known as an inventory) where they will walk around the property to record any existing damage. This will be used as evidence at the end of the tenancy to decide how much of the deposit money will be returned.

Make sure you attend the check-in process and take photos of even the smallest marks as it may end up saving you money. Always ask to see a copy of the inventory and check that it’s accurate before you sign it. 

Does the tenant fee ban change Tenancy Deposit Protection?

From 1 June 2019, it’s illegal for letting agents to charge the majority of fees to tenants on all new tenancies. For existing tenancies, there is 12-month transition period. Security deposits are exempt from this new law, but deposits will be capped at the equivalent of five weeks’ rent (or six weeks if the annual rent is over £50,000) for new tenancies.

If you sign a new contract after this date and have previously paid a higher deposit for your existing tenancy, the letting agent will have to refund anything which is more than five or six weeks of the new rent within 28 days.

Read more about the fees agents are allowed to charge following the changes here.

Who are the deposit scheme providers?

The names of the authorised TDP schemes differ according to country:

How is TDP different across the UK?

There are some regional differences to TDP legislation. These mostly relate to the type of scheme available and the number of days a landlord or letting agent has to protect a deposit.

Overall, there are two types of TDP scheme: custodial and insurance.

The custodial option is free to use, and the TDP provider will hold the deposit in a secure bank account.

With the insurance option, landlords pay a fee and keep hold of the deposit in their bank account.

England and Wales

In England and Wales, deposits must be registered within 30 days of receipt. The custodial and insurance schemes are both available.

Northern Ireland

In Northern Ireland, deposits must be registered within 14 days of receipt. Landlords can also choose between a custodial or insurance scheme, although deposits taken prior to 1 April 2013 don’t need to be registered.

Scotland

In Scotland, landlords only have access to a custodial scheme, but this option still provides tenants with the same level of protection. Landlords and agents must lodge the deposit within 30 working days from the start of the tenancy.

Where is my deposit protected?

If you’re not sure where your deposit is protected, ask your landlord or letting agent for proof. You can also check to see whether it’s been registered with one of the schemes by visiting their websites using the links above.

Remember that landlords must follow the law and protect a tenant’s deposit. Those who don't can be fined between one and three times the deposit amount. If you don’t think your deposit has been protected, you can apply to your local county court. The Government’s website provides more advice about this here.

How is a deposit returned?

If you’re moving out of a property, the landlord or letting agent has to return the deposit within a certain period of time once you’ve requested it in writing (10 days in England and Wales; five days in Scotland and Northern Ireland). As with the start of a tenancy, attend the ‘check-out’ procedure where your landlord or letting agent will compare the original inventory to the current state of the property.

Before the check-out, give the house a good clean and repair any minor damage. The letting agent or landlord will then let you know how much of the deposit money they think you’re owed, minus any deductions for unpaid rent, cleaning or damage. If you agree to this, your deposit should be returned.

What if something goes wrong?

If you cannot agree about the return of a deposit or haven’t received it back, each scheme offers a free dispute resolution service. Less than 1% of all tenancies end in dispute, so it’s very unlikely this will happen. But if you do find yourself in this situation, an impartial adjudicator will use the original inventory as evidence.

When this happens, each party is also able to submit any extra evidence to help support their case, such as the tenancy agreement, check-in/ check-out report, or any receipts. Once the deadline for submitting evidence has passed, the scheme will reach a legally binding decision about the return of the deposit within 28 days.

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