Landlords must protect tenant deposits by 6 May

Landlords must protect tenant deposits by 6 May

Category: Buy To Let
Date: 19/04/2012

The law has changed. Section 184 of the Localism Act now formally forces landlords to protect their tenants' deposits in an approved tenancy deposit protection scheme.

The new rules came into effect on 6 April 2012, with landlords needing to get deposits into a scheme by 6 May 2012 to avoid being fined.

What are the new tenancy deposit protection rules?

  • Landlords are required to protect a tenant's deposit, if the tenancy started on or after 6 April 2007.
  • New tenants' deposits must be protected within 30 days of the tenancy starting.
  • Landlords (or their letting agents) must provide the tenant with certain information, within 30 days of the tenancy start date. This information will have to include:
    - Contact details for the landlord (or agent)
    - The name of the deposit protection scheme used
    - Why the deposit has been charged
    - How and when the tenant can get it back
    - What will happen in the event of a disagreement about the returning of a deposit

Tenancy deposit protection schemes

Landlords or letting agents have 3 different options for protecting their tenants' deposits. Tenancy deposit protection schemes protect a tenant's deposit in the event that a landlord or letting agent cannot pay or withholds a deposit at the end of the tenancy.

If there is a dispute between the landlord and tenant about the amount of deposit to be returned, the deposit protection scheme gets involved to independently review the case and give a cheaper and quicker outcome than using the courts.

There are two types of scheme – custodial and insurance-based. With a custodial-based scheme the deposit is sent to and held by the protection scheme. With an insurance-based scheme you hold onto the deposit, only sending it to the scheme if there is a dispute.

These are the only schemes that have been approved by the Government:

Deposit Protection Service


The Deposit Protection Service

  • Free custodial-based deposit protection scheme.
  • Where there is a dispute, an independent Alternative Dispute Resolution service will review the case

my deposits


  • Insurance-based deposit protection scheme.
  • Impartial dispute resolution service to settle deposit disputes.
  • Small fee for using the scheme.

Tenancy Deposit Scheme

Tenancy Deposit Scheme

  • Insurance-based deposit protection scheme.
  • Where there is a dispute, an Independent Case Examiner will review the case impartially.
  • Small fee for using the scheme.

What happens if a tenant's deposit isn't protected?

If you don't protect your tenant's deposit, they can take you to court. In addition to ordering you to place the deposit in a protection scheme, the court can fine you between 1-3 times the amount of the deposit in question.

What next?

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