Deposits

Residential tenancy deposits have been regulated since April 2012 under the Tenant Fees Act 2019/Renters’ Rights Act (RRA), are limited to 5-6 weeks’ rent, must be protected in a government scheme, and failure incurs penalties (1-3x deposit, potential eviction blocks).

Deposit governing law & purpose

Purpose: Safeguard against property damage or unpaid rent, as specified in tenancy agreement.
Governing Laws: Tenant Fees Act 2019 (caps/bans), Housing Act 2004/Localism Act 2011 (protection schemes), Renters’ Rights Act 2025 (strengthens enforcement/database).

Permitted & required actions

Maximum Deposit: Max 5 weeks’ rent (annual rent <£50k) or 6 weeks’ (≥£50k).
Protection: Landlords must use a government-approved scheme within 30 days of receipt.
Prescribed Information: Must provide details about the scheme and deposit location.

Penalties for non-compliance

Failure to protect/inform: Tenant can claim compensation (1-3x deposit amount) via court.
No Section 21 (pre-RRA)/Section 33 (post-RRA): Landlord cannot use “no-fault” (or subsequent) eviction notice until the deposit is returned.
Prohibited fees/deposits: Up to £5,000 fine for the first offence, unlimited thereafter.

Types of Deposit Protection Schemes

There are two primary types of schemes used by landlords and agents:

Custodial Schemes:
- How it works: The landlord or letting agent pays the entire deposit amount to the scheme administrator.
- Cost: Free for landlords to use.
- Benefit: The scheme holds the money in a bank account and handles the return process at the end of the tenancy.
Insurance-Based Schemes:
- How it works: The landlord or letting agent retains the deposit in their own bank account during the tenancy.
- Cost: The landlord pays a fee or insurance premium to the scheme operator to “insure” the deposit.
- Benefit: Allows the landlord to keep the funds (and any interest earned), but they must pay the tenant back at the end of the tenancy. If the landlord fails to return the money, the scheme’s insurance covers the payment to the tenant.
Deposit Replacement Products (Alternative):
- Some providers like mydeposits offer “deposit replacement” options where the tenant pays a non-refundable fee (often one week’s rent) instead of a large cash deposit.

Official Operators in the UK

The government has authorised three main providers to operate these schemes. Each offers both custodial and insurance-based options.

England and Wales

The Deposit Protection Service (DPS): The largest provider in the UK and primarily known for its custodial service.
mydeposits: Offers custodial, insurance, and deposit replacement products.
Tenancy Deposit Scheme (TDS): The only not-for-profit scheme

Testemonials

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David Thompson Landlord, Manchester

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James Hartley HMO Landlord, Liverpool

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The template documents alone have saved me hundreds in legal fees. Knowing they're kept up to date with current legislation gives me real peace of mind.

Sandra Mitchell Landlord, Leeds

As a first-time landlord, I had so many questions about deposits, contracts and compliance. The iHowz resources gave me confidence that I was doing everything correctly from the start.

Rachel Edwards Landlord, Bristol