Tenancy deposit schemes compared: DPS, TDS and mydeposits

Take a deposit on a private tenancy in England and you have 30 days to protect it in one of the three government-approved schemes and give the tenant the prescribed information, counting the day the money arrives as day one. Miss either and the tenant can claim one to three times the deposit, and a court can't make a possession order on most grounds until it's put right.

Why deposit protection exists

Before 2007, landlords held deposits directly. Disputes over deductions at the end of tenancies were common and difficult to resolve.

The protection system serves two purposes: safeguarding tenant money in an independent scheme, and offering free Alternative Dispute Resolution (ADR) when landlord and tenant disagree about deductions and both agree to use it. You should also understand broader tenant rights, including the rules on tenant discrimination, which affect how you handle deposits and tenant selection.

The rules are strict because deposits are often tenants' largest financial commitment when renting. Failing to protect a deposit correctly can result in penalties of one to three times the deposit amount, paid to the tenant. The court also can't make a possession order on almost any ground until the problem is put right.

The three approved schemes: DPS, TDS and mydeposits

Every deposit taken on an assured tenancy in England must sit in one of the three government-approved schemes, and any private arrangement outside them is non-compliant.

Which to choose. All three offer the same legal protection and the same free dispute resolution, so the choice that matters is between custodial and insured protection. Take the custodial option unless you have a specific reason to hold the money: it costs nothing, and it removes the risk of a dispute about whether the deposit still exists. Choose insured only if you need the deposit in your own account during the tenancy, and budget for the fee.

Only three tenancy deposit protection schemes are approved for use in England and Wales. You must use one of these. Any other arrangement is not legally compliant.

Deposit Protection Service (DPS). Run by Computershare. Offers both custodial (they hold the deposit) and insured (you hold the deposit but pay insurance) options. The custodial option is free. Website: depositprotection.com

MyDeposits. Run by Tenancy Deposit Solutions Ltd. Offers both custodial and insured schemes. Charges apply for the insured option. Website: mydeposits.co.uk

Tenancy Deposit Scheme (TDS). Offers both custodial and insured options. Charges for insured, free for custodial. Website: tenancydepositscheme.com

All three schemes provide the same essential service: holding or insuring the deposit and offering dispute resolution. The choice between them is mainly about personal preference, though some letting agents have preferred schemes.

Scotland has separate schemes: SafeDeposits Scotland, MyDeposits Scotland, and Letting Protection Service Scotland. Northern Ireland has two: Tenancy Deposit Scheme Northern Ireland and My Deposits Northern Ireland.

Custodial vs insured schemes

You must choose between custodial and insured protection. Both are legally compliant but work differently.

Custodial scheme: You transfer the deposit to the scheme. They hold it until the end of the tenancy. When the tenancy ends, both parties agree how to divide it. If you can't agree, the scheme's ADR service can decide if you both agree to use it, or the dispute goes to court. Custodial protection is free.

The advantage is no cost and complete impartiality. The disadvantage is you don't have access to the deposit money during the tenancy.

Insured scheme: You keep the deposit in your own bank account but pay the scheme to insure it. At the end of the tenancy, you handle the return yourself if there's agreement, or use the scheme's ADR for the disputed amount if you both agree to it. Insured schemes charge a fee, typically £20 to £30 per tenancy.

The advantage is you retain access to the money and potential interest. The disadvantage is cost and you must handle returns proactively.

Most landlords with smaller portfolios use custodial schemes to avoid cost. Larger landlords or professional landlords sometimes prefer insured schemes for cash flow reasons.

Deposit replacement schemes

Deposit replacement schemes have emerged in recent years as an alternative to traditional deposits. They remove the need for a cash deposit entirely, which makes them a different product from the deposit protection schemes above.

How they work: The tenant pays a non-refundable fee (typically equivalent to one week's rent) to an insurance provider instead of paying a cash deposit to the landlord. The insurance then covers the landlord for unpaid rent, damages, or cleaning costs up to a specified limit, usually equivalent to a traditional deposit amount.

Common providers: Reposit, Flatfair, and Zero Deposit are among the main deposit replacement providers in the UK market. Each has slightly different fee structures and coverage terms.

Advantages for tenants: Lower upfront cost. Instead of paying five or six weeks' rent as a deposit, the tenant pays a smaller non-refundable fee. This can make renting more accessible, particularly for tenants moving between properties who would otherwise have deposits tied up in multiple places.

Advantages for landlords: No deposit protection obligations. Since no cash deposit is taken, the 30-day protection deadline and prescribed information requirements don't apply. Claims for damages or unpaid rent go through the insurance provider rather than a deposit scheme's ADR process.

Considerations: The fee is non-refundable, so tenants don't get money back at the end of the tenancy even if there are no deductions. Some landlords prefer holding an actual deposit as it can feel more secure. Claims processes vary by provider, so check how quickly and easily you can claim before choosing a scheme.

Deposit replacement schemes are entirely optional. They suit some landlords and tenants but not others. If you do take a traditional cash deposit, the protection rules in this guide apply in full.

The 30-day deadline

This is the key compliance requirement. You must protect the deposit in an approved scheme within 30 days of receiving it. The clock starts on the day the deposit is paid to you.

The law gives you 30 days beginning with the day you receive the deposit, so that day counts as day one. If a tenant pays a deposit on 1 February, you must protect it by 2 March (1 March in a leap year). If the tenancy doesn't start until 15 February, the deadline stays the same, because it is based on when you received the money.

The 30-day deadline is absolute. “I forgot” or “I was busy” are not defences. If you protect the deposit on day 31, you've failed to comply.

For custodial schemes, “protected” means the scheme has received and confirmed they hold the deposit. For insured schemes, it means you've registered the deposit with the scheme and paid any required fees.

Prescribed information requirements

As well as protecting the deposit, you must provide the tenant (and anyone else who paid the deposit) with prescribed information within 30 days of receiving the deposit.

Prescribed information is a specific set of details about the deposit protection. What it must contain is set by the Housing (Tenancy Deposits) (Prescribed Information) Order 2007. It must include the amount of the deposit, the address of the property, the name and contact details of the landlord, the name and contact details of the tenant, the name and contact details of the scheme, information about how the deposit is protected, details of how to apply for the deposit to be released, and information about the dispute resolution service.

You don't have to use your scheme's template. The law sets out what the information must contain without prescribing a form, so your own document is valid if it contains everything the 2007 Order requires. Most landlords still use the scheme's template because it is the easiest way to cover everything. Whichever you use, it must include a certificate signed by you (or the agent who protected the deposit) confirming the information is accurate.

The 30-day deadline for providing prescribed information runs parallel to the 30-day protection deadline. Both must be completed within 30 days of receiving the deposit. Protecting the deposit but failing to provide prescribed information is non-compliance.

You must also be able to prove you provided it. Simply generating the document is not enough. Our guide on proving tenants received documents explains the evidence you need.

Penalties for non-compliance

The penalties for failing to protect a deposit or provide prescribed information correctly are severe and intended to be punitive.

Financial penalty. If you fail to comply, the tenant can apply to the county court (our guide to court and tribunal evidence covers what to prepare). The court must order you to pay the tenant between one and three times the deposit amount. This is in addition to returning the deposit, or protecting it if the tenancy is still running.

For example, if the deposit was £1,000 and you failed to protect it properly, you must return the £1,000 deposit and pay the tenant an additional £1,000 to £3,000 penalty. The court has discretion on the exact amount within that range based on the severity of the breach.

Tenants have six years to claim. The six years run from your failure to meet the 30-day rules rather than from the end of the tenancy, and each new tenancy can restart the clock. A tenant can claim during the tenancy or after it ends.

Loss of possession rights. Before the Renters' Rights Act 2025, failing to protect the deposit properly prevented you from using Section 21 no-fault eviction. Now the court can't make a possession order on any ground except Grounds 7A and 14 (anti-social behaviour) while the deposit is unprotected or the prescribed information hasn't been given. Rent arrears grounds are not exempt, so you cannot regain possession even if the tenant is in serious arrears. You can still serve a Section 8 notice, and the bar lifts once you protect the deposit late and give the prescribed information, or return the deposit.

Our article on Section 8 eviction grounds explains how compliance failures can block possession claims under the new system.

Common deposit protection mistakes

Despite the rules being clear, certain mistakes happen repeatedly. Being aware of them helps you avoid them.

Missing the 30-day deadline. The most common error. Landlords receive the deposit and intend to protect it but delay. By the time they act, it's day 35 or 40, which is too late.

Protecting but not providing prescribed information. Landlords protect the deposit in a scheme but forget to send the tenant the prescribed information document. Both steps are required.

Providing prescribed information but no proof. The landlord emails the document but doesn't keep the sent email or any proof the tenant received it. Later, the tenant claims they never received it, and the landlord cannot prove otherwise.

Using the wrong scheme's prescribed information. Landlord protects the deposit with DPS but sends the MyDeposits prescribed information document. The information must match the scheme actually used.

Not protecting top-up deposits. If the tenant pays an additional deposit mid-tenancy (for example, to keep a pet), that additional amount must also be protected within 30 days and prescribed information provided again.

Holding money outside the scheme. Landlord uses an insured scheme but deducts money before the end of tenancy without agreement or adjudication. You cannot take money from an insured deposit unilaterally. If you can't agree, the dispute goes to the scheme's ADR service if you both agree to use it, or to court.

Proving you provided prescribed information

This is where many landlords fail. The law requires you to provide prescribed information, but in practice, you must prove you provided it.

If a tenant claims in court that they never received prescribed information, the burden is on you to prove they did. “I definitely sent it” is not proof.

Weak evidence: No record of sending it, or claiming you handed it to them in person but they didn't sign an acknowledgement.

Better evidence: Email showing you sent it within 30 days. Keep the sent email with the prescribed information attached. This proves you sent it but doesn't guarantee the tenant received or opened it.

Best evidence: Digital platform tracking showing the tenant accessed the document. A log showing they opened the prescribed information on a specific date within the 30-day window is compelling proof.

Alternatively, registered post with signed receipt. The tenant signs to confirm delivery. Keep that signature proof.

Many landlords hand prescribed information to tenants at the start of the tenancy along with other documents. Get them to sign an acknowledgement listing all documents received. Keep that signed acknowledgement for the duration of the tenancy plus six years after it ends.

Deposit returns and disputes

At the end of the tenancy, the deposit must be returned or deductions justified. The protection scheme's dispute resolution service is most useful at this stage.

If you and the tenant agree on how to divide the deposit, the money must be returned within 10 days of agreeing the amount. For custodial schemes, both parties confirm agreement and the scheme releases the money accordingly. For insured schemes, you return the agreed amount and notify the scheme.

If you disagree, the scheme's ADR service can settle it, but only if you and the tenant both agree to use it. Both parties submit evidence (inventory, check-out report, photos, invoices for cleaning or repairs). An independent adjudicator reviews the evidence and decides how to divide the deposit.

The adjudication is free, and the decision is final once you have both agreed to use it. It is usually faster and cheaper than court. If either side won't use ADR, the dispute goes to the county court instead.

To maximise your chances in a dispute, you need evidence. A detailed inventory and schedule of condition at the start, a thorough check-out report at the end, and contemporaneous records of the property's condition. Our guide on end of tenancy documentation covers what you need.

Deposits for HMOs and multiple tenants

HMOs with multiple tenants on separate agreements can create deposit protection complexity, but the principles remain the same.

If each tenant has a separate tenancy agreement and pays a separate deposit, you must protect each deposit individually within 30 days of receiving it and provide prescribed information to each tenant.

If multiple tenants share a joint tenancy and pay a single combined deposit, you protect that total amount as one deposit and provide prescribed information to all tenants named on the tenancy agreement.

For rooms in an HMO where tenants come and go on rolling contracts, track deposit protection carefully. When one tenant leaves and a new one arrives, if there's a new deposit, it must be protected within 30 days of receipt.

Record keeping

Keep full records of deposit protection for every tenancy. Store proof of protection, prescribed information provided to tenants, proof of delivery of prescribed information, and deposit return records or adjudication decisions.

Retain these records for at least six years after the tenancy ends. That covers the six-year time limit for a deposit penalty claim, which runs from the breach. Our guide to landlord record-keeping requirements covers retention periods for other records.

If you use a digital system to track documents, include deposit protection records. Search by property, tenant, or date. Export evidence if needed for tribunal or court.

What to do with every deposit

Every deposit must be protected in an approved scheme within 30 days of receiving it, and the prescribed information must reach the tenant within the same 30 days. You also need to be able to prove you did both.

The penalties for failure are severe: one to three times the deposit amount paid to the tenant, plus no possession order on almost any ground until you put it right. The money penalty applies even if the failure was accidental or you later corrected it.

Set up a system that automatically protects deposits when received. Use calendar reminders if needed. Count the 30 days from the date you received the money. Send prescribed information using methods that create proof: tracked emails, digital platforms with access logs, or registered post with signature confirmation.

Our landlord compliance checklist includes deposit protection alongside all other mandatory requirements.

Deposit protection has been the law for nearly 20 years, and courts expect landlords to know the rules. If you are new to letting, our first-time landlord compliance guide walks through all the essentials. These penalties are entirely preventable if you protect the deposit and serve the prescribed information on time, and keep proof of both.