The Tenancy Deposit Scheme

Landlords of assured shorthold tenancies must now protect deposits they receive via a Tenancy Deposit Protection Scheme, which safeguards the deposits and provides alternative dispute resolution methods. 

Types of scheme

There are two types of scheme – custodial and insurance-based.

There is one custodial scheme run by the Deposit Protection Service. Under that scheme, the tenant pays the deposit to the landlord; the landlord then pays the deposit into the scheme; within 14 days of receiving a deposit, the landlord must give the tenant certain prescribed information. At the end of the tenancy if the landlord and tenant agree how the deposit should be divided, they will tell the scheme which returns the deposit. If there is a dispute, the scheme will hold the amount until the dispute resolution service or court decides what is fair.