Deposit Protection Schemes UK: Complete Landlord Guide
How to protect your tenant's deposit correctly. Compare the three government-backed schemes, understand deadlines, and avoid penalties of up to 3x the deposit.
The Latch Team
Editorial
If you take a tenancy deposit from a tenant in England or Wales, you are legally required to protect it in a government-approved tenancy deposit scheme within 30 days of receiving it. You must also provide the tenant with prescribed information about where their deposit is held and how they can get it back.
The penalties for failing to protect a deposit are severe — a court can order you to pay compensation of between one and three times the deposit amount. You will also be unable to serve a valid eviction notice until the deposit is properly protected. In some cases, tenants have received compensation of over £10,000 for deposit protection failures.
This guide explains the three government-approved schemes, the difference between custodial and insured protection, the 30-day deadline, prescribed information requirements, deposit dispute procedures, and how Latch helps you track deposit protection dates across your portfolio.
What Is Tenancy Deposit Protection?
Tenancy deposit protection was introduced by the Housing Act 2004 to safeguard tenants' deposits. The law requires landlords and letting agents to protect any deposit taken under an Assured Shorthold Tenancy (AST) in one of three government-approved schemes.
The purpose of the schemes is to:
- Ensure tenants get their deposit back at the end of the tenancy (minus any agreed deductions)
- Provide a free dispute resolution service when landlords and tenants disagree about deductions
- Prevent landlords from unfairly withholding deposits
Note: Under the Renters' Rights Act 2025, the assured shorthold tenancy is being replaced by a single system of periodic tenancies. However, deposit protection requirements continue to apply to all tenancies where a deposit is taken.
The Three Government-Approved Schemes
There are three government-approved deposit protection schemes in England and Wales:
| Scheme | Custodial Option | Insured Option | Key Features |
|---|---|---|---|
| Deposit Protection Service (DPS) | Yes (free) | No | The most widely used custodial scheme. The DPS holds the deposit for the duration of the tenancy. |
| MyDeposits | Yes (free) | Yes (fee-based) | Offers both custodial and insured protection. Competitive insured rates for landlords. |
| Tenancy Deposit Scheme (TDS) | Yes (free) | Yes (fee-based) | Established scheme with comprehensive dispute resolution. Offers both options. |
Custodial vs Insured Protection
You must choose between custodial and insured protection for each deposit. The key differences are:
| Feature | Custodial | Insured |
|---|---|---|
| Who holds the deposit | The scheme holds the money | The landlord holds the money |
| Cost to landlord | Free | Annual fee (typically £20-£30 per deposit) |
| Deposit return | Released by the scheme once both parties agree | Landlord returns the deposit directly |
| If landlord fails to return | Scheme holds the money, so tenant is protected | The insurance policy covers the tenant if the landlord defaults |
| Best for | Landlords who prefer not to hold the deposit | Landlords who want to retain control of the funds |
Latch recommendation: For most landlords, the custodial scheme is the simplest option. It is free, the scheme handles the money, and disputes are managed independently. Latch can track deposits in any of the three schemes.
The 30-Day Deadline
You must protect the deposit and serve prescribed information within 30 days of receiving it. This is a strict legal deadline — not 30 working days, but 30 calendar days.
The 30-day clock starts from the date you (or your agent) receive the deposit, regardless of when the tenancy starts. If a tenant pays the deposit on 1 March but the tenancy does not start until 15 March, you must still protect it by 31 March.
Critical: The 30-day deadline covers both protecting the deposit AND serving the prescribed information. You must do both within 30 days. Protecting the deposit on day 25 and serving the prescribed information on day 35 is still a breach.
Prescribed Information
Within the same 30-day window, you must serve the tenant (and any relevant person who paid the deposit) with prescribed information. This must include:
- The name, address, and contact details of the landlord
- The name, address, and contact details of the deposit protection scheme
- The amount of the deposit
- The property address
- How the deposit will be returned at the end of the tenancy
- What the tenant should do if there is a dispute about the deposit
- Information about the scheme's dispute resolution service
Most deposit protection schemes provide template prescribed information documents that you can complete and serve on the tenant. Keep proof that the prescribed information was served — ideally by email or with a signed acknowledgement.
Penalties for Non-Compliance
The penalties for failing to protect a deposit or serve prescribed information are severe:
| Breach | Consequence |
|---|---|
| Deposit not protected within 30 days | Court can order compensation of 1x to 3x the deposit amount |
| Prescribed information not served within 30 days | Court can order compensation of 1x to 3x the deposit amount |
| Deposit not protected AND prescribed information not served | Court can order compensation of 1x to 3x (cumulative claims possible) |
| Attempting to serve eviction notice | Invalid — cannot serve notice until deposit is properly protected and prescribed information served |
A tenant can bring a deposit protection claim at any time during the tenancy and for up to 6 years after the tenancy ends. There is no time limit during the tenancy itself.
Deposit Disputes
At the end of the tenancy, if you and the tenant cannot agree on how much deposit should be returned, either party can refer the dispute to the deposit protection scheme's Alternative Dispute Resolution (ADR) service. This is free for both parties.
To support your case in a deposit dispute, you should have:
- A detailed check-in inventory with photographs and condition descriptions
- A check-out inventory with photographs showing any damage or changes
- Copies of all correspondence with the tenant about the deposit
- Receipts or invoices for any cleaning, repairs, or replacements
- Evidence that the tenant caused the damage (not fair wear and tear)
Documentation is everything: The most common reason landlords lose deposit disputes is lack of evidence. A thorough check-in and check-out inventory with timestamped photographs is your most valuable asset. Latch stores all property documents and photographs in one place for easy retrieval.
How Latch Tracks Deposit Protection
Latch simplifies deposit management across your entire portfolio:
Deposit Recording
Record the deposit amount, protection scheme, certificate number, and protection date for every tenancy.
Complete records
Deadline Alerts
Latch alerts you if a deposit has not been recorded as protected within 30 days of receipt.
Never miss the deadline
Prescribed Information
Generate and track prescribed information documents, with a record of when they were served.
Proof of service
End-of-Tenancy Tracking
When a tenancy ends, Latch reminds you to process the deposit return and tracks any disputes.
Clean wrap-up
Manage Deposits with Latch
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Get Started with LatchDisclaimer: This guide is for informational purposes only and does not constitute legal advice. Deposit protection requirements are set out in the Housing Act 2004 (as amended). The Renters' Rights Act 2025 may introduce further changes to deposit regulations. Always consult a qualified solicitor or letting agent for advice specific to your circumstances. Last updated February 2026.
