This article is for general information only and does not constitute legal advice.
You have 30 days from receiving a tenant's deposit to protect it in a government-approved scheme and serve the prescribed information. Miss that deadline and you face a penalty of between one and three times the deposit amount. Under the Renters' Rights Act 2025, you also cannot use any Section 8 ground for possession (except anti-social behaviour) if the deposit is unprotected.
Three schemes operate in England and Wales: the Tenancy Deposit Scheme (TDS), the Deposit Protection Service (DPS), and MyDeposits. All three are equally valid in law. The differences are in how they handle your money, what they charge, and practical features.
Custodial vs insured
Every scheme offers a custodial option where the scheme holds the deposit for the duration of the tenancy. This is free. You transfer the money, they hold it, and it gets released at the end of the tenancy when both parties agree on deductions (or after adjudication if there is a dispute).
TDS and MyDeposits also offer insured options where you keep the deposit in your own account and pay a fee for the scheme to insure the amount. DPS offers custodial only.
Insured fees run from £19 to £30 per deposit per year depending on the scheme and deposit amount, according to Property Passport. With the deposit cap at five weeks' rent (set by the Tenant Fees Act 2019), the cash you retain under an insured scheme is modest. Most landlords with one or two properties will find custodial simpler and cheaper.
The three schemes compared
| Feature | TDS | DPS | MyDeposits |
|---|---|---|---|
| Custodial (free) | Yes | Yes | Yes |
| Insured (fee) | Yes (£20-30) | No | Yes (£19-27) |
| Coverage | England and Wales | England and Wales | England, Wales, and Northern Ireland |
| Operator | The Dispute Service Ltd | Computershare | Hamilton Fraser |
| Dispute resolution | Free ADR | Free ADR | Free ADR |
| Typical adjudication time | 4-8 weeks | 4-8 weeks | 4-8 weeks |
| Online portal | Comprehensive | Functional, bulk tools | Clean, NRLA integration |
| Phone support | Mon-Fri 9-5 | Online only | Mon-Fri 9-5:30 |
According to August, DPS is the largest custodial scheme by volume, TDS is popular with letting agents and portfolio landlords, and MyDeposits has strong links to the NRLA (offering a 30% discount on insured protection for members).
Which scheme to choose
For a single property with one tenancy: any custodial scheme works. DPS is the simplest. Registration takes five to ten minutes online.
For a portfolio managed by a letting agent: check which scheme the agent uses. Switching mid-tenancy is not possible (you must wait until a tenancy ends to move to a different scheme). If you manage some properties yourself and others through an agent, using the same scheme reduces administration.
For properties in Northern Ireland: MyDeposits is the only option. TDS and DPS cover England and Wales only.
For NRLA members: MyDeposits insured comes with a membership discount, making it the cheapest insured option if you prefer to retain the deposit.
Serving prescribed information
Protecting the deposit is only half the obligation. You must also serve the tenant with "prescribed information" within 30 days. This includes the scheme name and contact details, the deposit amount, the property address, and how to apply for the deposit's release.
All three schemes generate the prescribed information document automatically when you register the deposit online. Print it or email it and keep proof of delivery.
If a parent or guarantor paid the deposit, they must also receive the prescribed information.
What happens at the end of the tenancy
At checkout, you and the tenant agree on any deductions (cleaning, damage, unpaid rent). If you both agree, the deposit is returned within five to ten working days.
If you disagree, either party can raise a dispute through the scheme's free Alternative Dispute Resolution (ADR) service. An independent adjudicator reviews the evidence (check-in photos, checkout report, invoices, tenancy agreement, correspondence) and makes a binding decision.
Strong evidence wins disputes. A professional inventory at check-in (typically £80 to £150) and a checkout report with photographs dramatically improve your position. Without dated photographs showing the property's condition at the start, deductions are difficult to defend.
Penalties for non-compliance
Failing to protect a deposit or failing to serve prescribed information within 30 days exposes you to:
A county court order to pay the tenant compensation of one to three times the deposit amount. Inability to use Section 8 grounds for possession (except Ground 7A and Ground 14 for anti-social behaviour) until the deposit is properly protected or returned. Under the previous regime, an unprotected deposit blocked Section 21. Under the Renters' Rights Act 2025, it blocks most Section 8 grounds instead.
Tenants have six years to bring a claim for deposit protection breaches. The claim can be made during or after the tenancy.
If you inherited a property with a tenant whose deposit was never protected by the previous landlord, you are still liable. Protect the deposit immediately and serve prescribed information.
Tips for avoiding disputes
Take a professional inventory with timestamped photographs at check-in. Conduct a mid-tenancy inspection (with proper notice) and record any issues. Use a professional checkout service at the end. Keep all receipts for any cleaning or repair work. Respond to maintenance requests promptly throughout the tenancy (documented communication strengthens your position at adjudication).
Sources
- GOV.UK, "Deposit protection schemes and landlords". https://www.gov.uk/deposit-protection-schemes-and-landlords [Accessed 6 May 2026]
- Property Passport, "Tenancy deposit protection schemes compared". https://www.propertypassport.uk/guides/tenancy-deposit-protection-schemes-tds-dps-mydeposits [Accessed 6 May 2026]
- August, "DPS vs TDS vs MyDeposits: which scheme should you use?". https://www.augustapp.com/blog/deposit-protection-scheme-comparison [Accessed 6 May 2026]