Tenancy Deposit Scheme (TDS)
Legal & RegulatoryOne of the government-approved schemes for protecting tenants' deposits in England and Wales, offering both custodial and insured options
Tenancy Deposit Scheme refers to the government-approved deposit protection schemes landlords must use for AST deposits in England and Wales: TDS (Tenancy Deposit Scheme), DPS (Deposit Protection Service), and MyDeposits. Deposits must be protected within 30 days of receipt with prescribed information served to tenants. Non-compliance can result in penalties of 1-3x the deposit amount and invalidated Section 21 notices. All schemes offer free ADR for end-of-tenancy disputes.
Government-Approved Schemes
In England and Wales, there are three approved schemes:
1. Tenancy Deposit Scheme (TDS)
- Offers both custodial and insured
- Largest scheme by membership
- Free custodial option
2. Deposit Protection Service (DPS)
- Custodial only (free)
- Government-backed
- Interest donated to charity
3. MyDeposits
- Offers both custodial and insured
- Popular with agents
- Paid insured option
Custodial vs Insured
| Aspect | Custodial | Insured |
|---|---|---|
| Deposit held by | Scheme | Landlord/Agent |
| Cost | Free | Annual fee |
| Return process | Via scheme | Direct to tenant |
| Best for | Smaller landlords | Agents, portfolios |
Legal Requirements
Within 30 days of receiving deposit:
- Protect deposit in approved scheme
- Provide Prescribed Information to tenant
- Include scheme details and dispute process
Prescribed Information includes:
- Amount of deposit
- Property address
- Scheme details
- How to get deposit back
- ADR information
- Tenant's signature (acknowledgement)
Penalties for Non-Protection
If deposit not protected:
- Tenant can claim 1-3× deposit amount
- Section 21 notice invalid
- Must protect before serving Section 21
- Court can order return plus compensation
Deposit Disputes at End
If parties agree: Deposit released per agreement
If disputed:
- Free ADR through scheme
- Both parties submit evidence
- Adjudicator makes binding decision
- Usually completed in weeks
For Letting Agents
Deposit protection best practices:
- Protect within 7 days (not 30)
- Serve Prescribed Information immediately
- Keep proof of service
- Track protection status for all properties
- Use scheme's ADR for disputes
- Document all deductions thoroughly