Deposit Protection

Tenancy deposit protection ensures that tenants' deposits are held securely and can only be used for legitimate purposes at the end of a tenancy. It provides a dispute resolution process if landlord and tenant disagree over deductions.

If you take a tenancy deposit for an Assured Shorthold Tenancy (AST), you must:

• Protect the deposit in a government-approved scheme within 30 days of receiving it
• Provide the tenant with prescribed information about the deposit within 30 days
• Return the deposit at the end of the tenancy (minus any agreed deductions)

The three government-approved schemes are:

• Deposit Protection Service (DPS)
• MyDeposits
• Tenancy Deposit Scheme (TDS)

Prescribed information you must provide includes:

• The amount of the deposit and address of the property
• Your name and contact details
• Details of the deposit protection scheme used
• Information about the scheme's dispute resolution service
• Circumstances under which deductions may be made

The Renters' Rights Act 2025 makes several important changes:

Section 21 abolition: From 1 May 2026, Section 21 no-fault evictions are abolished. Currently, failing to protect a deposit means you cannot serve a Section 21 notice. After 1 May 2026, this specific penalty disappears - but compensation penalties still apply.

All tenancies become periodic: Fixed-term tenancies are abolished from 1 May 2026. All tenancies automatically become periodic (rolling month-to-month). Existing deposits will remain protected and do not need to be re-registered when tenancies convert to periodic.

Increased Rent Repayment Orders: Tenants can apply for Rent Repayment Orders for certain landlord offences. The maximum claim increases from 12 months to 24 months' rent under the Renters' Rights Act 2025.

Deposit requirements unchanged: The deposit cap remains at 5 weeks' rent (for annual rent under £50,000) or 6 weeks' rent (for annual rent of £50,000 or more). The 30-day protection deadline remains.

Current penalties:

• Compensation of 1-3 times the deposit amount payable to the tenant
• Penalties apply for each breach - if a tenancy renews without proper protection, each instance is a separate breach
• Inability to serve Section 21 notices until the deposit is returned or properly protected
• Courts have ordered landlords to pay tens of thousands in compensation for repeated breaches

From 1 May 2026:

• Section 21 penalty no longer applies (Section 21 is abolished)
• Compensation of 1-3 times the deposit still applies
• Multiple breach penalties still apply
• Tenants may also be able to claim Rent Repayment Orders in some circumstances

At the end of a tenancy, if there's a dispute over deductions, either party can use the scheme's free dispute resolution service. Landlords often lose disputes due to:

• Inadequate inventories and check-in reports
• Lack of photographic evidence
• Failure to prove damage occurred during the tenancy
• Attempting to claim for fair wear and tear