Tenancy Deposit Protection UK Explained (2026): DPS, MyDeposits, and TDS
Protecting your tenant's deposit in a government-approved scheme is one of the most important obligations a landlord has. Fail to do it correctly and you cannot serve a valid Section 21 notice — and you risk a court fine of up to 3× the deposit amount.
Why Deposit Protection is Required
Deposit protection was introduced by the Housing Act 2004. All deposits taken for an Assured Shorthold Tenancy (AST) in England and Wales must be protected in one of three government-authorised schemes within 30 days of receipt.
Penalties for non-compliance: If you fail to protect the deposit or fail to serve the Prescribed Information, a court can order you to pay the tenant between 1× and 3× the deposit amount. You also cannot serve a valid Section 21 notice while the deposit is unprotected.
The Three Government-Approved Schemes
DPS (Deposit Protection Service)
Custodial & Insured
Free to use. Holds the deposit on the landlord's behalf (custodial) or insures it (insured). depositprotection.com
MyDeposits
Insured & Custodial
Landlord holds the deposit and pays a fee to insure it. Also offers a free custodial option. mydeposits.co.uk
TDS (Tenancy Deposit Scheme)
Custodial & Insured
Well-established scheme used widely by letting agents. Both custodial and insured options. tenancydepositscheme.com
What is Prescribed Information?
Within 30 days of receiving the deposit, you must also serve Prescribed Information on the tenant. This must include:
- The address of the rented property
- How much deposit was paid and when
- Which scheme is protecting it
- The scheme's contact details and dispute resolution procedure
- Your contact details and those of any third party who paid the deposit
- Circumstances under which deductions may be made
- How to apply for the deposit's return at the end of the tenancy
Deposit Cap (Tenant Fees Act 2019)
Under the Tenant Fees Act 2019, deposits are capped at:
- 5 weeks' rent — where annual rent is below £50,000
- 6 weeks' rent — where annual rent is £50,000 or above
Charging more than these amounts is a prohibited payment under the Act and carries a financial penalty.
Returning the Deposit
At the end of the tenancy, the deposit must be returned within 10 days of agreeing on any deductions. Valid deductions include:
- Unpaid rent
- Damage beyond fair wear and tear
- Cleaning costs where the property is not returned in the same condition as at check-in
- Missing items from the inventory
If there is a dispute, either party can raise it through the scheme's Alternative Dispute Resolution (ADR) service — a free alternative to court. A detailed check-in inventory significantly strengthens a landlord's position in any deposit dispute.