Tenancy Deposit Scheme

 

Tenancy deposit protection was introduced by the Housing Act 2004.

 

Tenancy deposit protection schemes guarantee that tenants will get their deposits back at the end of the tenancy, if they meet the terms of the tenancy agreement and do not damage the property.

Since 6 April 2007, all deposits taken by landlords and agents for assured shorthold tenancies in England and Wales must be protected by an authorised tenancy deposit scheme. Assured shorthold tenancies are the usual tenancies made between a private landlord and tenants.

A landlord is ultimately responsible for ensuring that any deposit he or she takes from a tenant in respect of an assured shorthold tenancy is protected and that the statutory requirements of tenancy deposit protection are met.

 

There are two types of Tenancy Deposit Protection schemes: custodial and insurance-based.

 

The deposit protection service provides the only custodial tenancy deposit protection scheme.

Under this scheme the deposit protection service holds the deposit money in a bank account. When the tenancy ends, it releases the deposit to the person who is entitled to it.

 

Under insurance-based schemes, the landlord or the landlord's agent holds the tenant's deposit and pays a fee to insure it (against the landlord illegally keeping the deposit). If the landlord doesn't pay the tenant the amount they are owed at the end of the tenancy, the insurer will pay the tenant and try to get the money back from the landlord.

The two insurance-based providers are MyDeposit and Tenancy Deposit Scheme.

Further information on the tenancy deposit protection schemes and how they work can be found in the factsheet in the downloads on the right hand side of this page and on the Directgov website.

 

For further information on the scheme please view the factsheet below.