If you take a deposit from a tenant in England, you are legally required to protect it. This is not optional and the penalties for getting it wrong are severe. Whether you are a first-time landlord or have been letting for years, deposit protection is one of the most important compliance requirements you face. Here is everything you need to know.
The Legal Requirement
Under the Housing Act 2004, any deposit taken for an assured shorthold tenancy in England must be protected in a government-approved tenancy deposit scheme within 30 days of receipt. This requirement has been in force since 2007 and continues to apply under the Renters' Rights Act 2025. The 30-day deadline runs from the day you receive the deposit, not the day the tenancy starts. If you miss it, you are in breach of the law and the tenant can take you to court.
The Three Approved Schemes
There are three government-approved deposit protection schemes in England:
- **Deposit Protection Service (DPS)** — This is the only custodial scheme. It is free to use until the end of the season. You hand the deposit over to the DPS and they hold the money for the duration of the tenancy. At the end, the deposit is returned based on agreement between you and the tenant, or following adjudication if there is a dispute.
- **MyDeposits** — This is an insurance-based scheme. You keep the deposit in your own account and pay a fee to MyDeposits for insurance protection. If there is a dispute at the end of the tenancy, the adjudicator can order you to pay out of the deposit you hold.
- **Tenancy Deposit Scheme (TDS)** — This is also insurance-based. Like MyDeposits, you retain the deposit and pay a fee for protection. TDS offers both insured and custodial options, though the insured option is more commonly used by individual landlords.
All three schemes are equally valid. Using any of them satisfies the legal requirement. The choice comes down to whether you prefer to hold the deposit yourself (insurance-based) or have the scheme hold it (custodial).
Serving the Prescribed Information
Protecting the deposit is only half the job. You must also serve the tenant with prescribed information within the same 30-day window. This is a specific document that tells the tenant which scheme you have used, how to contact the scheme, what happens at the end of the tenancy, and how disputes are resolved. Each scheme provides a template for the prescribed information. You must serve it on every relevant person, which includes the tenant and anyone who paid the deposit on their behalf. Keep proof that you served it. A signed acknowledgement from the tenant is ideal.
The Deposit Cap
The Tenant Fees Act 2019 caps the amount of deposit you can take. If the annual rent is less than £50,000, the maximum deposit is five weeks' rent. If the annual rent is £50,000 or more, the maximum is six weeks' rent. This cap applies to all assured shorthold tenancies and continues under the Renters' Rights Act 2025. Taking more than the permitted amount is a breach of the Tenant Fees Act and can result in a fine of up to £5,000 for a first offence, or an unlimited fine and a banning order for repeat offences. Use our Deposit Cap Calculator to check your deposit is within legal limits.
What Happens if You Do Not Comply
The consequences of failing to protect a deposit or failing to serve the prescribed information are serious. The tenant can apply to the county court, which can order you to pay compensation of between one and three times the deposit amount. Deposit non-compliance also prevents you from gaining possession of the property on most grounds. Only Ground 7A (severe anti-social behaviour or criminal behaviour) and Ground 14 (anti-social behaviour) are exempt from this restriction. This means that if you need to seek possession for rent arrears, landlord occupation, sale, or any other standard ground, you will be unable to do so while the deposit remains unprotected. The good news is that you can rectify the breach at any time by protecting the deposit and serving the prescribed information — but until you do, your ability to recover your property is severely limited.
Common Mistakes to Avoid
The most common mistakes landlords make with deposit protection are missing the 30-day deadline, failing to serve the prescribed information, not re-protecting the deposit when a tenancy is renewed or becomes periodic, and taking a deposit that exceeds the cap. Each of these can be costly. The simplest way to stay compliant is to protect the deposit the same day you receive it and serve the prescribed information immediately.
Take Action
Make sure your deposit is protected and your documents are in order. Generate your complete document pack to get prescribed information templates and all 14 essential landlord documents for £29.99. You can also check your deposit limit with our Deposit Cap Calculator and review the full compliance picture in our Landlord Compliance Checklist 2026.