Every deposit taken on an assured tenancy in England or Wales must be protected in one of three government-approved schemes (DPS, MyDeposits, or TDS) within 30 days of receipt. Within the same 30 days you must serve the tenant with the Prescribed Information — scheme details, deposit reference, and statutory clauses. Failure to comply triggers a tribunal penalty of 1x to 3x the deposit AND blocks Section 8 possession. The three schemes are free at the custodial level.
Every deposit taken on an assured tenancy in England or Wales must be protected in one of three government-approved schemes within 30 days of receipt. Miss the deadline and you face a penalty of between one and three times the deposit, payable to the tenant. You also lose the right to serve a no-fault possession notice, still relevant even after Section 21's abolition because the same principles carry into the new Section 8 grounds.
The three approved schemes
- Deposit Protection Service (DPS), free custodial scheme run by Computershare. The DPS holds the deposit. Most popular among single-property landlords.
- MyDeposits, insurance-backed or custodial. Landlord keeps the money (insurance) or DPS-style custody.
- Tenancy Deposit Scheme (TDS), insurance or custodial. Popular among letting agents.
Prescribed information
Protection alone is not enough. Within 30 days you must also give the tenant the 'prescribed information', a specific list of 11 items including the scheme's contact details, the reasons you might retain some of the deposit, and a statement confirming the scheme leaflet has been provided. Every approved scheme publishes a template. Use it.
The Supreme Court in <em>Superstrike v Rodrigues</em> confirmed the 30-day window is hard. Miss it by one day and the penalty applies. There is no 'reasonable grounds' defence.
How much can you hold?
The Tenant Fees Act 2019 caps deposits at 5 weeks' rent where the annual rent is under £50,000, and 6 weeks' rent above that threshold. Holding deposits are separately capped at 1 week's rent and must be credited to the first month's rent or deposit, you cannot keep it unless the tenant withdraws.
What you can legally deduct at end-of-tenancy
- Unpaid rent up to the tenancy end date.
- Repair or replacement of damage beyond fair wear and tear, quantified by invoices or quotes.
- Cleaning, only if the property was professionally cleaned at the start and the schedule of condition evidences the return standard.
- Replacement of items listed on the inventory as missing or damaged.
- Unpaid utility bills if the tenancy made the tenant responsible.
Deductions you cannot make
- Routine redecoration (paint fading, minor scuffs), this is fair wear and tear.
- Carpet wear from normal use.
- A cleaning charge if the flat was already dirty at move-in and no inventory records that.
- Betterment, you cannot improve the property at the tenant's expense. A 10-year-old carpet's replacement value is not the price of a new carpet.
Dispute resolution
Each scheme runs a free Alternative Dispute Resolution service. The adjudicator reviews the evidence you both submit and decides the split. Evidence quality wins, dated photos, the original inventory, quotes in writing, a clear schedule of condition. Without them the benefit of the doubt goes to the tenant.
The <a class='underline text-brand-700' href='/shop/end-of-tenancy-deposit-deduction-pack'>End-of-Tenancy Deposit Deduction Pack</a> is the exact letter and evidence log adjudicators recognise, it gives you the best chance at the full deduction you ask for.