Many Landlords Failing to Protect Tenancy Deposits

Many landlords are putting themselves and their buy-to-let businesses at risk by failing to protect tenancy deposits, which is required by law.

All landlords in England and Wales must place their tenants’ deposits in one of three Government-approved tenancy deposit schemes.

When letting a property, most landlords choose to take a deposit from the tenant prior to the tenancy starting. A deposit provides a level of protection to landlords, and means that, should the tenant breach the terms of the tenancy agreement, such as causing damage to the property or not paying the rent, the landlord can then make appropriate deductions from the deposit.

Many Landlords Failing to Protect Tenancy Deposits

Many Landlords Failing to Protect Tenancy Deposits

Deposits taken by landlords or letting agents on Assured Shorthold Tenancies (ASTs) in England and Wales must be protected within 30 days in one of the three Government-approved insurance or custodial based deposit protection schemes, which are operated by MyDeposits, the Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS).


An insurance-based scheme enables landlords or their agents to retain the deposit during the tenancy, but in return pay a protection fee to the scheme.

Custodial scheme

Landlords or agents hand over the deposit for protection during the tenancy if they use a custodial scheme, with no fees attached. The scheme is funded entirely from the interest earned from the deposit pool.

There are separate tenancy deposit protection schemes in Scotland and Northern Ireland:


The three appointed scheme administrators in Scotland are: Letting Protection Service Scotland; Safedeposits Scotland; and MyDeposits Scotland.

Northern Ireland

In Northern Ireland, the schemes are: Deposit Scheme Northern Ireland; MyDeposits Northern Ireland; and Letting Protection Service NI.

Although it has been a legal requirement for landlords and agents to protect tenancy deposits in a scheme since 2007, many investors are running the risk of a hefty fine for not placing the funds into a Government-approved scheme, believes Danielle Cullen, the Managing Director of

“A small proportion of landlords did not put student deposits into Government protected schemes,” she says. “Some landlords were holding tenant deposits in private bank accounts; breaking a law introduced in April 2007.”

A report last year found that a total of £514m worth of deposits was believed to not be protected in one of the three schemes in England and Wales.

It comes despite the risk of a penalty for the landlord or letting agent, potentially up to thousands of pounds.

Tenants can apply to a local county court if they believe that their landlord has not used a deposit protection scheme when they should have and, if found guilty, the court can order the landlord/agent to pay up to three times the deposit amount within 14 days.

Landlords can also face penalties if their agent fails to protect tenancy deposits.

Failure to comply with the law can also affect a landlord’s right to chase rent arrears:

Always stick to the law and protect tenancy deposits!

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