Deposit protection schemes: which one to use and how they work

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The three deposit protection schemes in England and Wales

GOV.UK lists the government-backed schemes for properties in England or Wales [1]:

• Deposit Protection Service (DPS)
• MyDeposits, including deposits that were held by Capita [3]
• Tenancy Deposit Scheme (TDS)

Scotland and Northern Ireland have separate schemes [1].

All three do the same core job. They make sure tenants get their deposit back if they meet the tenancy terms, don't damage the property, and pay the rent and bills, and they offer free dispute resolution when you can't agree [1].

Custodial vs insured: which deposit protection scheme type?

GOV.UK says all schemes offer two options [1]:

For most self-managing landlords with a few properties, custodial is the simpler choice: it costs nothing and removes the temptation or risk of mixing deposit money with your own.

Deposit protection rules: what you must do

The core rules from GOV.UK [1][2]:

1. Protect it within 30 days of receiving it [1].
2. Give the tenant the prescribed information about where and how it's protected, also within 30 days [4].
3. Protect third-party payments too. If a parent or a rent deposit scheme pays, you still must protect it [1].
4. Holding deposits don't need protecting, but once the tenant moves in and it becomes a deposit, it must be protected [1].
5. Return it within 10 days of agreeing how much the tenant gets back [1].

How much can you take?

The Tenant Fees Act caps tenancy deposits at 5 weeks' rent where the annual rent is under £50,000, and 6 weeks' where it's between £50,000 and £100,000 [5]. Holding deposits are capped at 1 week's rent [5].

What changed with the Renters' Rights Act?

GOV.UK's tenant guidance now refers to assured periodic tenancies, which replaced assured shorthold tenancies on 1 May 2026 [3]. Deposits on these tenancies must still be protected in an approved scheme [3]. Separately, since 1 May 2026 you can only require up to one month's rent in advance between signing and the tenancy starting [6].

What happens if you don't protect a deposit?

GOV.UK says the tenant can apply to a county court at any time during the tenancy [2]. If the court finds you didn't protect it, it can order you to repay it or pay it into a custodial scheme within 14 days, and may order you to pay the tenant up to 3 times the original deposit [2]. It may also decide the tenant doesn't have to leave when the tenancy ends [2].

Deposit protection scheme disputes

If you and your tenant can't agree on deductions, the deposit stays protected in the scheme until the dispute is settled [1]. Each scheme offers dispute resolution, where an independent adjudicator decides based on the evidence each side sends.

That's where most landlords win or lose. The evidence that matters:

• the tenancy agreement
• a check-in inventory with the condition of each room
• dated photos at move-in and move-out
• records of repairs and damage reported during the tenancy
• invoices for any work you're claiming for

See our landlord inventory template guide.

Build your deposit evidence from day one

Gaffy keeps a room-by-room inventory and two dated photo sets, move-in and move-out, for each property, so you have the before and after if a deposit is ever disputed. Damage reported through the tenant's repair link is timestamped with photos. You can store the scheme certificate and prescribed information in the property's vault, and use our deposit protection reminder page to keep on top of the deadlines. See Gaffy's features. For the wider rules, read our main guide to deposit protection for landlords.

How to protect a deposit: step by step

1. Choose a scheme: the Deposit Protection Service, MyDeposits or the Tenancy Deposit Scheme [1].
2. Choose custodial or insured [1].
3. Register the deposit with the scheme within 30 days of receiving it [1].
4. Pay it in if you chose custodial.
5. Send the tenant the prescribed information within 30 days [4].
6. Keep the scheme certificate with the tenancy paperwork.

If the tenancy continues, check with your scheme what you need to do to keep the protection in place.

Deposit deductions: what you can claim for

Disputes usually come down to a few categories: cleaning, damage beyond fair wear and tear, missing items and unpaid rent. For each, the adjudicator will want to see the condition at the start, the condition at the end, and what it cost to put right. An invoice or quote is stronger than an estimate. If a pet caused the damage, GOV.UK says you can keep money from the deposit to cover repairs, but not claim the same damage on insurance as well [7].

Agree deductions in writing where you can. A short, itemised email with photos often settles things before a formal dispute.

If the landlord who took the deposit has died, read what happens to the tenancy deposit.

FAQs

What are the deposit protection schemes in the UK?

In England and Wales: the Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme. Scotland and Northern Ireland have their own [1].

Which deposit protection scheme is best?

All three are government-approved. The bigger choice is custodial (free, scheme holds the money) or insured (you hold it and pay a fee) [1].

How long do I have to protect a deposit?

30 days from receiving it [1].

What is the penalty for not protecting a deposit?

A court can order repayment of up to 3 times the deposit [2].

Do I need to protect a holding deposit?

No, until it becomes the tenancy deposit [1].

How quickly must I return the deposit?

Within 10 days of agreeing the amount [1].

How does Gaffy help?

Gaffy keeps dated move-in and move-out photos and a room-by-room inventory per property, so you have evidence in a dispute. It's £12 a month for up to 5 properties, plus £4 a month for each extra property, and the first month is free.

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Sources

1. GOV.UK, Deposit protection schemes and landlords: https://www.gov.uk/deposit-protection-schemes-and-landlords
2. GOV.UK, If you don't protect your tenants' deposit: https://www.gov.uk/deposit-protection-schemes-and-landlords/if-you-dont-protect-your-tenants-deposit
3. GOV.UK, Tenancy deposit protection: https://www.gov.uk/tenancy-deposit-protection
4. GOV.UK, Information you must give your tenants: https://www.gov.uk/deposit-protection-schemes-and-landlords/information-you-must-give-your-tenants
5. GOV.UK, Fees you can charge as part of a tenancy: https://www.gov.uk/guidance/fees-you-can-charge-as-part-of-a-tenancy
6. GOV.UK campaign hub, Renting is changing: https://housinghub.campaign.gov.uk/renting-is-changing/
7. GOV.UK, If a tenant wants a pet to live with them: https://www.gov.uk/assured-tenancy-agreements-a-guide-for-landlords/if-a-tenant-wants-a-pet-to-live-with-them