Deposit Protection Compliance Pack

Everything you need to protect deposits correctly, avoid penalties of up to 3x the deposit amount, and handle deductions and disputes with confidence.

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Quick Answer: If you take a tenancy deposit, you must protect it in a government-approved scheme within 30 calendar days and serve the tenant with prescribed information within the same period. Failure to comply can result in penalties of 1x to 3x the deposit amount and can undermine any possession proceedings at tribunal. This guide covers every step from receiving the deposit to returning it.

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Deposit protection is one of the most commonly breached landlord obligations in England. According to the Tenancy Deposit Scheme, thousands of tenants each year discover that their deposit was not properly protected. For landlords, the consequences of getting this wrong are severe and immediate.

This guide walks through every requirement in detail, gives you templates and checklists, and explains the dispute process from both sides.

The Three Approved Schemes

Since 6 April 2007, all tenancy deposits for assured shorthold tenancies in England and Wales must be protected in one of three government-approved schemes. Following the Renters' Rights Act 2025, this requirement extends to the new assured periodic tenancies.

Scheme Comparison

Custodial vs Insurance: Which to Choose?

Custodial schemes hold the deposit money directly. You transfer the deposit to the scheme, and it is held in a secure account until the tenancy ends. The scheme releases the money according to both parties' agreement or following dispute resolution.

Advantages:

• Free to use
• No risk of losing the deposit money (it is held by the scheme)
• Simpler administration -- the scheme handles the money

Disadvantages:

• You do not have access to the deposit money during the tenancy
• Release can take slightly longer as it goes through the scheme

Insurance schemes allow you to hold the deposit money yourself. You pay the scheme an annual fee, and the scheme guarantees that the tenant will receive their deposit back (via the scheme's insurance) if you fail to return it.

Advantages:

• You retain the deposit money (useful for cash flow)
• Faster release at the end of tenancy (you control the money)

Disadvantages:

• Annual fee per deposit
• You are responsible for holding the money safely and having it available when the tenancy ends
• If you spend the deposit money and cannot return it, the scheme's insurance will pay the tenant, and the scheme will pursue you for recovery

Recommendation: If you are a new or small-portfolio landlord, start with a custodial scheme. It is free and eliminates the risk of cash flow issues affecting deposit returns.

The 30-Day Protection Deadline

When Does the Clock Start?

The 30-day period begins on the day you receive the deposit. This is not the day the tenancy starts -- it is the day the money reaches you or your agent.

Example: If a tenant pays a deposit on 1 March but the tenancy does not start until 15 March, you must protect the deposit by 31 March (30 days from 1 March).

What Counts as a Deposit?

A deposit is any money paid by the tenant as security for the performance of their obligations under the tenancy or for the payment of rent. This includes:

• Traditional security deposits
• "Holding deposits" that are converted to security deposits
• Any money described as a "bond" that functions as a security deposit
• Payments required by a letting agent that function as security deposits

What does not count:

• Rent paid in advance (this is rent, not a deposit)
• Key deposits (a genuine key deposit returnable on return of keys, though this is a grey area)
• Pet damage insurance premiums (under the Renters' Rights Act 2025, landlords can require tenants to obtain pet insurance as a condition of pet approval — but separate "pet deposits" are prohibited under the Tenant Fees Act 2019)

Maximum Deposit Amount

Under the Tenant Fees Act 2019, the maximum deposit for most tenancies is:

• 5 weeks' rent for annual rent below £50,000
• 6 weeks' rent for annual rent of £50,000 or above

Calculate "one week's rent" by dividing the annual rent by 52.

Example: For a property rented at £1,200 per month (£14,400 per year), one week's rent is £14,400 / 52 = £276.92. The maximum deposit is 5 x £276.92 = £1,384.62.

Prescribed Information Requirements

What Is Prescribed Information?

Protecting the deposit in a scheme is only half the requirement. You must also serve the tenant with "prescribed information" -- a set of specific details about the deposit, the scheme, and the parties involved.

The prescribed information must be provided within the same 30-day period as the deposit protection.

What Must Be Included

The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 sets out the required information. You must provide:

About the deposit:

• The amount of the deposit paid
• The address of the property to which the deposit relates
• The name, address, telephone number, and email address of the landlord
• The name, address, telephone number, and email address of the tenant
• The name and contact details of any relevant person (e.g., the parent who paid the deposit on behalf of the tenant)
• The circumstances under which the landlord may retain all or part of the deposit at the end of the tenancy

About the scheme:

• The name and contact details of the tenancy deposit protection scheme
• Information about the purpose of the scheme
• Information about the scheme's dispute resolution service (ADR)
• How to apply for the release of the deposit
• What to do if the tenant cannot get hold of the landlord at the end of the tenancy

Confirmation:

• Confirmation that the deposit has been received and is being held in accordance with the scheme's rules
• The date the deposit was received

How to Serve Prescribed Information

You must serve the prescribed information on:

• The tenant
• Any "relevant person" -- someone who paid the deposit on behalf of the tenant (typically a parent or guarantor)

Proof of service is essential. If a dispute arises about whether prescribed information was served, you bear the burden of proof. Recommended methods:

• Email with the prescribed information attached as a PDF, and request a read receipt or acknowledgement reply
• Recorded delivery letter with a copy retained for your records
• Digital platform message via a timestamped communication system such as Togal, which creates an immutable record of what was sent and when
• Signed acknowledgement -- have the tenant sign a copy confirming receipt

Do not rely solely on handing a document to the tenant in person without any proof of delivery. If they deny receiving it, you have no evidence.

Prescribed Information Template

Use this as a starting point. Adjust to match your specific circumstances and the requirements of your chosen scheme.

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Prescribed Information for Tenancy Deposit Protection

Date: [Date]

Property: [Full property address]

Landlord:

• Name: [Your full name]
• Address: [Your correspondence address]
• Telephone: [Your phone number]
• Email: [Your email address]

Tenant(s):

• Name: [Tenant's full name]
• Address: [Property address -- as this is their home]
• Telephone: [Tenant's phone number]
• Email: [Tenant's email address]

Relevant Person (if applicable):

• Name: [Name of person who paid the deposit on behalf of the tenant]
• Address: [Their address]
• Telephone: [Their phone number]
• Email: [Their email address]

Deposit Details:

• Amount received: £[Amount]
• Date received: [Date deposit was paid]

Protection Scheme:

• Scheme name: [DPS / MyDeposits / TDS]
• Scheme address: [Scheme's address]
• Scheme telephone: [Scheme's phone number]
• Scheme website: [Scheme's website]

Deposit Protection Confirmation: The deposit has been protected with the above scheme. The deposit reference number is: [Reference number]

Circumstances for Deduction: The landlord may retain all or part of the deposit at the end of the tenancy for:

• Unpaid rent
• Damage to the property beyond fair wear and tear
• Missing items provided as part of the tenancy
• Cleaning costs if the property is not returned in the same condition as at the start of the tenancy (allowing for fair wear and tear)
• Any other breach of the tenancy agreement that results in financial loss to the landlord

Dispute Resolution: If there is a dispute about the deposit at the end of the tenancy, either party can use the scheme's free Alternative Dispute Resolution (ADR) service. Information about the ADR process is available from [Scheme website].

If the tenant cannot contact the landlord at the end of the tenancy, they should contact the scheme directly at the details above.

Signed: [Landlord signature] Date: [Date]

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What Happens If You Fail to Protect

Financial Penalties

If a tenant (or former tenant) applies to the county court and proves that you failed to protect the deposit or failed to serve the prescribed information within 30 days, the court must order you to:

1. Return the deposit to the tenant (or protect it within 14 days if the tenancy is ongoing), AND
2. Pay compensation of 1x to 3x the deposit amount to the tenant

The compensation amount is at the court's discretion, but 1x is the minimum. Courts have consistently awarded 2x or 3x where the landlord showed a deliberate or careless disregard for the requirement.

Example: For a deposit of £1,400:

• Minimum penalty: £1,400 (1x) + return of deposit = £2,800 total exposure
• Maximum penalty: £4,200 (3x) + return of deposit = £5,600 total exposure

Impact on Eviction Notices

Under the Housing Act 1988 (as amended), an unprotected deposit historically prevented you from serving a valid Section 21 notice. While Section 21 is abolished under the Renters' Rights Act 2025, deposit protection failures can still:

• Undermine your credibility in Section 8 proceedings
• Be raised in any tribunal proceedings as evidence of non-compliance with landlord obligations
• Result in the court viewing your conduct as unreasonable when deciding discretionary grounds

The Tenant Can Claim at Any Time

A tenant can bring a claim for deposit protection failure at any time during the tenancy and up to 6 years after the tenancy ends. There is no requirement for the tenancy to have ended before claiming.

The Deposit Return Process

Timeline for Return

There is no statutory deadline for returning a deposit, but most schemes require it to be returned within 10 working days of the tenant and landlord agreeing the amount to be returned.

Best practice timeline:

What You Can Deduct For

You can propose deductions for:

• Unpaid rent (with evidence of the arrears)
• Damage beyond fair wear and tear (with evidence of the damage and the cost of repair)
• Missing or damaged inventory items (with evidence from the check-in and check-out reports)
• Cleaning costs (only if the property is returned in a materially worse condition than at the start, allowing for fair wear and tear)
• Other breaches of the tenancy agreement that have caused you a financial loss

What You Cannot Deduct For

• Fair wear and tear. Normal deterioration from everyday living is expected and is not the tenant's responsibility. Faded paint, worn carpet in high-traffic areas, and minor scuffs on walls are generally fair wear and tear.
• Pre-existing damage. Anything that was already damaged at the start of the tenancy (which is why the check-in report is critical).
• Improvements the tenant made with your consent. If the tenant added shelving or painted a room with your permission, you cannot deduct for removing or reversing those changes.
• Betterment. You cannot charge the tenant for replacing an old item with a new one. For example, if a 10-year-old carpet is damaged, you can deduct the cost of a carpet of equivalent age and condition, not a brand-new carpet.

Evidence Requirements for Deductions

The Check-In Report

The check-in report (also called an inventory) is the single most important document for deposit deductions. Without it, you have no baseline to compare against.

A good check-in report includes:

• Date and time of the inspection
• Name of the person conducting the inspection
• Room-by-room description of the property condition
• Condition of walls, ceilings, floors, doors, and windows in each room
• Condition and working order of all appliances and fixtures
• Meter readings (gas, electricity, water)
• Key count and types
• Dated photographs of every room from multiple angles
• Close-up photographs of any existing damage or wear
• Photographs of all furnished items showing their condition
• The tenant's signature acknowledging the report (or documented evidence that the tenant was given the opportunity to review and comment)

The Check-Out Report

The check-out report must follow the same format and level of detail as the check-in report. The purpose is to enable a direct comparison.

A good check-out report includes:

• The same structure as the check-in report
• Room-by-room comparison with the check-in condition
• Photographs taken from the same angles as the check-in photographs
• Notes on any changes, damage, or missing items
• Meter readings
• Key return confirmation
• The tenant's signature (or documented evidence that the tenant was invited to attend and participate)

Supporting Evidence for Each Deduction

For every deduction you propose, you should provide:

1. The check-in evidence showing the condition at the start of the tenancy
2. The check-out evidence showing the condition at the end of the tenancy
3. Invoices or quotes for the cost of repair or replacement
4. An allowance for fair wear and tear based on the age and condition of the item when the tenancy began

Togal's inventory report feature allows landlords to create room-by-room check-in and check-out reports with photographic evidence, condition notes, and tenant signature workflows -- providing the documentation needed to support deposit deductions.

Example of strong deduction evidence:

Deduction: Stained living room carpet -- £180

Check-in (Photo 1): Carpet in good condition, no stains. Check-out (Photo 2): Large red wine stain in centre of living room carpet. Quote from ABC Carpet Cleaning: Deep clean to remove stain -- £180. Carpet age at check-in: 2 years (installed January 2024, confirmed by receipt). No betterment applied as cleaning, not replacement, is proposed.

The Dispute Resolution Process

How Deposit Disputes Work

If the landlord and tenant cannot agree on deductions, either party can raise a dispute with the deposit protection scheme. All three schemes offer free Alternative Dispute Resolution (ADR) -- an independent adjudicator reviews the evidence from both sides and makes a binding decision.

Steps in the ADR Process

1. Either party raises a dispute through the scheme's online portal
2. Both parties submit evidence (check-in/out reports, photos, invoices, correspondence)
3. An independent adjudicator reviews the evidence -- there is no hearing or meeting
4. The adjudicator makes a decision on how the deposit should be divided
5. The scheme releases the deposit according to the adjudicator's decision
6. The decision is final and binding on both parties (though it can be challenged by judicial review in extreme cases)

What Adjudicators Look For

Deposit scheme adjudicators consistently report that landlords lose disputes because of:

• No check-in report (the adjudicator has no baseline and will award the deposit to the tenant)
• Poor-quality photographs (blurry, undated, or not showing the specific damage claimed)
• No invoices or quotes (claims for deductions without evidence of cost)
• Claiming for fair wear and tear (attempting to charge for normal deterioration)
• Excessive deductions (claiming the cost of a new item when the old one was already worn)
• No attempt to negotiate before raising the dispute

Adjudicator success rates: According to published data from the schemes, landlords retain some or all of the disputed deposit in around 60% of cases. The landlords who succeed are those with comprehensive check-in/check-out documentation and clear photographic evidence.

Common Deposit Protection Mistakes

Mistake 1: Missing the 30-Day Deadline

This is the most common and most expensive mistake. If the deposit is not protected within 30 days, the tenant can claim 1-3x compensation at any point during or up to 6 years after the tenancy.

Fix: Set a calendar reminder for the day the deposit is received. Protect it within 7 days, not 30 -- this gives you a margin for any administrative issues.

Mistake 2: Protecting but Not Serving Prescribed Information

Many landlords protect the deposit on time but forget to serve the prescribed information, or serve it late. This is the same breach as not protecting at all -- the penalty applies.

Fix: Send the prescribed information on the same day you protect the deposit. Use the template in this guide as your starting point.

Mistake 3: Wrong Name on the Protection

The deposit must be protected in the name of the correct landlord. If the property is owned by a company, the deposit should be in the company's name. If jointly owned, both owners should be named.

Fix: Check the ownership structure before protecting the deposit and ensure the scheme records match.

Mistake 4: Not Re-Protecting After a Tenancy Change

If a tenancy changes (e.g., a new tenant replaces an existing one on a joint tenancy), you may need to re-protect the deposit or update the scheme records. The rules are scheme-specific.

Fix: Check with your scheme whenever there is a change to the tenancy parties.

Mistake 5: No Check-In Report

Without a check-in report, you cannot prove what condition the property was in at the start of the tenancy. This means you will almost certainly lose any dispute about deductions.

Fix: Conduct a thorough check-in inspection for every tenancy, with photographs, and have the tenant sign or acknowledge it.

Mistake 6: Deducting for Fair Wear and Tear

This is the most common reason landlords lose deposit disputes. Normal deterioration from everyday living is not the tenant's responsibility.

Fix: Familiarise yourself with what constitutes fair wear and tear. The TDS publishes detailed guidance on their website.

Mistake 7: Delayed Deposit Return

Even where the full deposit is due back, landlords sometimes delay the return for weeks or months. This causes frustration, complaints, and potential legal action.

Fix: Aim to complete the check-out, confirm the deductions (if any), and initiate the return within 10 working days of the tenancy ending.

Step-by-Step Deposit Protection Process

Use this as your operational checklist for every new tenancy.

Before the Tenancy Starts

• Confirm the deposit amount does not exceed 5 weeks' rent (or 6 weeks for properties rented at £50,000+ per year)
• Decide which scheme to use (custodial or insurance)
• Prepare the prescribed information document (use the template in this guide)
• Schedule the check-in inspection

Day 0: Deposit Received

• Record the exact date and amount of the deposit received
• Record the method of payment (bank transfer, cheque, cash)
• If cash: issue a receipt to the tenant

Within 7 Days: Protect the Deposit

• Log in to your chosen scheme's portal
• Register the deposit with all required details (landlord, tenant, property, amount, tenancy start date)
• For custodial schemes: transfer the deposit money to the scheme
• For insurance schemes: pay the annual protection fee
• Download and save the deposit protection certificate
• Note the deposit reference number

Within 7 Days: Serve Prescribed Information

• Complete the prescribed information document with all required details
• Send to the tenant (and any relevant person) via a method that creates proof of delivery
• Request acknowledgement of receipt
• Save a copy of the prescribed information and proof of delivery

At the Start of Tenancy: Check-In

• Conduct a thorough room-by-room inspection
• Take dated photographs from multiple angles
• Record condition of all fixtures, fittings, and appliances
• Record meter readings
• Count and record keys provided
• Have the tenant sign the check-in report (or document that they were given the opportunity)
• Provide the tenant with a copy

During the Tenancy

• Respond promptly to any reports of damage or disrepair
• Keep records of all maintenance and repair work
• If the tenancy parties change, update the scheme records

At the End of Tenancy: Check-Out

• Schedule the check-out inspection (invite the tenant to attend)
• Conduct a thorough room-by-room inspection using the same format as the check-in
• Take dated photographs from the same angles as the check-in
• Compare the check-in and check-out reports
• Note any damage beyond fair wear and tear
• Record meter readings and key return

After the Tenancy: Deposit Return

• Identify any proposed deductions with supporting evidence
• Notify the tenant in writing of the proposed deductions (or confirm the full deposit is being returned)
• Allow the tenant a reasonable period to respond (7-14 days)
• If agreed: initiate the deposit return through the scheme
• If disputed: follow the scheme's ADR process
• Complete the return within 10 working days of agreement

Deposit Protection and the Renters' Rights Act 2025

The Renters' Rights Act 2025 has not changed the fundamental deposit protection requirements, but it has changed the consequences of non-compliance.

Under the Act:

• The PRS Database (from late 2026) will require landlords to confirm deposit protection status — failure to register on the Database is itself an offence that can trigger a Rent Repayment Order of up to 24 months' rent
• Ombudsman complaints about deposit handling will be a new enforcement route from 2028
• The existing 1x to 3x penalty for unprotected deposits under s.214 of the Housing Act 2004 remains in force alongside these new obligations

For a full overview of the Renters' Rights Act, see our Complete Landlord Guide. For all other compliance requirements, see our UK Landlord Compliance Checklist 2026.

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This guide was last updated in March 2026. Deposit protection rules and scheme terms can change. While we strive for accuracy, this guide is for informational purposes and does not constitute legal advice. Consult a qualified solicitor for advice on your specific situation.