How the tenancy deposit schemes work: DPS, MyDeposits and TDS, custodial and insured

Every tenancy deposit taken on an assured periodic tenancy in England must be protected in one of three government-approved schemes within 30 days of the landlord or agent receiving it, and the tenant must be given a set of prescribed information about where it is within the same 30 days. The schemes are the Deposit Protection Service (DPS), MyDeposits and the Tenancy Deposit Scheme (TDS).

Each scheme offers a custodial route, where the scheme holds the money for free, and an insured route, where you keep the money and pay a fee to insure it. This guide explains how the two routes differ, what the law requires at each step, and what goes wrong when a deposit is not protected properly. Checked against gov.uk, legislation.gov.uk and the three scheme websites on 31 October 2026.

The three approved schemes

In England and Wales, a deposit must go into one of:

• Deposit Protection Service (DPS), depositprotection.com
• MyDeposits (styled "mydeposits" by the scheme), mydeposits.co.uk
• Tenancy Deposit Scheme (TDS), tenancydepositscheme.com

Scotland and Northern Ireland have their own schemes and rules. All three schemes are approved by the government, and all three provide a free dispute resolution service. The main difference between them is pricing and the software they give agents, so the choice usually comes down to which one your office already knows.

Custodial versus insured

DPS describes its custodial option as "FREE Custodial deposit protection" and its insured option as "Insured protection for a small fee". MyDeposits says custodial protection means "we will hold the deposit for the duration of the tenancy for free" and that under its insured scheme "you pay a small fee to protect and hold the deposit". TDS Custodial is free and TDS Insured is the option where you keep the deposit and pay a fee. Check each scheme's current fee page before quoting a landlord a cost.

For a small agency, custodial has two practical advantages: nothing to pay, and a smaller client account balance to reconcile and insure. Insured suits agencies that want the deposit available quickly at check-out and are comfortable with the extra client money duties.

The 30-day rule

Section 213 of the Housing Act 2004 requires the landlord to comply with the scheme's initial requirements, meaning lodge or register the deposit, "within the period of 30 days beginning with the date on which it is received". The prescribed information must be given to the tenant within the same 30 days. The clock starts when the money arrives, which is often before the tenancy begins.

Two details catch agencies out:

• A holding deposit does not need protecting while it is a holding deposit. When the tenancy starts and the money is put towards the tenancy deposit, it becomes a deposit and the 30 days run from then. See our holding deposit guide.
• A deposit paid by a third party, such as a parent or a council rent deposit scheme, must still be protected, and that person must be named in the prescribed information.

The deposit itself is capped at five weeks' rent where the annual rent is under £50,000 and six weeks' rent at £50,000 or more. Our deposit cap calculator works it out from the rent.

The prescribed information

Within 30 days of receiving the deposit, the landlord or agent must tell the tenant, in writing:

1. the address of the rented property
2. how much deposit has been paid
3. how the deposit is protected
4. the name and contact details of the scheme and its dispute resolution service
5. the landlord's, or the letting agency's, name and contact details
6. the name and contact details of any third party who paid the deposit
7. the circumstances in which some or all of the deposit may be kept
8. how to apply to get the deposit back
9. what to do if the tenant cannot get hold of the landlord at the end of the tenancy
10. what to do if there is a dispute over the deposit

The schemes supply a prescribed information template and a deposit certificate. Protecting the deposit without serving the information, or serving it without protecting the deposit, does not satisfy the law. Keep proof of how and when the information was given: an email with the PDF attached, a signed receipt, or a note on the tenancy record of the date it was handed over.

Repayment and disputes

At the end of the tenancy the landlord must return the deposit within 10 days of both sides agreeing how much is to be repaid. Where the tenant and landlord disagree about deductions, the scheme's dispute resolution service is free, both parties must agree to use it, and the adjudicator's decision is final. Under a custodial scheme the money stays with the scheme until the dispute is resolved; under an insured scheme the landlord or agent must send the disputed amount to the scheme.

If the deposit is not protected at all, the tenant's route is the county court rather than the scheme. The end-of-tenancy steps are summarised in our guide to tenancy deposit protection rules.

What happens if a deposit is not protected

Under section 214 of the Housing Act 2004 a tenant can apply to the county court. The court can order the deposit to be repaid or paid into a custodial scheme within 14 days, and must order the landlord to pay the tenant a sum of "not less than the amount of the deposit and not more than three times the amount of the deposit". That applies to a late protection as much as to no protection, and to a failure to serve the prescribed information.

The Renters' Rights Act added a second consequence. gov.uk's guide to the Act says landlords cannot gain possession if they have not properly protected a tenant's deposit, and the landlord guidance says a court may decide the tenant does not have to leave when the tenancy ends. With Section 21 gone, a possession claim under the new grounds can therefore stall on a deposit mistake made years earlier. See our Renters' Rights Act guide for letting agents.

A process for the office

1. On the day the deposit arrives, record the date received on the tenancy.
2. Check the amount against the five- or six-week cap.
3. Lodge or register the deposit with your scheme and save the certificate.
4. Send the prescribed information to every tenant, and any third-party payer, and record the date and method.
5. Diarise day 30 as a hard deadline, with a reminder at day 14.
6. At check-out, agree deductions in writing, pay the agreed amount within 10 days, and refer anything disputed to the scheme.

How Letfold helps

Letfold records the date each deposit was received and the date the prescribed information was given on the tenancy, and the expiries report lists deposit deadlines falling in a chosen window so nothing reaches day 30 unnoticed. Deposit certificates and the prescribed information sit in the tenancy's documents. When you enter a deposit, Letfold checks it against the five- or six-week cap from the rent. See tenancies and compliance.

Frequently asked questions

Which deposit schemes are approved in England?

The Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme. Each offers a custodial option, where the scheme holds the money, and an insured option, where the landlord or agent holds it and pays a fee.

What is the difference between a custodial and an insured deposit scheme?

In a custodial scheme the money is transferred to the scheme and held there for free. In an insured scheme the landlord or agent keeps the money in a client account and pays the scheme a fee to insure it; any disputed amount must be sent to the scheme at the end of the tenancy.

How long do you have to protect a deposit?

30 days from the date the deposit is received, and the prescribed information must be given to the tenant within the same 30 days.

What is the prescribed information?

The ten items the tenant must be told in writing, including the deposit amount, which scheme holds it, the scheme's dispute service, the landlord's or agent's contact details, when deductions can be made and how to get the deposit back.

What is the penalty for not protecting a deposit?

A court must order the landlord to pay the tenant between one and three times the deposit, and can order the deposit itself to be repaid or protected within 14 days. A landlord who has not protected the deposit properly can also be prevented from gaining possession.

Sources

Checked on 31 October 2026:

• Tenancy deposit protection and information landlords must give tenants (gov.uk)
• If your landlord does not protect your deposit and disputes and problems (gov.uk)
• Housing Act 2004, section 213 and section 214 (legislation.gov.uk)
• Guide to the Renters' Rights Act (gov.uk)
• Deposit Protection Service, mydeposits and TDS: how to present your case to a TDS adjudicator (scheme websites)
• TDS: easy tenancy deposit protection (Propertymark)

This article is general information for England, not legal advice.