Security deposits for rental properties


The tenant will be required to pay a security deposit (usually at least one month’s rent) which is used to reimburse you for any damages at the end of the tenancy, or to repay any rent which may have been due after the tenant moves out.

Deposit Protection legislation came into effect on 6 April 2007. After which, all deposits taken for Assured Short-hold Tenancies will have to be covered by a tenancy deposit protection scheme.

What are the legislative requirements?


  • Any landlord or agent who takes a deposit from a tenant for an Assured Short-hold Tenancy must safeguard it in an approved tenancy deposit scheme and the tenant must be told which one.
  • The deposit must be in money.
  • Landlords in breach of these provisions will not be able to issue Section 21 notices, and may have to pay the tenant compensation of three times the deposit.
  • The landlord/agent must submit the deposit to the operators of their scheme when requested to do so.
  • Each scheme must have procedures for resolving disputes without going to court.
  • There are strict time limits for the return of the deposit if there is no dispute.


The Act allows for both custodial and insured schemes


  • Custodial schemes are where the deposit is lodged with an independent third party i.e. outside the control of the landlord.
  • Insured schemes allow the landlord/agent to retain control of the deposit as long as they are subject to suitable insurance arrangements.
  • Secondary legislation will fill out the detail, including time limits for dealing with disputes.


What is DPS?

DPS has been developed to ensure that the deposits are protected and that disputes about their return are resolved swiftly, inexpensively and impartially.

Under DPS:

  • Deposits will be protected during the tenancy.
  • Where there is no dispute at the end of the tenancy, deposits will be returned promptly.
  • Where there is a dispute about the return of the deposit it will be dealt with fairly by an impartial and qualified adjudicator.
  • The adjudicator will make his decision quickly, and the deposit will be paid out without unnecessary delay. Whilst every effort is made to ensure that responsible tenants are approved for every tenancy, we cannot accept liability for the action of any tenant we introduce in good faith. You must instigate all Court proceedings for recovery of rent or possession and any costs incurred are not included in our charge.
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