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Deposit Protection Schemes

Tenancy Deposit Protection (TDP) schemes guarantee that tenants will get their deposit back at the end of the tenancy. However they must meet the terms of the tenancy agreement and must not damage the property.

Landlord obligations

Landlords must protect their tenants' deposits if they have let the property on an assured shorthold tenancy which started after 6 April 2007. However it’s good practice for landlords to protect deposits in all circumstances. TDP schemes do not cover holding deposits.

Landlords who don’t protect their tenants' deposits when required to can be taken to court by the tenant. They may need to repay the deposit plus a sum equivalent to three times the deposit. The landlord may also be unable to seek possession of their property.

Approved schemes

There are three TDP schemes approved by the UK Government:

Types of scheme

There are two types of TDP scheme:

  • Custodial - the DPS provides the only custodial scheme. It holds the deposit in a bank account and returns it at the end of the tenancy to the person who is entitled to it. This scheme is free to landlords and letting agents.
  • Insurance based - where the landlord or landlord's agent holds the tenant's deposit and pays a fee to insure it against landlord default. My Deposits and TDS are insurance based providers.

Your clients should seek independent advice on the most suitable scheme for them.

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For the use of mortgage intermediaries & other professionals only

If you do not have professional experience, you should not rely on the information contained on this site. If you are a professional and you reproduce any part of the information contained on this site, to be used with or to advise private clients, you must ensure it conforms to the Financial Conduct Authority's advising and selling rules. These pages are for the use of those people who are resident and ordinarily resident in the UK and should not be regarded as an offer or invitation to sell Mortgage products in any jurisdiction other than the UK.

Birmingham Midshires is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered office; The Mound, Edinburgh, EH1 1YZ

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