Deposit Protection Scheme:
Landlord Guide to the DPS

The deposit protection scheme (DPS) is the legal requirement for landlords in England and Wales to protect tenancy deposits in a government-approved scheme within 30 days of receiving them. There are three government-approved schemes: the Deposit Protection Service (DPS), MyDeposits, and the Tenancy Deposit Scheme (TDS). Landlords must also provide prescribed information to the tenant within 30 days.

Prescribed information is the set of documents and information a landlord must provide to the tenant (and any relevant person who paid the deposit) within 30 days of receiving the deposit. It includes: the scheme leaflet, the scheme's terms and conditions, details of the deposit amount and property, the circumstances in which deductions can be made, and the dispute resolution procedure. Failure to provide prescribed information has the same consequences as failing to protect the deposit.

Under the Tenant Fees Act 2019, the maximum deposit a landlord can take is 5 weeks' rent (where annual rent is less than £50,000) or 6 weeks' rent (where annual rent is £50,000 or more). Taking a deposit above the cap is a prohibited payment and can result in a fine of up to £5,000 for a first breach.

Failing to protect a deposit or provide prescribed information within 30 days has serious consequences: the tenant can apply to court for a penalty of 1–3 times the deposit amount; you cannot serve a valid Section 8 notice on certain grounds until the deposit is protected or returned; and you may be unable to make deductions from the deposit at the end of the tenancy. We advise landlords on remedying non-compliance and defending deposit penalty claims.

In a custodial scheme, the landlord pays the deposit to the scheme, which holds it for the duration of the tenancy. The scheme is free to use. In an insurance-backed scheme, the landlord keeps the deposit but pays a fee to insure it. At the end of the tenancy, if there is a dispute, the landlord must pay the disputed amount to the scheme while the dispute is resolved. Both types are government-approved and meet the legal requirement.

At the end of the tenancy, you can make deductions from the deposit for unpaid rent, damage beyond fair wear and tear, cleaning costs (if the property is not returned in the same condition), and other breaches of the tenancy agreement. You must provide the tenant with a written breakdown of any deductions. If the tenant disputes the deductions, the scheme's free dispute resolution service can adjudicate. We advise landlords on making and defending deposit deduction claims.