Have you protected your tenants’ deposit according to the rules? The Housing Act 2004 states that all landlords renting out their property on an assured shorthold tenancy must put their tenant’s deposit in a tenancy deposit protection scheme (TDS). The rules are stricter from 2026 onwards, and tenancy deposit protection needs to be handled correctly to avoid serious consequences.
If you are a landlord in the SE1 area of London such as Shad Thames, Lower Marsh or The Cut, or nearby areas of Vauxhall or Wapping, read on for more information on landlord deposit schemes. We explain the benefits, how long the landlord has to protect the deposit, and your responsibilities as a landlord.
Landlords have to protect deposits to give a route to dispute resolution, and to protect against legal complications. Until now, landlords have been legally required to place their tenants’ deposits in a tenancy deposit protection (TDP) scheme within 30 days, or your tenants can take you to court.
Being a landlord in London can be confusing. There are over 170 Acts & Regulations to consider, so, how do you know if you are compliant?
Under the new Renters’ Rights Act, you may need to prove that you have protected the tenant’s deposit correctly if you take action to gain possession of your property.
The tenancy deposit offers landlords a means of recouping the costs if tenants fall into arrears or damage the property. It’s held throughout the tenancy, then returned in full once it ends unless a deduction is made. If you sell the property with tenants during the tenancy, the deposit can be transferred to the new landlord. Crucially, landlords have to protect these deposits.
Landlords are not obligated to take a tenancy deposit, but it is usual. Under the current deposit protection rules for England and Wales, a tenant deposit can’t exceed 5 weeks’ rent.
A tenancy deposit differs from a holding deposit, which reserves the property during initial checks and is returned within days.
The landlord or letting agent they appoint must register the deposit in a government-approved deposit protection scheme within 30 working days of receiving the payment.
If there are any disputes between the landlord and tenant, the scheme that holds the deposit will aim to settle this impartially.
As of 6 April 2007, registering your tenant’s deposit in a deposit protection scheme is legally required within 30 days of receiving the funds from your tenant. You must also provide your tenant with relevant information on the scheme with which you have registered their deposit.
If you don’t, you could be fined up to 3 months’ rent. Tenants can also claim compensation if it’s found that the found that their landlord didn’t protect the deposit.
These deposit protection rules were put in place for landlords with assured shorthold tenancies. As of 1 May 2026, the new Renters’ Rights Act will convert these to periodic tenancies and put a heightened emphasis on protecting tenants’ deposits.
Tenancy deposit protection is a key requirement for using certain section 8 grounds for eviction, and the court will not grant a possession order if you haven’t protected the tenants’ deposit in a government-approved tenancy deposit scheme.
The main benefit for landlords is access to a free dispute resolution service to mediate disagreements. Tenancy deposit disputes can arise when deciding how much of the deposit is returned at the end of the tenancy.
The scheme will provide an independent adjudicator who will review the evidence presented by both parties to make a decision. Both the tenant and landlord must agree to use the service. If you disagree with the final decision, you must go to court.
The scheme gives tenants peace of mind that their deposit is protected and ensures that the landlord or letting agent will return their deposit at the end of the tenancy.
Want to be a more informed landlord? Getting deposits right starts with a thorough house inspection checklist and understanding the correct process for giving notice to end a tenancy.
You must ensure you put your tenant’s deposit in a government-approved scheme. In England and Wales, these are:
There are two types of deposit protection schemes: custodial and insured. In either case, the deposit scheme provider offers a free dispute resolution service.
When you register for a custodial tenancy deposit scheme, you transfer the entire deposit amount to your provider, who will hold the funds until the end of the tenancy. These schemes are free and are the most popular choice for landlords.
If you opt for an insurance-based scheme, you register the tenant’s deposit with your provider but keep the funds in your bank account until the end of the tenancy. You will pay a small fee each time you collect a deposit from your tenant. Landlords with more extensive portfolios opt for this because they can keep any interest accrued by holding the money in their accounts.
What’s the best deposit protection scheme for landlords? There’s no single answer, as some may benefit one type of landlord more than another. Here are some pros and cons to consider:
The UK’s oldest government-approved services and the only non-profit organisation, the Tenancy Deposit Scheme (TDS), also operates deposit protection schemes in Scotland and Northern Ireland.
Pros:
Cons:
| Pros | Cons |
|---|---|
| Backed by RICS, ARLA and NRLA | Deposits limited to £25,000 on Insured scheme |
| Landlord templates supplied | Restricted to UK domiciled companies only |
| Training opportunities via TDS Academy | Landlords must be named on contracts |
As part of a network of landlord, tenant and letting agent services and schemes, NRLA-accredited MyDeposits has connections to the Property Redress Scheme, and services for Wales, Northern Ireland, Scotland and Jersey as well as England.
Pros:
Cons:
| Pros | Cons |
|---|---|
| Bulk function for large portfolios | Some services only open to companies |
| Call centre for all members | |
| PAYG and tailored pricing on Insured scheme | |
| Generate legal documentation and prescribed information | |
| Dispute resolution status reports sent to account |
Deposit rules sit alongside other compliance duties, including what landlords need to know about the Renters’ Rights Act 2026 and checking your tenant’s right to rent.
The Deposit Protection Service (DPS) holds around 7 million deposits, making it the largest UK deposit protection scheme.
Pros:
Cons:
| Pros | Cons |
|---|---|
| Quick set-up | Client Money Protection (CMP) required to access Insured scheme |
| No deposit limits | Bank transfer only |
| Free webinars | |
| Bulk deposit uploads via Multiple Tenancy Upload tool | |
| Add multiple admins |
The custodial scheme is entirely free. However, if you register for an insurance-based scheme, the landlord must pay a fee for each deposit they register for protection.
Each of the three government-backed services has different costs for their insurance-based schemes, so you must examine the pros and cons of each scheme and ensure that the fees are affordable.
If you do not register to protect your tenant’s deposit, the tenant can raise a compensation claim for up to three times the total deposit paid. Up to 2026, landlords have been prevented from serving a section 21 eviction notice. From May 2026 onwards, you could struggle to evict under a range of section 8 grounds.
Don’t forget you must all provide your tenants with the relevant information about the scheme within 30 days of receiving the deposit.
You can make a deduction from the tenant’s deposit in several circumstances. These include:
You must give your tenant a written explanation detailing why you are retaining all or part of their deposit. This is why it is essential to create a detailed inventory, set clear expectations in the tenancy agreement, and keep a record of all communications with your tenant throughout their tenancy.
A deposit is a valuable way for SE1 landlords to protect themselves against tenants who breach their contracts or cause damage that would result in costs to the landlord. Tenancy deposits are capped at five weeks’ rent; the average rent in SE1 is around £780 per week, so the average deposit for properties in Waterloo, The Cut, Bermondsey, Borough or London Bridge is approximately £3,900.
Landlords that take a deposit from their tenants must protect it in one of the three government-approved schemes mentioned above. If they fail to protect their tenants’ deposit, landlords can face a large fine and lose other rights, such as obtaining a possession order to evict a tenant.
If you protect the deposit after the 30-day window, you’re still technically in breach until the moment it’s registered. Your tenant can bring a claim at any point during that period, and courts have awarded compensation of between one and three times the deposit amount even where the landlord eventually protected it. Under the Renters’ Rights Act, a late-protected deposit could also undermine your ability to rely on certain grounds for possession, so acting within the deadline is critical.
If the deposit was already protected under the original assured shorthold tenancy and remains in the same approved scheme, you don’t need to re-register it when the tenancy converts to a periodic tenancy. However, you should check that the prescribed information you gave your tenant is still accurate — for example, that your contact details and the scheme’s details haven’t changed — because outdated prescribed information can create the same legal problems as an unprotected deposit.
Yes. If you use a letting agent to manage your property, they can register the deposit in a government-approved scheme on your behalf. However, the legal responsibility still sits with the landlord. If your agent fails to protect it or provides incorrect prescribed information, it’s you as the landlord who faces the penalty claim. It’s worth confirming in writing which party is handling protection and asking for proof of registration.
Once the tenancy ends and both parties agree on any deductions, the deposit should be returned within 10 days. If you’re using a custodial scheme, the scheme provider releases the funds directly. If you’re on an insured scheme, you return the money yourself from your own account. Where there’s a dispute over deductions, the funds stay protected until it’s resolved — either through the scheme’s free adjudication service or through the courts.
Deposit protection only applies to assured shorthold tenancies — and, from May 2026, to the periodic tenancies that replace them. If you rent a room in your own home to a lodger, they’re a licensee rather than a tenant, so the deposit protection rules don’t apply. However, if you let individual rooms in a property you don’t live in and each occupant has their own tenancy agreement, those deposits do need to be protected in an approved scheme.
If you are a landlord in the SE1 area of London, we can advise you further on your responsibilities regarding Tenancy Deposit Schemes. To find out more about the services we offer landlords in Elephant & Castle, Borough and London Bridge, do not hesitate to contact us.
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Lee Whitelock
Director
Being a landlord in London can be confusing. How do you make sure you are compliant?