Deposit Protection Rules: DPS, MyDeposits, and TDS Compared

UK law (Housing Act 2004) requires landlords to protect tenancy deposits in a government-approved scheme within 30 days of receipt. There are exactly three approved schemes for England and Wales (Scotland and Northern Ireland have separate equivalents). Failure to protect a deposit on time can expose you to a tenant claim worth 1-3x the deposit amount and can undermine later possession action. This guide covers every option, cost, deadline, and the practical workflow that keeps you compliant.

The 30-day clock starts when

The 30-day window starts the day you receive the deposit, not the day the tenancy begins. If you take a holding deposit before signing the AST, the clock starts when that deposit converts into a security deposit. If you receive cleared funds on a Friday, the 30 days runs from Friday — bank-clearing delays don't extend the deadline. Mark the date on your calendar; do not rely on memory.

The three schemes

Deposit Protection Service (DPS)

The DPS is the only entirely free custodial scheme. You transfer the deposit to DPS and they hold it for the duration of the tenancy. At the end, it's returned based on agreement between landlord and tenant. The DPS is run by Computershare, the same group that handles share-registry services for FTSE listed companies — the operational stability is high.

• Cost: Free (custodial only)
• Best for: Landlords who prefer simplicity and don't want to hold deposits in their own account
• Cashflow note: the deposit sits with DPS, so you don't have it available for emergency cashflow. For most landlords this is fine; some prefer the insured route below.

MyDeposits

MyDeposits offers both custodial (free) and insured options. With the insured scheme, you hold the deposit yourself and pay a fee for insurance protection. The insured fee is per-tenancy, not per-property — if a tenancy renews you re-register and re-pay.

• Cost: Free (custodial) or from £17.04 per tenancy (insured)
• Best for: Landlords who want flexibility between custodial and insured
• Note: insured option requires you keep the deposit in a separate, identifiable account — co-mingling with personal funds invalidates the protection.

Tenancy Deposit Scheme (TDS)

TDS also offers custodial and insured options. The insured scheme lets you hold the deposit while paying for protection. TDS is widely used by letting agents because their dispute resolution panel is well-regarded; for self-managing landlords the choice between TDS insured and MyDeposits insured usually comes down to fee and personal preference.

• Cost: Free (custodial) or from £20.00 per tenancy (insured)
• Best for: Landlords who prefer to hold deposits (insured option)
• Note: TDS publishes annual dispute statistics; their adjudication outcomes lean roughly 50/50 between landlord and tenant when both make a claim, slightly more landlord-favourable on cleaning disputes.

Custodial vs insured: which to choose

Custodial: The scheme holds the money. Free, simpler, but you don't have access to the funds. Choose this if you don't need the deposit cashflow and want zero ongoing admin.

Insured: You hold the money and pay for insurance. You keep the deposit in your own (separate) account but must return it when due. Choose this if you want flexibility, are comfortable with the obligation, and have a separate landlord bank account ready.

For 90% of self-managing landlords, custodial is the right answer: zero cost, zero ongoing fee, the scheme handles disputes, and you don't risk co-mingling fund issues. The insured option is mostly for portfolio landlords or letting agents who already have separate client-money accounts and prefer the operational control.

Prescribed Information: the second half of the requirement

Protecting the deposit is only half the requirement. You must also serve Prescribed Information to the tenant within 30 days, including:

• Which scheme holds the deposit (DPS / MyDeposits / TDS)
• The scheme's contact details
• How the tenant can apply for the deposit's return
• What to do if the tenant cannot be found at the end of the tenancy
• What to do if there's a dispute
• The amount of the deposit and the address of the property

Each scheme provides a Prescribed Information template. Use it verbatim — don't try to reword. Keep proof you served it (date-stamped email or signed tenant acknowledgement). Without that proof, the protection technically isn't valid.

Penalties for non-compliance

Two consequences if you fail to protect on time or fail to serve Prescribed Information:

1. Possession risk. Until you remedy (either return the deposit or correctly protect + serve), your enforcement position is weaker and the tenant has a clear counterclaim.
2. Tenant compensation claim. Tenant can apply to the County Court for compensation of 1-3x the deposit within 6 years of the breach. Courts award the higher end (3x) for deliberate non-protection or repeat offences; first-time genuine errors usually attract 1x.

The maximum exposure on a £1,500 deposit is £4,500 plus court costs. On a portfolio of 5 properties with multiple tenancies that have rolled, the cumulative exposure can reach £20,000+. Don't risk it.

Common deposit mistakes

• Re-registering after a tenancy renewal. When an AST converts to a periodic tenancy at month 6 or 12, the deposit is automatically re-protected under most scheme rules — but you should re-serve Prescribed Information. Confirm with your scheme.
• Splitting deposits across schemes. Each deposit goes in one scheme. Don't put half in DPS and half in MyDeposits.
• Forgetting joint tenants. If two tenants signed the AST, both must receive Prescribed Information.
• Late protection because of the holding deposit. Holding deposits (max 1 week's rent under the Tenant Fees Act 2019) become security deposits when the tenancy starts; that's when the 30-day clock starts.

Tracking in Tendmere

Tendmere tracks which scheme each deposit is registered with, the protection date, and the Prescribed Information deadline. You'll get reminders if anything is approaching expiry or if a new tenancy deposit needs protecting. The audit log records when each deposit was registered + when Prescribed Information was served, so if a tenant ever disputes timeliness you have the evidence ready.

Related guides

• UK landlord compliance checklist — every certificate + deadline
• How to win a deposit dispute — when there's disagreement at end-of-tenancy
• Fair wear and tear: what you can deduct
• Right to Rent checks — the other 30-day move-in obligation