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What happens if you don't protect your tenants' deposits

You must protect your tenants' deposits using a tenant deposit protection (TDP) scheme, if they have an AST which started on or after 6 April 2007.

If your tenants are covered by the TDP legislation and you do not protect their deposits, you may not be able to get possession of your property at the end of the tenancy.

If your tenant believes their deposit is not being protected in a scheme, they can apply to the county court. If the court is satisfied that the landlord has not used a scheme to protect the deposit or has not done all the things he is required to under the legislation and scheme rules, it must do one of the following:

• order the person holding the deposit to repay it to the tenant
• order the person holding the deposit to pay it into a custodial scheme’s bank account within 14 days

In addition, the court must also order the landlord to pay the tenant between one and three times the deposit within 14 days of making the order.

Read 'Deposit protection schemes for private tenants' to find out when you need to use a tenancy deposit scheme and the scheme providers available.

• Deposit protection schemes for private tenants

• Download 'Tenancy deposit advice guide' - Citizens Advice Bureau (PDF, 41K) Opens new window

• Help with PDF files

What if your letting agent goes out of business?

If you are a landlord using a letting agent and they have protected your tenants' deposits using a TDP scheme, you should check that the deposits will be safe if the agent goes out of business. You should note that as a landlord, you are responsible for ensuring that the deposit is safeguarded in a scheme and any monies due to your tenant are repaid at the end of the tenancy.

If your letting agency was using the custodial Deposit Protection Service (DPS) before it went out of business, the deposit will be safe. To release the deposit at the end of the tenancy you should send the scheme:

• proof of ownership of the property
• a copy of the tenancy agreement
• a letter saying that the agent has gone out of business

With insurance-based schemes, tenants will get their deposits back from the scheme's insurer if the letting agency closes down. However, if the money has been lost, the landlord will be responsible for paying the money back to the insurer.

The Tenancy Deposit Scheme (TDS) is an insurance-based provider. Under the TDS, deposits are protected for either:

• up to 12 months after the original start date of the tenancy
• three months after the agent's membership of the scheme ended

This protection stops automatically if the landlord makes other arrangements to protect the deposit. The TDS should tell you when an agent's membership of a scheme has ended. You should get legal advice to make sure that you know what to do if the deposit will no longer be protected at the end of the tenancy.

Under the rules of the insurance-based scheme, MyDeposits, the protection will continue:

• for a maximum period of 90 days from the date that membership ends; or
• until the deposit is re-protected by the landlord individually or elsewhere in another scheme, whichever is the lesser period of time.

• Find a solicitor or advice agency

What happens if there is a dispute over a deposit

Each TDP scheme operates a free alternative dispute resolution (ADR) service, in case you and your tenant cannot agree how much deposit should be returned.

Disputes under the custodial tenancy deposit protection scheme

The custodial scheme - called the Deposit Protection Service (DPS) - will keep the deposit until its ADR service or the courts decide how much of the deposit should be returned to the tenant.

Neither you nor your tenant has to use the ADR service, but if you agree to do so, you must both accept its decision. If you refuse to use an ADR service, your tenant can apply to the county court for a decision.

• Deposit Protection Service (DPS) - how to handle a dispute Opens new window

Disputes under insurance-based tenancy deposit protection schemes

Under the insurance-based schemes - MyDeposits or TDS - you must pay the disputed amount of the deposit into the scheme while the ADR service considers the dispute. The scheme will then pay any amount due to the tenant.

If you do not pay in the disputed amount, the ADR service will make a decision in the same way. However, the scheme's insurers will then try to recover from you any amount it pays to the tenant.

• MyDeposits - how to handle a dispute Opens new window

• Tenancy Deposit Scheme information and how to handle a dispute Opens new window

What happens if the landlord or tenant cannot be contacted?

If the landlord or tenant cannot be contacted at the end of a tenancy or during a dispute, the other party can ask the TDP scheme for help.

Custodial scheme contact procedures

Under the custodial DPS, the landlord or tenant can use the 'single claim' process to recover the deposit.

The single claim process can also be used if a landlord or tenant does not respond to a request for information from the scheme after a tenancy has ended.

An application to use the single claim process must be supported by a statutory declaration, which should be sworn or affirmed in the presence of an approved official. The declaration sets out specified information about the tenancy and the steps taken to contact the other party. The DPS will then ask both landlord and tenant for comments. If there are no objections, the scheme will refer the dispute to its ADR service who will decide how the deposit should be allocated.

• Find out how to make a single claim - Deposit Protections Service (DPS) Opens new window

Insurance-based scheme contact procedures

If the landlord uses the MyDeposits or TDS schemes, the tenant can apply to the relevant TDP provider - or 'raise a dispute' - to get their deposit back.

Landlords that do not respond to requests for information from the schemes can be expelled from the scheme. If this happens, the tenant's deposit is still protected and will be refunded by the scheme's insurers if the ADR service decides this is fair.

• MyDeposits - how to handle a dispute Opens new window

• Tenancy Deposit Scheme (TDS) - scheme information and how to handle a dispute Opens new window

More useful links

• Tenancy deposit protection information: Department for Communities and Local Government Opens new window

• Download the 'Guide to deposits, disputes and damages' (PDF, 555K) Opens new window

• Find your local Citizens Advice Bureau office Opens new window

• Download assured and assured shorthold tenancy guidance for tenants from Communities and Local Government (PDF, 498K) Opens new window

• Download assured and assured shorthold tenancy guidance for landlords from Communities and Local Government (PDF, 641K) Opens new window

• Tenancy deposit protection scheme advice from Shelter Opens new window

• Help with PDF files

Useful contacts

• Home and community useful contacts

• A-Z of local councils

• Communities and Local Government Opens new window