Compare Tenancy Deposit Protection Schemes
Where a Landlord or Agent fails to comply with the Deposit Protection Schemes
- The Landlord WILL have problems regaining legal possession of their property (see section 7 court form)
- Cannot make lawful deduction for damage, rent arrears, legal costs etc
- Irrespective of loss be ordered to return the deposit & pay the Tenant three times the deposit as compensation read more
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Prior to signing the Tenancy Agreement Tenants will often pay you holding deposit. You are not required to protect a holding deposit but should issue a receipt. However, once they are your tenant the holding fee becomes a deposit which must be protected with a deposist scheme
There were only Four Deposit Protection schemes being;
1) The DPS Deposit Protection Service PROVIDE THE PRIMARY custodial scheme - this means there are no fees payable.
From April 2016 mydeposits shall also be providing a custodial based tenancy deposit protection scheme.
With regards the DPS who are PIMS preferred choice. The Landlord /Agent register for FREE and then pay any deposits to the DPS who will then hold the deposit throughout the life of the tenancy. It is a free service and interest is split between the landlord and tenant. At the end of the tenancy the tenant applies for their deposit back and as long as the landlord does not require any money from it, it is returns ONLY with the Landlords consent. If the landlord and tenant can't agree on a satisfactory figure, the (ICE Independent case examiner) would adjudicate and decide on who gets what. The process of dispute resolution applies to all schemes How the DPS Custodial Scheme works
2) DPS Insurance Scheme - LOWER COST INSURANCE OPTION
April 2013 the DPS launched a lower cost insurance scheme this presented better value than previously provided by the other schemes - which historically charged much higher fees - DPS Insurance Scheme
NOTE - The New Capita Tenancy Deposit Insurance Scheme launched 1st April 2013 - closed September 2013
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3) The TDS (The Dispute Service) an insurance based protection scheme (mainly used by Letting Agents)
Works in very much the same way as the DPS the only difference being that the money is held in a secure client account and insured by the TDS. At the start of the tenancy both landlord and tenant will receive a certificate showing the amount of deposit held the name of the landlord, the names of all the tenants, the property address and the dates of the tenancy.
4) Mydeposits (TDSL) AND DPS :The insurance based deposit protection schemeS
A Landlord or Agent pays charges every time they issue a new or renew a Tenancy Agreement. Mydeposits have reduced there fees but some may consider they have only done so for the DPS came to the market with a more attractive offering. It may be considered previously their prices/profits were too high. £5 Joining Fee + Standard Fee per deposit £20 for deposits up to £500 and £26 for Deposits more than £500.
WARNING DEPOSIT INSURANCE SCHEMES Once the AST becomes a periodic the scheme MUST be notified within 30 days otherwise deposit protection lapses and this can expose you to a fine of three times the deposit and you are also unable to evict you tenant.
These are the rules of compliance
A deposit protection fee is payable for each deposit you protect. The fee is set at the start of your membership, or on your membership renewal.
The deposit protection fee protects the deposit for the duration of the tenancy agreement as stated on the AST Agreement.
If you renew, extend, amend or reissue the AST Agreement (by whatever means) you will need to purchase a further deposit protection.
The only exception to this rule is if you allow the original AST Agreement to run into a Statutory Periodic Tenancy (SPT), then no further protection fee is payable, however you must inform the scheme of the extension. An SPT enables both you and the tenant to continue on the original terms and conditions (with the exception of rent revisions) of the letting where no new tenancy agreement or amendment is issued. WARNING if you do NOTHING protection lapses and this exposes you to a fine
From April 2016 mydeposits shall also be providing a custodial based tenancy deposit protection scheme. PIMS consider DPS custodial schemes should be used
WARNING Renewing a Tenancy Agreement
Warning Insurance Schemes When you
renew a Tenancy Agreement you are obliged to purchase a new insurance policy. Should you fail to do so you invalidate your Section 21 Notice (see section 7
court form). If you allow the original tenancy to continue as a periodic Tenancy then the original insurance remains valid
Where the deposit is protected with the DPS custodial scheme no such issue arises for the deposits remains protected irrespective of the fact you renew the tenancy.
The Housing Act 2004 (Chapter 4, sections 212-5; & Schedule 10) made provision for both the protection of tenancy deposits and the resolution of disputes over their return.