Tenancy Deposits: Protection, Deductions and Disputes

England only — Wales, Scotland and Northern Ireland have separate regimes

Deposits used to be the boring bit of compliance. They are now the single most dangerous thing on most landlords’ files, because the Renters’ Rights Act quietly turned an unprotected deposit from a section 21 problem into a possession problem — and section 21 no longer exists to be blocked.

I’d go further: if you own more than a couple of properties and read only one thing this month, make it this. The hour it takes to check every deposit is protected is worth more than anything else on this site.

The three schemes

Scheme	Operator	Custodial	Insured
Deposit Protection Service (DPS)	Computershare Investor Services	Yes	Yes
mydeposits	Tenancy Deposit Solutions Ltd	Yes	Yes
Tenancy Deposit Scheme (TDS)	The Dispute Service Ltd	Yes	Yes

How much you can lawfully take

Tenant Fees Act 2019, Schedule 1

Before any of the protection rules bite, the amount itself has to be lawful. Two separate caps apply, and both are calculated the same way: the annual rent divided by 52. Not 52.14, and not 365 divided by 7. The intuitive arithmetic produces a figure a fraction over the statutory one, and a fraction over is a prohibited payment.

Payment	Cap	Provision
Tenancy deposit, annual rent under £50,000	5 weeks' rent	Sch 1 para 2(3)
Tenancy deposit, annual rent £50,000 or more	6 weeks' rent	Sch 1 para 2(3)
Holding deposit	1 week's rent	Sch 1 para 3(3)

What actually counts as a deposit

Section 212(8) of the Housing Act 2004 defines a tenancy deposit as money intended to be held — by you or anyone else — as security for the performance of the tenant's obligations or the discharge of their liabilities under the tenancy. "Money" means cash or otherwise, so bank transfers and card payments are money and are protectable in the ordinary way.

What you cannot do is take something that is not money. Section 213(7) says no person may, in connection with an assured tenancy, require a deposit consisting of property other than money. "Property" here means moveable property under s.213(10) — so a car, a watch, jewellery or goods are caught; land is not.

The duty, and the deadline

The cap is calculated on annual rent, not monthly. One week’s rent is the annual rent divided by 52 — not the monthly rent divided by four. On £1,200 a month: £14,400 ÷ 52 = £276.92, times five = £1,384.61. Anything above that is a prohibited payment. Work it out with the deposit cap calculator.

What changed on 1 May 2026 — and why it is worse than it looks

Two changes, and the second is the one that catches people.

Protection now applies to all assured tenancies. The old rules were written around assured shortholds. Since ASTs no longer exist, the Act extended the regime to assured tenancies generally.

The bar moved from the notice to the order. This is the important one. The old rule stopped you serving a section 21 notice on an unprotected deposit. The new rule stops the court making a possession order — on any section 8 ground except the two antisocial behaviour ones.

	Before 1 May 2026	Now
What was blocked	Serving a section 21 notice	The court making a possession order
Which grounds	Section 21 only	Every section 8 ground except 7A and 14
When you find out	Before you serve — cheap	At the hearing — after fees and months
Ground 8 arrears affected?	No	Yes

So a tenant can be four months into arrears, you can have a textbook ground 8 case, and the court cannot make the order. It is a hard bar, not a factor the judge weighs.

Curing a lapse: what it fixes and what it doesn’t

This is the most commercially important distinction in the whole topic, and it is widely got wrong.

Action	Lifts the possession bar?	Removes the penalty?
Protect the deposit late	Yes — the statute says “whether or not within the period”	No
Serve prescribed information late	Yes — the 30-day limb is deliberately omitted from the bar	No
Return the deposit in full	Yes	No
Return it with agreed deductions	Yes	No

So if you discover a lapse: protect it immediately, because that restores your ability to get possession — and budget for a possible award anyway.

The penalty is not “up to” three times

You will read everywhere, including on GOV.UK, that a court “may order you to repay up to three times the deposit”. That understates the position and it matters.

The tenant can bring the claim after the tenancy has ended, and the limitation period is six years running from the breach — not from when the tenancy finished. On a portfolio with rolling tenancies a fresh breach can arise on each one, so “six years” is not a clean cut-off.

Full detail, including what the courts have actually awarded and where the case law currently sits: unprotected deposit penalties.

The prescribed information, item by item

SI 2007/797, article 2(1)

Protecting the deposit is the half everyone remembers. Serving the prescribed information is the half that generates the claims — and it carries the identical penalty, because s.214 refers to "section 213(3) or (6)" in the same breath. A landlord who protected perfectly on day one but never served compliant information faces exactly the same mandatory award.

It is a longer list than most landlords serve:

Article	What must be given
2(1)(a)	Name, address, telephone number, email and any fax number of the scheme administrator
2(1)(b)	The information in the scheme administrator's own leaflet explaining ss.212–215 and Schedule 10
2(1)(c)	The procedures for paying and repaying the deposit at the end of the tenancy
2(1)(d)	The procedures where either party is not contactable at the end — which includes a party whose whereabouts are known but who is not responding
2(1)(e)	The procedures where the parties dispute the amount
2(1)(f)	The facilities for resolving a dispute without going to court
2(1)(g)	The tenancy-specific details: amount, address, your contact details, the tenant's (including contact details for use after the tenancy ends), any relevant person's, the circumstances in which you may retain part of the deposit by reference to the terms of the tenancy, and a signed certificate

That certificate has to confirm two things: that the information is accurate to the best of your knowledge and belief, and that you gave the tenant the opportunity to sign a document containing it. Where an agent complied with the initial requirements, several of these references can be read as the agent rather than you.

Renewals, replacements and the tenancies still on the old rules

Two provisions decide whether a continuing tenancy needs the whole exercise repeating.

The compliance timeline

When	What has to happen
Before you take it	Check the amount against the cap. Five or six weeks' rent, annual rent divided by 52
Day 0	You receive the deposit. The clock starts on the date of receipt, not the tenancy start date — unless a holding deposit was applied to it, in which case it starts on the date of the agreement
By day 30	Comply with the scheme's initial requirements — s.213(3)
By day 30	Serve the prescribed information, in the prescribed form, on every tenant and every relevant person — s.213(5) and (6)
Keep	Proof of both, and of what the property looked like at check-in. That evidence decides any later deduction
On renewal	Check s.215B applies. Same deposit, same scheme, same parties, same premises — or start again
At the end	Repay, or claim with evidence. Disputed sums go to the scheme; agreed sums are released

Where the law is still moving

One question sitting over all of this is unresolved. Lowe v The Governors of Sutton's Hospital in Charterhouse is before the Supreme Court, with a hearing listed for 3 November 2026, on two points about defective prescribed information: whether the requirement is satisfied where the landlord refers to a clause in a tenancy agreement that was not attached and whose numbering was wrong, and whether the confirmation requirement is met where only a covering letter is signed and the certificate itself is not.

The Court of Appeal decided both in the landlord's favour in 2025, applying the "reasonable recipient" principle — an obvious error is one a reasonable recipient would see through. The Court of Appeal built on that again in Hamer v Levy in May 2026, where information with a wrong address, a wrong digit in a phone number and no signed certificate was still held sufficient.

The deposits hub

Questions