Tenancy deposit schemes
Tenancy deposit schemes

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Tenancy deposit schemes
  • What is an assured shorthold tenancy?
  • What is a deposit?
  • What are the requirements?
  • Insurance-based schemes
  • Custodial schemes
  • Dispute resolution
  • What happens if the landlord fails to comply?
  • Consequences of late or non-compliance
  • Information for local housing authorities

All deposits taken by landlords for residential assured shorthold tenancies (ASTs) in England and Wales must be protected by a tenancy deposit scheme (TDS). The parties to an AST cannot contract out of the obligations.

There are two types of TDSs: insurance-based schemes and custodial schemes. They are intended to:

  1. allow tenants to get all or part of their deposit back when they are entitled to it and make any disputes easier to resolve

  2. encourage landlords and tenants to make a clear agreement from the start on the property's condition so that a landlord is not left out of pocket when a tenancy expires and a tenant leaves

It is for the landlord, as opposed to the tenant, to choose which scheme to use.

What is an assured shorthold tenancy?

Since 28 February 1997, the majority of assured tenancies have been ASTs. Any tenancy granted after 28 February 1997 is automatically an AST unless:

  1. a notice is served stating that the tenancy is not an AST

  2. it is written in the agreement that it is not an AST, or

  3. an exception applies

For further guidance on ASTs, see Practice Notes: Assured and assured shorthold tenancies—granting and Assured and assured shorthold tenancies—terminating.

What is a deposit?

A deposit for the purposes of the legislation is any money intended to be held (by the