Tenancy deposit protection: rules, deadlines and penalties
Taking a deposit is easy. Protecting it correctly — on time, in the right scheme, with the right paperwork served — is where a surprising number of otherwise-careful landlords slip up, and the penalty is one to three times the deposit. Here are the rules, in plain English.
The three things you must do
1. Protect the deposit in a government-approved scheme within 30 days of receiving it. There are three schemes — the Deposit Protection Service (DPS), MyDeposits, and the Tenancy Deposit Scheme (TDS) — offering custodial (they hold the money) or insured (you hold it, they insure it) options.
2. Serve the prescribed information — also within 30 days. This tells the tenant which scheme holds the deposit, how to get it back, and how disputes are resolved. Protecting the money but failing to serve the prescribed information is one of the most common — and most penalised — mistakes.
3. Cap it correctly. For most tenancies the deposit is capped at five weeks' rent (or six weeks where annual rent is high). Taking more than the cap is itself a breach.
Day 0
You receive the deposit
The 30-day clock starts the moment it's paid.
Within 30 days
Protect it in an approved scheme
DPS, MyDeposits or TDS — custodial or insured.
Within 30 days
Serve the prescribed information
Scheme details, how to reclaim, dispute process.
End of tenancy
Return or dispute
Agree deductions, or use the scheme's free adjudication.
The penalty — and why it still bites after Section 21
Get it wrong and a tenant can take you to court. If the deposit wasn't protected, or the prescribed information wasn't served, the court can order you to pay the tenant one to three times the deposit — per breach — on top of returning the deposit itself.
Historically, deposit failures also blocked a Section 21 notice. With Section 21 now abolished under the Renters' Rights Act, that specific lever is gone — but don't read that as “it matters less.” The financial penalty is unchanged, and deposit compliance is exactly the kind of prerequisite a tenant will raise to defend a Section 8 possession claim. Sloppy deposit handling now costs you money and your route to possession.
30 days
to both protect the deposit and serve the prescribed information
1–3×
the deposit — the penalty a court can award the tenant
5 weeks
the standard deposit cap (six where annual rent is high)
Getting it right, every time
The rules aren't hard; the failure mode is human — a deposit taken on a busy day, prescribed information that never quite gets sent, a renewal where nobody re-checks protection. The fix is to make it a tracked step, not a memory.
How Tekniti helps
If you manage rental properties and want to see how Tekniti handles this automatically, get in touch at hello@tekniti.ai.