Deposit Protection: The Rules and Mistakes That Cost Landlords

Today is 1 May 2026. The Renters Rights Act is now in force. Section 21 is abolished, fixed terms no longer exist, and every assured tenancy in England is periodic.

With no fixed end date built into any tenancy, the moment a dispute arises when a tenant eventually leaves is harder to predict. There is no natural break in the cycle when a landlord can reset the slate. Deposits must remain protected for however long the tenancy runs, whether that is 14 months or 7 years.

That makes getting deposit protection right from day one more important than before. The rules themselves have not changed under the Renters Rights Act. But one of the consequences of getting them wrong has: unprotected deposits now block landlords from using most Section 8 grounds to seek possession, regardless of what the tenant has done wrong.

Here is what the rules require, and the mistakes that regularly end up costing landlords in county court.

The 30-Day Rule

Under Section 213 of the Housing Act 2004, a landlord must do two things within 30 days of receiving a deposit:

1. Register the deposit with a government-authorised scheme.
2. Serve the prescribed information on the tenant.

Both deadlines are the same: 30 days from the date the deposit is received. Meeting one without the other does not put a landlord in compliance. Both steps must be completed within the window.

The 30-day clock starts on the date the deposit is actually received. If a landlord takes a holding deposit that converts into a tenancy deposit on the start of the tenancy, the 30-day window begins at the point it is held as a tenancy deposit.

The Three Approved Schemes

There are three government-authorised schemes in England and Wales:

• Tenancy Deposit Scheme (TDS): tenancydepositscheme.com
• Deposit Protection Service (DPS): depositprotection.com
• mydeposits: mydeposits.co.uk

All three are government-backed. Each operates in two forms: custodial and insured.

Custodial means the scheme holds the deposit money for the duration of the tenancy. It leaves the landlord's account on registration and sits with the scheme until the end of the tenancy, when the scheme pays out whatever has been agreed between landlord and tenant. Custodial protection is free to use.

Insured means the landlord holds the deposit themselves. The scheme insures it, guaranteeing the tenant can reclaim their money if the landlord defaults or fails to return it properly. Landlords pay a fee for insured cover, and the cash stays in their account during the tenancy.

Neither model is better for every situation. Custodial suits landlords who want a clean administrative separation between their money and the tenant's. Insured suits those who want to retain access to the funds during the tenancy, subject to scheme rules. Either way, the legal protection offered to the tenant is equivalent.

Prescribed Information: The Step Many Landlords Miss

Registering the deposit is the part most landlords remember. Serving the prescribed information is the step that catches people out.

The prescribed information requirement comes from the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 and is a separate obligation to the registration itself. A landlord must give the tenant written confirmation of:

• The address of the rented property
• The amount of deposit paid
• How the deposit is protected and which scheme is used
• The scheme's name, contact details, and dispute resolution process
• The landlord's name and contact details
• How to reclaim the deposit at the end of the tenancy
• What to do if the landlord cannot be contacted when the tenancy ends
• How to raise a dispute if the deposit return is contested

Each approved scheme provides a standard prescribed information form that covers most of this. Landlords using any of the three schemes are directed through the process on registration. But completing the form in the scheme portal is not the same as serving it on the tenant. The document must reach the tenant within the 30-day window.

If a third party paid the deposit, such as a parent or guarantor, the prescribed information must be served on them as well.

Penalties for Non-Compliance

A tenant can apply to a county court under Section 214 of the Housing Act 2004 if their deposit has not been properly protected or the prescribed information has not been served. The court can order the landlord to pay between one and three times the deposit amount.

The average deposit in England and Wales is now £1,175 (TDS Group, 2024/25). At three times that amount, the financial exposure on a single tenancy is over £3,500 before any legal costs.

Courts consider the degree of non-compliance when setting the multiplier. A landlord who protected slightly late after noticing an oversight is treated differently from one who never protected at all. But there is no legal grace period. Even one day late is technically non-compliant, and a tenant who discovers that gap after a dispute has arisen has every right to use it.

From 1 May 2026, the consequences extend further. Under the updated Section 8 framework introduced by the Renters Rights Act, landlords cannot obtain a possession order on most grounds unless the deposit was protected and the prescribed information was served before the Section 8 notice was given. The only grounds unaffected by this are Ground 7A and Ground 14, which cover serious anti-social behaviour. For every other ground, including rent arrears under Ground 8, intended sale under Ground 1A, or landlord occupation under Ground 1, an unprotected deposit blocks possession.

A landlord with a genuine arrears situation who never properly protected the deposit cannot serve a valid Section 8 notice until the protection is in place and the prescribed information has been served. Correction is possible. The notice cannot be served until it has happened.

Common Mistakes That Cost Landlords

Late registration. The 30-day window is firm. Registering on day 31 is non-compliant. Many landlords assume a day or two either side of the deadline is tolerable. The legislation sets no grace period.

Serving prescribed information late or not at all. Some landlords register the deposit correctly and assume the scheme has handled everything. In most cases, the landlord still needs to actively serve the prescribed information document on the tenant within the 30-day window. Registration and prescribed information are separate steps.

Changing schemes mid-tenancy without re-serving prescribed information. If you move a deposit from one approved scheme to another, the prescribed information must be re-served to reflect the new scheme details. Moving the money without updating the tenant's records is non-compliance.

Deducting for fair wear and tear. Approved schemes will not support deductions for normal deterioration through use. A carpet that is worn at the end of a four-year tenancy is expected. A carpet with burns or stains is different. The distinction matters, and adjudicators apply it consistently.

Missing the prescribed information on a scheme change. If you have moved a deposit between schemes at any point during a tenancy without re-serving updated prescribed information, that gap is still an exposure. With tenancies now periodic under the RRA, there is no reset point coming.

Deductions That Hold Up

Cleaning is the leading cause of deposit disputes. In 2024/25, cleaning appeared in 54% of all TDS adjudication cases (TDS Group). That figure has been consistently high for years, and it is largely preventable.

Deductions that generally hold up at adjudication:

Cleaning costs, where the property was at a documented standard at check-in and is demonstrably below that standard at check-out. The deduction should reflect the actual cost of restoring it to the original condition, not an automatic full professional clean regardless of what the outgoing tenant left behind.

Damage beyond fair wear and tear, supported by a photographic check-in inventory that shows the original condition of the item. Broken fixtures, burn marks, or furniture damage attributable to the tenant are valid deductions where the evidence is clear.

Unpaid rent, where the amount owed and the payment history are clearly documented.

Deductions that typically do not hold up:

Cosmetic wear and redecoration from normal use. Marks on walls from furniture, minor scuffing on skirting boards, and faded paintwork over a long tenancy are fair wear and tear. Adjudicators will not support a redecoration claim on that basis.

Full redecoration simply because a property needs refreshing. Unless the decoration is in a materially worse state than evidenced at check-in, a full repaint will be rejected. The question adjudicators ask is whether the condition has deteriorated beyond what normal use would cause over the length of the tenancy.

Deductions without documentation. Any claim needs evidence of the original condition. Without a detailed check-in inventory, photographic record, and comparison against the check-out condition, deductions are very difficult to defend. Adjudicators find in the tenant's favour when the pre-tenancy standard cannot be demonstrated.

Post-RRA: Deposits for the Long Run

With all tenancies now periodic and no fixed terms available, deposits must remain continuously protected for however long the tenancy continues. A tenancy starting today might run for three years. There is no scheduled review point.

The practical implication is that deposit compliance needs to be an ongoing check, not just a day-one task. If you change managing agents, confirm that deposit records have transferred correctly and that the scheme registration still shows the right landlord or agent details. If you move a deposit between schemes, re-serve the prescribed information before any other step.

For landlords with multiple properties, a portfolio audit of deposit registrations is worth doing now, before any possession situation forces the issue.

For a broader view of what the Renters Rights Act requires from landlords today, see our Renters Rights Act compliance checklist. For the costs of void periods that often arise when deposit disputes delay a re-let, see our article on what void periods actually cost.

This article is for informational purposes only and does not constitute financial or investment advice. Tax rules and legislation change frequently. Always verify current rates with HMRC or GOV.UK and seek independent professional advice before making investment decisions.