For landlords · 5 min read
Deposit protection schemes compared: custodial vs insured
In England a tenancy deposit must be protected in one of three government-approved schemes — the Deposit Protection Service, MyDeposits or the Tenancy Deposit Scheme — within 30 days of receipt, and the prescribed information must reach the tenant in the same window. Custodial protection is free and the scheme holds the money; insured protection lets you keep the deposit but you pay a fee. Missing the deadline can cost one to three times the deposit in compensation and may prevent a court from granting possession until the rules are satisfied.
Frequently asked questions
Which deposit schemes are approved in England?
Three: the Deposit Protection Service (DPS), MyDeposits and the Tenancy Deposit Scheme (TDS). Each offers custodial and insured options.
How long do I have to protect a deposit?
30 days from receiving it. The prescribed information must also reach the tenant within the same 30-day window — protecting the money alone is not sufficient.
What is the difference between custodial and insured deposit protection?
Custodial means the scheme holds the money and is free to use. Insured means you keep the deposit and pay the scheme a protection fee. The tenant's protection is equivalent; the difference is who holds the cash.
What happens if I protect a deposit late?
A tenant can claim compensation of one to three times the deposit, and a possession claim may be blocked until the deposit is properly protected, returned or otherwise resolved under the current rules. Correcting it afterwards does not undo the original breach.
How much deposit can I take?
In England, security deposits are capped at five weeks' rent where annual rent is under £50,000, or six weeks' rent at or above £50,000. Holding deposits are capped at one week's rent.