Tenancy Deposit Protection (TDP) schemes guarantee that tenants will get their deposits back at the end of the tenancy, if they meet the terms of the Tenancy Agreement and do not cause or effect damage to the property. Landlords must protect their tenants’ deposits using an approved TDP scheme, if they have let the property under an Assured Shorthold Tenancy (AST) which started after 6 April 2007.
Landlords or their managing agent must use one of the three government approved TDP schemes to protect tenants’ deposits where these conditions apply. If any other scheme is used, deposits are not protected in law. The three approved schemes are:
• Deposit Protection Service (DPS)
• Tenancy Deposit Scheme (TDS)
If the landlord does not protect the tenants’ deposits when required to do so, the landlord is at risk of being taken to court and being obliged to repay the tenant their deposit plus three times the amount of the deposit paid.
TDP schemes do not cover holding deposits paid by the tenant to the estate agent to secure the property. Tenants pay a holding deposit to the estate agents before they have signed a rental agreement. Landlords or agents are not required to protect a holding deposit with a scheme before someone becomes their tenant. However, once they are a tenant with an AST the holding deposit becomes a deposit which must be protected under one of the above three schemes.