Tenancy deposit protection: advice for landlords

Since the tenancy deposit protection rules were introduced in 2007, the government-approved tenancy schemes have safeguarded billions of pounds of tenants' money – yet compliance failures can still occur.

The following guidance sets out the deposit protection rules, explains the role of tenancy deposit schemes and provides clarity on upcoming legislative changes.

These include the extension of The Hazards in Social Housing (Prescribed Requirements) (England) Regulations 2025 – commonly referred to as Awaab's Law – to privately rented homes.

Although not yet in force for private landlords, the direction of travel is clear: health and safety compliance will become a central enforcement priority.

For example, failure to deal with hazards such as mould, damp and disrepair may affect a landlord's ability to make deductions from a deposit, especially if poor conditions lead to disputes or tribunal action.

Notably, a court will only grant a possession order to evict a tenant if their deposit has been protected in a government-approved scheme or returned in full – failure to comply can not only lead to financial penalties, but also delay or block the ability to regain possession of the property.

Tenants are also being given more support, with the government launching a new online tool to help them resolve repair issues.

Deposit protection ensures that a tenant's money is kept safe and returned fairly at the end of the tenancy. It also gives both parties access to free, impartial dispute resolution if disagreements arise about deductions.

Failing to protect a deposit correctly can lead to:

• a court order to return the deposit in full
• a penalty of up to three times the deposit amount.

Up-to-date guidance can be found on the government's tenancy deposit protection page; separate schemes are available for landlords in Scotland and Northern Ireland.

• Deposit Protection Service (DPS)
• MyDeposits
• Tenancy Deposit Scheme (TDS).

Each scheme provides two options, as follows.

• A custodial scheme involves transferring the tenant's deposit to the deposit scheme, which holds it securely until the end of the tenancy. This eliminates the need for the landlord or agent to manage the deposit directly.
• In an insured scheme, a landlord or agent hold the tenant's deposit for the duration of the tenancy; in return, they pay a fee to the scheme to protect the deposit. This ensures that the tenant's money is safeguarded, even in the event of a dispute.

Both schemes offer valuable benefits, and choosing the right one will depend on the circumstances.

For landlords or letting agents who want more control over the deposit and don't mind paying a small fee, an insured scheme can be ideal, whereas those who prefer a cost-effective and straightforward solution might prefer a custodial scheme.

Register the deposit within 30 days of receiving it: landlords or their letting agent must register it with a government-approved tenancy deposit scheme. This is a legal requirement, and failing to do so could lead to fines.

Provide the prescribed information: within the same 30 days, landlords or their letting agent must give the tenant written details known as prescribed information. This includes:

• the name and contact details of the protection scheme used
• the deposit amount and date received
• how and when the deposit will be returned
• details of the dispute resolution process.

Keep detailed records: good record-keeping is essential when managing deposits. A well-documented tenancy reduces the likelihood of disputes and provides clear evidence if one does arise at the end of tenancy.

Landlords or their letting agent should ensure they have:

• a copy of the signed tenancy agreement
• a detailed inventory report, including photographs, to document the property's condition at the start of the tenancy
• copies of all communications related to deposit deductions.

End of Section 21 'no-fault' evictions: landlords will no longer be able to evict tenants without giving a reason. Instead, they must rely on strengthened Section 8 grounds, such as intending to sell or move in themselves, or serious rent arrears.

Periodic tenancies as standard: all new assured shorthold tenancies (ASTs) will automatically become periodic, with no fixed end date. Tenants will be able to give two months' notice at any time.

Landlords wishing to end a tenancy must use one of the prescribed Section 8 grounds, and existing fixed-term tenancies will convert to periodic at the end of their term.

This change gives tenants flexibility and landlords continuous tenancies without renewal paperwork, but it removes the certainty of a fixed end date. Landlords should plan ahead if they anticipate needing the property back for personal use or sale.

Rent increase controls: rent increases will be limited to once per year, using the Section 13 notice procedure. Tenants may challenge increases they believe exceed market value via the First-tier Tribunal.

Landlords or letting agents acting on their behalf should keep rent adjustments transparent and evidence based, using local comparables to justify changes.

Other noteworthy reforms include the following.

• Private rented sector ombudsman – all landlords will need to register with a new ombudsman for tenant complaints.
• Property portal – a national register of landlords and properties will support enforcement and transparency.
• Pets – landlords must not unreasonably refuse a tenant's request to keep a pet, though pet insurance may be required.
• No DSS bans – rejecting applicants based on benefits or family status will be prohibited.

Under the new regulations, social landlords must investigate reported issues within 10 working days, provide tenants with written findings within three working days and begin repairs within five working days where a significant risk to health is identified.

Emergency hazards must be addressed within 24 hours, and alternative accommodation offered if immediate safety can't be guaranteed.

While these timescales currently apply only to the social housing sector, the government has confirmed plans to extend similar standards to the private rented sector through the Renters' Rights Act 2025.

This extension will be subject to consultation, and the government has yet to release full details of how and when it will be implemented.

Private landlords are still encouraged to adopt these principles now by:

• carrying out regular inspections for leaks, condensation and ventilation issues
• keeping detailed logs of all repair reports and response times
• engaging qualified contractors and documenting works.

Proactive maintenance not only protects tenant health but also reduces the risk of property damage, deposit disputes and future legal exposure once the standards of Awaab's Law are broadened.

While this means more compliance work, it also creates an opportunity to strengthen trust and transparency with tenants.

By protecting deposits properly, maintaining well-documented records and acting swiftly on property issues, landlords can reduce risk, avoid disputes and maintain steady tenancies.