Tenancy & deposits
What is deposit protection?
Deposit protection requires a tenancy deposit taken for an assured shorthold tenancy to be placed in an authorised scheme within a set period, with prescribed information given to the tenant.
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<img src="https://propertyoptix.co.uk/glossary/deposit-protection/diagram.svg" alt="deposit protection — diagram from PropertyOptix" width="880" height="620" loading="lazy">
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<a href="https://propertyoptix.co.uk/glossary/deposit-protection">What is deposit protection?</a> — diagram by
<a href="https://propertyoptix.co.uk">PropertyOptix</a>
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</figure>There are two obligations and both must be met: protecting the money and serving the prescribed information. Protecting the deposit while failing to serve the information is a breach, and it is the more common of the two.
The consequences are severe and asymmetric. A tenant can claim a penalty of a multiple of the deposit, and an unprotected deposit blocks a section 21 notice until the position is remedied.
What counts as a deposit is broader than it looks. Money taken as security by another name can still be a deposit, and holding deposits are subject to their own separate rules on amount and return.
What goes wrong in practice
- Deposit protected but prescribed information never served, or no evidence of service.
- Deposit protected late, outside the statutory period.
- A renewal treated as not requiring the information to be re-served where it does.
- Money taken as a fee or security that is in substance a deposit and is not protected.