Tenancy Deposit Scheme (TDS)
A tenancy deposit scheme (TDS) is a government-approved scheme that holds or insures a tenant’s deposit for most assured shorthold tenancies in England and Wales. Landlords and agents must protect an eligible deposit in one of the schemes within 30 days of receiving it and give the tenant prescribed information about where it is held and how it will be returned.
There are currently three approved providers, offering:
Custodial schemes – the scheme holds the money.
Insurance-backed schemes – the landlord/agent keeps the money but the scheme insures against misuse.
At the end of the tenancy, the deposit should be returned promptly if there is no agreed deduction. If the landlord proposes deductions, for example for damage beyond fair wear and tear or rent arrears and the tenant disagrees, each scheme offers a free adjudication service as a form of alternative dispute resolution.
If a landlord fails to protect the deposit correctly, the tenant can claim a financial penalty and, in many cases, the landlord is restricted from using certain possession routes until the breach is remedied. The Renters’ Rights Act reforms sit alongside these rules, reinforcing the principle that deposits are the tenant’s money, held as security, and that deductions must be fair, evidenced and open to challenge.
