WHO SHOULD READ THIS?

Tenants Agents Landlords

WHAT IS THE TENANCY

DEPOSIT SCHEME?
AN ADVISORY INSURED SCHEME LEAFLET
FOR LANDLORDS AND TENANTS

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© TDS. 6th Edition, Revised May 2019. Rebranded November 2023

 WHAT IS THE TENANCY DEPOSIT SCHEME?

Contents
WHAT IS TDS? 03

WHAT IS TENANCY DEPOSIT PROTECTION? 03

WHAT DOES TENANCY DEPOSIT PROTECTION MEAN? 04

WHAT ARE THE LEGAL REQUIREMENTS? 05

WHAT IF THE LANDLORD OR AGENT DOES NOT COMPLY? 06

IS MY DEPOSIT PROTECTED? 07

WHAT HAPPENS TO THE DEPOSIT AFTER THE LANDLORD

OR AGENT RECEIVES IT? 08

WHAT HAPPENS TO THE DEPOSIT AT THE END

OF THE TENANCY?

IF THERE IS A DISPUTE, WHAT HAPPENS TO THE DEPOSIT? 09

HOW ARE DISPUTES RESOLVED? 10

WHAT IF THE LANDLORD OR TENANT CAN’T BE

CONTACTED AT THE END OF THE TENANCY? 11

IS ADJUDICATION BETTER THAN GOING TO COURT? 12

WHAT CAN TDS DEAL WITH? 13

HOW MUCH DOES IT COST? 13

WHO CAN JOIN THE TENANCY DEPOSIT SCHEME? 13

OUR GUARANTEE OF IMPARTIALITY 14

DATA PROTECTION 15

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

What is TDS?
The Dispute Service Ltd operates two tenancy deposit
protection schemes, authorised by the government:
Insured and Custodial. This leaflet deals with the Insured
scheme only. There is a separate leaflet for TDS Custodial.

TDS HAS TWO MAIN ROLES:

1  O PROTECT
T 2  O HELP RESOLVE DISPUTES
T
DEPOSITS ABOUT DEPOSITS

WHAT IS TENANCY DEPOSIT PROTECTION?

Tenancy deposit protection applies to all deposits for assured

shorthold tenancies that started in England or Wales on or after
BY LAW, A
6 April 2007.
LANDLORD
MOST RESIDENTIAL TENANCIES IN THE PRIVATE RENTED OR AGENT
SECTOR ARE ASSURED SHORTHOLD TENANCIES, WITH SOME WHO RECEIVES
EXCEPTIONS. FOR EXAMPLE, A TENANCY CANNOT BE AN A DEPOSIT
ASSURED SHORTHOLD TENANCY IF: FOR SUCH

THE TENANT IS A COMPANY; A TENANCY

MUST PROTECT
HE RENT IS MORE THAN £100,000 A YEAR;
THE DEPOSIT.

THE TENANCY IS FOR A HOLIDAY LET; OR

A UNIVERSITY OR COLLEGE RENTS THE

ACCOMMODATION TO ITS STUDENTS.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

What does tenancy

deposit protection mean?
PROTECTING A TENANT’S DEPOSIT WITH A GOVERNMENT-AUTHORISED
SCHEME SUCH AS TDS;

PROVIDING THE TENANT WITH PRESCRIBED INFORMATION ABOUT WHERE

THEIR DEPOSIT IS BEING PROTECTED AND HOW IT WILL BE MANAGED.

TENANCY DEPOSIT PROTECTION

SCHEMES CAN BE ONE OF TWO KINDS:

Custodial Insured
This is where the scheme This is where the landlord or agent holds
holds the deposit during the deposit during the tenancy, but must
the tenancy. give it to the scheme at the end of the
tenancy if there is a dispute. The scheme
is insured because this guarantees that
the tenants will always get the money
back to which they are entitled.

EACH TENANCY DEPOSIT SCHEME HAS ITS OWN RULES SETTING OUT IN DETAIL
HOW IT OPERATES.

THE TDS RULES ARE AVAILABLE FROM THE TDS WEBSITE AND ON REQUEST.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

What are the

legal requirements?
These are contained in sections 212 to 215 of, and Schedule
10 to, the Housing Act 2004 (as amended). Tenancy deposit
protection applies to money received by a landlord or agent that
is meant to be held as security in case a tenant does not comply
with their obligations.

The landlord or agent must comply with the initial requirements of an authorised
tenancy deposit protection scheme within 30 days of receiving the deposit.

TO PROTECT A DEPOSIT WITH THE PRESCRIBED INFORMATION INCLUDES:

TENANCY DEPOSIT SCHEME, THE
THE CONTACT DETAILS OF THE
LANDLORD OR AGENT NEEDS TO:
LANDLORD AND TENANT;
BELONG TO THE SCHEME;
THE RENTED PROPERTY’S ADDRESS;
REGISTER THE DEPOSIT ON THE
TDS DATABASE; THE DEPOSIT AMOUNT;
PAY A MEMBERSHIP THIS LEAFLET;
SUBSCRIPTION OR DEPOSIT
PROTECTION CHARGE. PAY A MEMBERSHIP SUBSCRIPTION OR
DEPOSIT PROTECTION CHARGE.
A TDS Member (landlord or agent) must also
give the tenant ‘prescribed information’. The The landlord or agent must also specify which tenancy
information is set out in the Housing (Tenancy
agreement clauses say how the deposit can be used.
Deposits (Prescribed Information) Order 2007.
It must also be given to anyone who paid the
TENANTS MUST BE GIVEN THE
deposit on the tenant’s behalf.
OPPORTUNITY TO:
CHECK ANY DOCUMENT THE
LANDLORD PROVIDES CONTAINING
PRESCRIBED INFORMATION; AND

SIGN IT TO CONFIRM THE

INFORMATION IS ACCURATE.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

What if the landlord or

agent does not comply?
A landlord or agent should A landlord who has not correctly
protected a deposit cannot serve a notice
protect the deposit in an
to end the tenancy and regain possession
authorised scheme and of it under section 21 of the Housing Act
provide the tenant (and 1988. The landlord can only serve such a
any sponsor) with the ‘section 21 notice’ after the deposit has

prescribed information been repaid or after any court case about

the deposit has ended.
within 30 days of receiving
the deposit. A landlord who has not given the tenant
prescribed information within 30 days
If they don’t do so, then the tenant (or must not issue a section 21 notice until the
the person who paid the deposit) can take prescribed information has been given. If
the landlord or agent to court. The court this takes place more than 30 days after
can order the landlord or agent to protect the landlord or agent received the deposit,
the deposit or repay it to the tenant. the tenant can still apply to court for
The court can also order the landlord or compensation of between one and three
agent to pay the tenant compensation times the deposit’s value.
of between one and three times the
deposit’s value.

TDS CANNOT AWARD COMPENSATION TO TENANTS IF A LANDLORD OR AGENT

FAILS TO COMPLY WITH THE LAW RELATING TO TENANCY DEPOSIT PROTECTION.
THIS CAN ONLY BE DEALT WITH BY THE COURTS.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

Is my deposit protected?

TENANTS CAN CHECK IF THEIR DEPOSIT IS REGISTERED WITH TDS BY VISITING

WWW.TENANCYDEPOSITSCHEME.COM

If tenants have received a Tenancy If the tenancy has not ended, the tenant
Deposit Protection Certificate, they (or one of the joint tenants) can object
should enter the code number from that to the ending of deposit protection by
certificate. Alternatively they can enter phoning the TDS customer contact
their surname, the deposit amount, the center.
tenancy postcode, and the date their
tenancy started. If the tenancy has ended and the tenant
is not satisfied with the proposed split of
If a member informs TDS that the the deposit, then the tenant can ask
protection of a deposit should be TDS to resolve the dispute within
ended, TDS will make reasonable three months after the end of
efforts to inform the tenant the tenancy.
before ending the protection.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

What happens to the

deposit after the
landlord or agent
receives it?
The landlord or the agent will hold the deposit during the
tenancy. The tenancy agreement should state who receives any
interest it makes.

What happens to the

deposit at the end of
the tenancy?
If there is no dispute about the return of the deposit at the end of the tenancy, the landlord or
agent must pay the deposit to the tenant without delay, less any deductions that the tenant
has agreed.

Who raises a dispute if there is no agreement about the deposit return?

If there is a dispute about the return of the deposit or about proposed deductions, the parties
should try to reach agreement without delay. Most disputes are resolved informally in this way.
But if the deposit has not been returned to the tenant within 10 days of the tenant asking for it,
the Housing Act 2004 allows the tenant to ask TDS to resolve the dispute.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

If there is a dispute,
what happens to the
deposit?
THE LANDLORD OR AGENT CAN TAKE A PAYMENT FROM THE DEPOSIT IF:
BOTH LANDLORD AND TENANT HAVE AGREED; OR

THE COURT HAS ORDERED THE DEPOSIT TO BE PAID; OR

TDS DIRECTS TO SEND THE MONEY TO TDS.

Once TDS has been asked to resolve a deposit dispute, the landlord or the agent must
send the disputed amount to TDS. By this time, the landlord or agent should have paid
the tenant any part of the deposit that is not an agreed deduction or in dispute.

If whoever is holding the deposit does not send the disputed deposit amount to TDS, TDS will take legal
action to recover it. This will not delay TDS in resolving the dispute.

If the deposit holder cannot pay the disputed amount, for example because it has become insolvent, TDS
will arrange the adjudication, pay the tenant the amount awarded by the adjudicator and make a claim to
its insurers.

The law requires TDS to guarantee only that the tenant receives the amount they are
entitled to.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

How are disputes

resolved?
The tenant will ask TDS to resolve the dispute by going online at www.tenancydepositscheme.com and
completing a Dispute Application Form giving details of the dispute.

The deposit holder must then send the disputed amount to TDS. TDS will copy the dispute details to
the agent or landlord who is to respond to the dispute and give them 10 working days to do so. The agent
or landlord will need to confirm that they want TDS to resolve the dispute, and send in their evidence.
After this the tenant will also be given 10 working days to respond to the agent’s/landlord’s evidence, and
send in any evidence that they also wish the adjudicator to consider.

If all the parties agree to TDS resolving the dispute, TDS will appoint an impartial adjudicator to make a
binding decision, normally within 28 days of receiving the parties’ consent to resolving the dispute and
receiving the evidence they wish to be considered. If landlords and agents do not reply, they are treated as
consenting to TDS resolving the dispute. In all these cases, the adjudicator will normally make a decision
within 28 days after the deadline for receipt of evidence.

Within a further 10 days or less of the adjudicator’s decision, TDS will pay the amount due to each party.

The adjudicator’s decision will be based on the evidence sent to TDS – there will be no hearing or visit to
the property.

The adjudicator’s decision is final. There is no right of appeal to TDS or to the government department in
charge of the tenancy deposit protection schemes.

FURTHER DETAILS ARE SET OUT IN THE TENANCY DEPOSIT SCHEME RULES FOR THE
INDEPENDENT RESOLUTION OF TENANCY DEPOSIT DISPUTES AT
WWW.TENANCYDEPOSITSCHEME.COM

1. If a Letting Agent or Landlord is using TDS DIRECT only the tenant can raise a dispute. Agents and landlords cannot raise a
dispute if they are using TDS DIRECT. TDS may at its discretion allow an agent or landlord to raise a dispute, where this has been
agreed in advance as part of that agent or landlord’s membership of the scheme. Where this is the case, the agent/landlord will
send in their evidence at the same time as completing a Dispute Application Form giving details of the dispute. After this the tenant
will be given 10 working days to respond to the agent’s/landlord’s evidence, confirm that they want TDS to resolve the dispute, and
send in any evidence that they also wish the adjudicator to consider.
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 WHAT IS THE TENANCY DEPOSIT SCHEME?

What if the landlord or

tenant can’t be
contacted at the end of
the tenancy?
TDS CANNOT RESOLVE A DISPUTE IF IT CANNOT CONTACT THE PARTIES TO GET
THEIR CONSENT TO TDS BEING INVOLVED. IN THESE CIRCUMSTANCES, THE
DEPOSIT HOLDER MUST DO THE FOLLOWING:
1 ASSESS ANY DAMAGE, RENT ARREARS AND ANY OTHER LIKELY DEDUCTIONS
FROM THE DEPOSIT AS THEY WOULD NORMALLY DO;

2 SPLIT THE DEPOSIT, PAY THE PARTY WHO IS PRESENT THE APPROPRIATE
AMOUNT, AND TRANSFER THE AMOUNT DUE TO THE ABSENT TENANT/
LANDLORD TO A SUITABLY CHOSEN ‘CLIENT SUSPENSE (BANK) ACCOUNT’;

3 MAKE A FORMAL RECORD OF ALL ACTIONS TAKEN, SUPPORTED BY

APPROPRIATE DOCUMENTATION.

After enough time (usually at least six years) has passed from the last contact from the absent tenant/
landlord, the deposit holder may then donate the absent party’s share to a suitable registered charity –
subject to a binding promise from the deposit holder that it would immediately pay from its own pocket any
valid claim it later received from the beneficial or legal owner.

If the absent tenant/landlord returns within that time and seeks to dispute the allocation of the deposit, TDS
may offer to adjudicate

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

Is adjudication better
than going to court?
Deposit disputes need to be resolved quickly and cheaply.
Tenants usually need the money as a deposit on their next
property, andlandlords need to know how much will be available
to spend on things like redecoration, damage or repairs.

Going to court takes time Sometimes landlords or tenants prefer

to go to court. It might be better for a
and can be expensive and
landlord to go to court if they have a big
stressful. claim that is well above the deposit. It
If TDS protects a deposit and the dispute might be better for a tenant to go to court
goes to court, the disputed amount must if they have a counterclaim – say if they
be sent to TDS. TDS will distribute the had to pay for boiler repairs because the
deposit once it receives a final court order heating did not work for several weeks.
showing what is to happen to the deposit. TDS cannot deal with counterclaims.
However if a tenant or landlord does not
Where TDS cannot accept a dispute for
take their dispute to the County Court
adjudication, TDS will notify any other
within 6 months of refusing consent for
party to the dispute that this has happened.
TDS to resolve the dispute, TDS may at its
The other party to the dispute may then
discretion return the disputed deposit it
choose to go to court or rely on the
is holding to the other party who did not
agent’s judgment if the agent is holding
refuse consent.
the deposit.
TDS can only resolve a dispute if the
deposit has been registered with TDS. If a
deposit has not been registered, the parties
will have to go to court if they cannot agree
a settlement.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

What can TDS

deal with?
Using the TDS dispute resolution service TDS cannot deal with disputes between
is not compulsory. If either the landlord or individual tenants, or between landlords
tenant does not agree to use the service, and their agents. TDS does not act as a
one of them could choose to go to court. regulator and cannot order changes in
trading practices, close down businesses,
TDS can only deal with disputes about the
or prosecute landlords or agents. However,
deposit itself, and cannot make awards that
it does try to raise standards in the private
are for more than the disputed deposit.
rented sector by educating tenants,
If a larger amount is disputed, you may
landlords and agents about the cause of
need to go to court. TDS cannot deal with
disputes and how to avoid them.
counterclaims by tenants – such as a claim
for disrepair. If you are a tenant and you
wish to bring a counterclaim against your
landlord, you will need to go to court.

How much Who can join the

Tenancy Deposit
does it Scheme?

cost?
The Tenancy Deposit Scheme is open
to landlords and letting agents offering
residential property for rent. They will be
TDS is funded by the membership
asked to provide relevant information – as
subscriptions and deposit protection
set out in the TDS Rules – to TDS before it
charges that letting agents and landlords
decides whether they can be accepted as a
pay. All these fees are on the TDS website.
member, and what their subscription will be.
TDS makes no charge to tenants for
protecting the deposit. There is no charge
to landlords, tenants or agents for having a
dispute resolved.
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 WHAT IS THE TENANCY DEPOSIT SCHEME?

Our guarantee
of impartiality
TDS is overseen by a Board, which is responsible for operating
and financing the business. The Board, and the TDS
management, have no role in resolving disputes and cannot
intervene in decisions about disputes.
The scheme’s Director of Dispute Resolution is responsible for resolving disputes. The most
usual method for resolving a dispute through TDS is to use adjudication but the scheme
may suggest negotiation, mediation or other methods.

Adjudicators work fairly and impartially. All TDS adjudicators belong to the Chartered
Institute of Arbitrators and comply with our Adjudicator Code of Conduct, which is available
on the TDS website. The adjudicators make decisions without favour, based on the issues in
dispute and the evidence provided.

TDS publishes breakdowns of awards in its Annual Reports. These give an overview of
how awards are split between tenants, landlords and agents.

You can see the adjudicators’ decision-making guidelines and some example case
studies at www.tenancydepositscheme.com

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

Data protection
TDS WILL NOT USE LANDLORDS’ OR TENANTS’ PERSONAL DATA FOR ANY
PURPOSE EXCEPT TO OPERATE THE SCHEME (THIS INCLUDES COMPILING
STATISTICAL DATA) AND RESOLVE DISPUTES.

FROM TIME TO TIME, TDS MAY INVITE LANDLORDS OR TENANTS TO

PARTICIPATE IN SURVEYS. IF YOU DO NOT WISH TO BE CONTACTED FOR
SURVEY PURPOSES, PLEASE INFORM TDS BY LETTER OR EMAIL TO THE
CONTACT DETAILS GIVEN IN THIS LEAFLET.

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 WHAT IS THE TENANCY DEPOSIT SCHEME?

0300 037 1000 [email protected] tenancydepositscheme.com

West Wing, First Floor, The Maylands Building, HP2 7TG

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