How to Protect a Tenant's Deposit: TDS, DPS, and MyDeposits Explained

Deposit protection is not optional. If you take a deposit from a tenant in England, you must protect it in a government-approved scheme within 30 days. There are no grace periods, no exceptions, and no "I didn't know." Failure to comply can cost you thousands of pounds in compensation and—more immediately—prevent you from regaining possession of your property when a tenancy ends.

It sounds straightforward. And it is, once you understand the rules. The problem is most landlords don't—or they think they do, and get a critical detail wrong.

In Middlesbrough and across Teesside, we still encounter landlords managing their own properties who either do not protect deposits correctly or do not realise they've made a mistake until a tenant makes a claim. Deposit protection is one part of the wider compliance framework every landlord must follow. This guide explains the three schemes, the deadlines you cannot miss, and what to do if disputes arise.

The Three Approved Schemes

There are exactly three government-approved deposit protection schemes in England. All are legal; all are safe. The choice between them comes down to how much money you want to keep in your own account versus how much you want the scheme to handle.

TDS (Tenancy Deposit Scheme)

TDS offers both custodial (free) and insured (paid) options, making it flexible for landlords with different preferences.

Custodial: You transfer the deposit to TDS. They hold it. You don't touch it until the tenancy ends. It costs nothing.
Insured: You keep the deposit in your own bank account. TDS holds insurance against the risk that you fail to return it or make improper deductions. This costs around £20–£30 per deposit per year.

TDS has the most transparent dispute resolution process and is widely used by letting agents.

DPS (Deposit Protection Service)

DPS operates custodial only—no insured option. You transfer the deposit; they hold it; there's no fee.

For most landlords in Middlesbrough managing a small portfolio, DPS is the simplest choice. The platform is intuitive, the dispute resolution is included, and there's no premium to remember to pay or track.

MyDeposits

MyDeposits, like TDS, offers both custodial (free) and insured (paid) models. It's widely used by both agents and independent landlords.

The structures are identical to TDS: custodial means you transfer the money, insured means you keep it and pay a premium.

Custodial or Insured? Here's What to Choose

Custodial is free and removes your responsibility for the funds during the tenancy. The downside: you cannot access the money for any reason until the tenancy ends. (If you need working capital, this might not suit you.)

Insured lets you keep the deposit in your business account—useful for cash flow. The downside: you must remember to pay the premium each year. If it lapses, the deposit is no longer protected, even if you intended to pay. You're also taking on the risk that a dispute resolution adjudicator rules against you.

Our recommendation for Middlesbrough landlords: If you manage fewer than 5 properties, use custodial DPS. It's free, it's simple, and it removes a risk vector. You won't accidentally let cover lapse, and you won't be tempted to dispute deductions you cannot quite justify.

If you manage 10+ properties or an agent, insured schemes can work—but only if you have systems to track renewal dates.

The 30-Day Deadline and Prescribed Information

You must protect the deposit within 30 calendar days of receiving the money. Not 30 days from the start of the tenancy, not 30 days from when you decide to, but 30 days from receipt.

Example: tenant pays deposit on the 1st, tenancy starts on the 20th. You have until the 31st to protect it, even though they won't move in for three weeks.

Prescribed information is equally important and equally time-bound. It's a formal notice that tells the tenant:

Your name and contact details
The tenant's name
The property address
The amount of deposit
The name and contact details of the scheme holding it
How the dispute resolution process works
When and how deductions may be made

You must provide this—in writing, to every named tenant—within 30 days. Each scheme provides a template form. Complete it. Sign it. Keep proof that you delivered it (email, hand-delivered with a signature, etc.).

Protecting the deposit without providing prescribed information is half-compliance. Both are required.

The Cost of Getting It Wrong

This is where deposit protection matters most. The penalties are severe enough that you should not take the risk of cutting corners.

You cannot serve a Section 21 notice. This is the big one. If a deposit is not protected or prescribed information is not provided, any Section 21 notice you serve is invalid. You cannot use the no-fault eviction route to regain possession. For a landlord in Middlesbrough with a problem tenant, this means months of additional delay and the need to pursue possession via Section 8 (with grounds). The Renters Reform Act 2026 has further changed the eviction landscape for most landlords, so understanding the current rules is critical.

Compensation of 1x to 3x the deposit amount. A tenant can claim between one and three times the deposit in compensation for non-compliance. Courts are not lenient here. Clear disregard for the rules often results in 2x or 3x awards. A £1,000 deposit failure can become a £2,000–£3,000 bill.

The claim can be made anytime. There's no statute of limitations. A tenant can bring a claim during the tenancy or after it ends, even if you've since protected the deposit and made everything right. The breach happened on day 31 when you missed the deadline—that damage cannot be undone.

For the full scope of regulatory penalties and breaches, read our guide on letting regulation compliance.

Protecting a Deposit: Your Step-by-Step Guide

Here's exactly what to do.

Step 1: Receive the deposit. The tenant pays. Under the Tenant Fees Act 2019, the maximum is 5 weeks' rent (for annual rent < £50,000) or 6 weeks' rent (for annual rent ≥ £50,000). Nearly all Middlesbrough rentals fall under the 5-week cap.

Step 2: Choose your scheme. TDS, DPS, or MyDeposits. If you use a letting agent, they'll usually have a preference already set up. If you're managing the property yourself, DPS custodial is the safest bet.

Step 3: Register and protect. Create an account with your chosen scheme (if you don't have one), register the tenancy details, and either transfer the deposit (custodial) or pay the first year's insurance premium (insured). Do this within 30 days of receipt.

Step 4: Serve prescribed information. Complete the scheme's prescribed information form. Provide a copy to every tenant on the agreement. Ideally get a signed acknowledgement. At minimum, send it via email and keep the sent confirmation.

Step 5: Store everything. Keep digital copies of the protection certificate, prescribed information, and all scheme correspondence. You'll need these when the tenancy ends.

Step 6: Create a detailed inventory. This is separate from deposit protection but critical for end-of-tenancy disputes. A proper check-in inventory with dated photographs is your evidence later. Without it, deductions almost never survive dispute resolution.

When Disputes Arise: Returns and Deposits

At the end of the tenancy, you have 10 days to return the deposit—assuming both you and the tenant agree on any deductions.

If you're keeping part of the deposit for damage, cleaning, or unpaid rent, you need evidence:

Check-in and check-out inventories (dated, with photographs)
Receipts or quotes for repairs
Correspondence about issues during the tenancy
Proof of unpaid rent (payment records, arrears letters)

If you and the tenant disagree, neither of you can refuse to cooperate with the scheme's dispute resolution process. All three schemes offer free alternative dispute resolution (ADR). An independent adjudicator reviews evidence from both parties and makes a binding decision.

Adjudicators are strict about evidence. A claim without receipts or photographs almost always fails. If you say "£200 for cleaning," you'd better have a cleaning invoice or three. If you say "scuffed walls need redecorating," you need before-and-after photographs, a painter's quote, and evidence that this was not fair wear and tear.

Frequently Asked Questions

Q: How long do I have to protect a deposit? A: Exactly 30 calendar days from the date you receive the money. Not 30 working days, not "sometime in the first month." Miss the deadline by even one day and you've breached the law.

Q: Which scheme should I use? A: For most independent landlords in Middlesbrough, DPS custodial is the simplest and safest. It's free, you cannot accidentally let cover lapse, and the admin burden is minimal. If you manage many properties and have the systems to track insurance renewals, insured TDS or MyDeposits can work—but only if you're disciplined about renewals.

Q: What exactly is prescribed information? A: It's a formal notice that includes your details, the tenant's details, the amount of the deposit, the scheme name and contact info, and the dispute resolution process. The scheme provides a template. You must give it to the tenant in writing within 30 days. Without it, you're in breach even if the deposit is protected.

Q: Can I deduct from a deposit for wear and tear? A: No. Wear and tear is the normal degradation of a property over time and is the landlord's responsibility. You can deduct for damage beyond normal use, unpaid rent, or cleaning if the property is left in an unreasonably dirty state. But "the carpet is threadbare" or "the paint is scuffed" after 3 years is wear and tear. Adjudicators reject these claims consistently.

Q: What happens if I don't protect the deposit? A: A tenant can claim compensation of 1–3x the deposit amount. You also cannot serve a valid Section 21 notice, which means you lose the no-fault eviction route entirely if the tenancy becomes problematic. Additionally, depending on the circumstances, you may face other regulatory penalties.

Q: How long do I have to return the deposit after the tenancy ends? A: 10 days if you both agree on deductions. If there's a dispute, the ADR process takes typically 2–4 weeks, after which the scheme releases the funds according to the adjudicator's decision.

Q: What if a tenant disagrees with my deduction claims? A: The scheme's alternative dispute resolution service handles it. An independent adjudicator reviews evidence from both sides. Adjudicators are very strict: without receipts, photographs, and clear evidence of non-wear-and-tear damage, you will not retain the money. Vague claims like "cleaning needed" fail almost universally.

Q: Can I use a scheme outside these three? A: No. Only TDS, DPS, and MyDeposits are government-approved. Any other arrangement is a breach of the law, and you are liable for compensation. Use one of the three.