What Is A Tenancy Deposit Scheme And How Does It Work?

March 29,2022 | The TDC Content Team

The latest figures show that a staggering 4.5 million Brits are renting their home privately, and the trend is growing. It is becoming more important for those who do rent privately to be aware of their rights as tenants. 

Part of these rights includes understanding how your tenancy deposit works and the legalities around it. In this short guide, our experts will discuss what a tenancy deposit is, the Government-backed schemes used to protect it, what happens if your landlord doesn’t protect it, and how much a compensation claim can be worth. 


What is a Tenancy Deposit?

When you begin renting your home from a private landlord, you will more often than not be asked to pay your landlord a deposit. It can sometimes be called a security deposit, and it is used to cover potential costs like:

  • Rent arrears
  • Damage to the property 


From 1st June 2019, the law states that the maximum this deposit can be is equal to 5 weeks’ rent. So, to work this out, if your monthly rent is £600:

  • £600 x 12 – To get the yearly rent = £7,200
  • £7,200 ÷ 52 – To get the weekly rent = £138.46
  • £138.46 x 5 – To get the maximum amount of deposit = £692.31


This limit applies to all assured shorthold tenants (AST) and students in halls of residence, as long as the yearly rent is less than £50,000. 

There was no limit on the deposit amount before the law changed on 1st June 2019.

At the end of your tenancy, if all is well with the property and there is no damage or rent to pay, your landlord should give you back your deposit in full. If, however, you owe rent, you have damaged the property, or you have lost or broken some items from the inventory, your landlord may be entitled to take money from your deposit. 


What is a Tenancy Deposit Scheme?

If you rent your home on an assured shorthold tenancy, your landlord must protect your deposit in one of three Government-backed tenancy deposit schemes. These three schemes are:


The reason for this is so that the tenant is protected against rogue landlords. This way, the landlord cannot use the deposit as income, or simply spend the money. They also have to go through a scheme to raise any deductions at the end of the tenancy, which you are entitled to dispute. 

Your landlord must put your deposit into a scheme within 30 days of receiving the deposit, and tell you exactly where it is being protected. If your landlord uses an agent, the agent is responsible for:

  • protecting the deposit within 14 days
  • giving you specific written information within 28 days


The scheme administrators then hold your tenancy deposit in a special bank account, regulated by the Financial Conduct Authority, to ensure your money is safe and in case their scheme fails.

At the end of your tenancy, your landlord must then return your deposit to you within 10 days of you both agreeing on how much you’ll get back. If, however, you have a dispute with your landlord about the amount you are getting back, the Tenancy Deposit Scheme will hold your deposit until the issue is sorted. This means your money is protected, and rogue landlords cannot simply run away with your deposit. 


What happens if my landlord doesn’t protect my deposit?

If you haven’t received notification from your landlord or agent that your deposit has been protected, in the first instance you might want to check with them in writing. 

If it turns out the deposit has not been protected, you may be entitled to compensation. It is wise to double check it has not been protected by checking with the three Tenancy Deposit Schemes. 

If you challenge your landlord and they concede, you can ask your landlord to 

  • repay the deposit to you
  • pay the deposit into a tenancy deposit scheme’s bank account within 14 days


How can I check if I have a Tenancy Deposit claim?

Luckily, it is relatively easy to check whether you have a claim for compensation.

There are three tenancy deposit protection schemes that are protected by law. Each of these schemes has a platform to check if your deposit has been protected. These platforms for checking are listed here:


If you cannot find your deposit in one of these schemes, it is likely it has not been protected. We would advise getting in touch right away. 


How much can a Tenancy Deposit Compensation claim be worth?

Your landlord is liable for up to three times the amount of the original deposit. This means your compensation claim could be worth anything up to:

Amount of Deposit Potential Claim Worth
£100 £300
£250 £750
£500 £1,500
£750 £2,250
£1,000 £3,000
£1,500 £4,500
£2,000 £6,000
£3,000 £9,000

This amount is supposed to be a deterrent for landlords not protecting your money. The schemes were introduced to help safeguard your deposit and ensure that you get it back at the end of the tenancy. The compensation that you receive if it has not been protected is aimed to reflect this. 


How can Tenancy Deposit Claims help?

Tenancy Deposit Claims are a group of solicitors who endeavour to protect tenants like you and their legal rights. We have a dedicated team who are used to dealing with landlords, day in, day out.

If your landlord hasn’t protected your tenancy deposit, we are committed to securing the best possible outcome for you and we will keep you up to date in relation to your case, every step of the way. 

If you have been told by your landlord that the deposit is protected but it is not in any of these three schemes, you may have a claim for compensation. You may also have a claim if your landlord has simply failed to tell you where the deposit is protected within 30 days. 

Our team can let you know if you have a claim within a couple of days. 

You can get in touch with our expert team today by completing our online enquiry form here. Enter your details and we will be sure to get back in touch with you as soon as possible. 

For Your Information

We operate on a No Win, No Fee basis.

This means that if we are unable to recover compensation for you, we will not charge you.

If we are successful in recovering your damages, we will charge you 25%+VAT of your damages.

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