You have just taken a deposit from a new tenant. The money has cleared, the tenancy starts Monday, and somewhere in the back of your mind a clock has started ticking. Which scheme do you use, and how long have you actually got? Get this wrong and it is one of the few landlord mistakes that can cost you three times the money you were trying to hold safely.
Here is how the three schemes compare, and why the 30-day deadline is the number that matters most.
The 30-day rule that everything hangs on
In England and Wales, if you take a deposit on an assured shorthold tenancy you must do two things within 30 days of receiving it:
- Protect the money in a government-authorised scheme.
- Give the tenant the "prescribed information" (the scheme details, deposit amount, property address, and how to get it back or dispute deductions).
The 30-day window was set by the Localism Act 2011, which replaced the old 14-day rule. Both steps count. Protecting the cash but forgetting the prescribed information is still a breach. See GOV.UK: deposit protection schemes and landlords (checked July 2026).
There are three authorised schemes in England and Wales: the Deposit Protection Service (DPS), MyDeposits, and the Tenancy Deposit Scheme (TDS). Scotland and Northern Ireland run their own schemes, so this guide is England and Wales only.
Custodial vs insured: the real choice
Before you pick a brand, pick a type. Every one of the three offers both.
Custodial. You hand the deposit to the scheme and it holds the money for the length of the tenancy. This is free. At the end, whoever is owed what gets paid out once both sides agree, or after adjudication. Good if you would rather not touch the money or chase membership renewals.
Insured. You keep the deposit in your own account and pay the scheme a fee to insure it. You still have to hand the disputed amount over to the scheme if there is an argument at the end. Good if you want the cash to sit with you, but it is an active cost and an active responsibility.
From the tenant's point of view custodial is lower risk, because the money never sits with the landlord at all. If you become insolvent or simply go quiet, the tenant can go straight to the scheme.
DPS vs MyDeposits vs TDS, side by side
The three are more alike than the marketing suggests. All are government-authorised, all offer free custodial and paid insured, and all include free dispute resolution.
| DPS | MyDeposits | TDS | |
|---|---|---|---|
| Custodial option | Yes | Yes | Yes |
| Insured option | Yes | Yes | Yes |
| Custodial cost | Free | Free | Free |
| Insured cost | Annual or per-deposit fee | Annual or per-deposit fee | Annual or per-deposit fee |
| Free dispute service (ADR) | Yes | Yes | Yes |
| Coverage | England & Wales | England & Wales | England & Wales |
The custodial products are genuinely free on all three, so cost is rarely the deciding factor there. Insured pricing changes and is often bundled into agent or landlord memberships, so check the current fee on each scheme's own site before you commit rather than trusting a figure in a blog post.
In practice landlords choose on habit and interface. DPS is the oldest and largest custodial scheme; MyDeposits and TDS both built their names on the insured side and are popular with letting agents. For a single self-managing landlord, free custodial with any of the three does the job.
How disputes actually get settled
This is where the schemes earn their keep. If you and the tenant disagree over deductions at the end of the tenancy, every scheme offers free alternative dispute resolution (ADR): an independent adjudicator reads both sides' evidence and decides how to split the disputed amount.
Two things landlords underestimate:
- ADR is evidence-led, not sympathy-led. The adjudicator was not there. They see your check-in and check-out inventories, dated photos, receipts and the tenancy agreement. No inventory usually means no deduction, because you cannot prove the condition changed.
- The decision is final. If both parties agree to use ADR, the adjudicator's ruling is binding. You cannot protect a deposit late, skip the paperwork, and then rely on a hearing to bail you out.
A deposit with a solid inventory behind it is worth far more than the same deposit with a vague email trail.
What missing the deadline actually costs
Now the number that should focus the mind. If you fail to protect the deposit or serve the prescribed information within 30 days, the tenant, or former tenant, can take you to the county court. The court can order you to return the deposit and pay the tenant between one and three times its value. See GOV.UK: if your landlord does not protect your deposit.
Worked example. Rent is £1,000 a month, so £12,000 a year. Under the Tenant Fees Act 2019 the deposit is capped at five weeks' rent where annual rent is under £50,000, which is about £1,154. Say you take £1,150 and never protect it.
| Item | Amount |
|---|---|
| Deposit returned to tenant | £1,150 |
| Penalty at 1x (best case) | £1,150 |
| Penalty at 3x (worst case) | £3,450 |
| Worst-case total out of pocket | £4,600 |
So a £1,150 deposit you were trying to protect can turn into a £4,600 bill: the deposit back, plus three times it in penalty. The tenant can bring a claim for up to six years, and can do so even after they have moved out.
There used to be a second sting. You could not serve a valid Section 21 notice while a deposit sat unprotected. From 1 May 2026 the Renters' Rights Act 2025 abolished Section 21 no-fault evictions and made all tenancies periodic (Royal Assent 27 October 2025). That particular lever has gone, but the one-to-three-times financial penalty has not, and protecting deposits remains a legal duty.
A five-minute compliance checklist
- Take no more than the legal cap: five weeks' rent where annual rent is under £50,000, or six weeks' where it is £50,000 or more.
- Choose custodial if you want it free and hands-off; choose insured only if you have a real reason to hold the cash.
- Protect the deposit within 30 days of receiving it.
- Serve the prescribed information within the same 30 days, and keep proof you sent it.
- Take a dated, tenant-signed inventory with photos at check-in. It is your entire case at check-out.
- Re-serve the prescribed information if a fixed term rolls into a new agreement and your scheme requires it.
None of this is difficult, but all of it is time-limited. The landlords who get stung are almost never the ones who chose the "wrong" scheme. They are the ones who chose a good scheme a week too late.
This is general information, not tax or financial advice.
