Tenancy deposit protection

The requirement on landlords (and their agents) to protect tenancy deposits is mandatory across the UK, although the detailed provisions vary in the respective countries of the UK. 

This section reviews the legislative requirements in England and Wales, Scotland and Northern Ireland, as there are some significant differences in relation to:

  • when deposits need to be protected
  • what tenancies are covered by the legislation
  • what information needs to be provided by landlords
  • how quickly deposits must be protected
  • the types of scheme (insurance-backed or custodial) that apply and
  • the enforcement provisions that are available in the event of non-compliance.

The legislation in this area (in particular in England and Wales) has been subject to a number of challenges in the courts and, as a result, the legislation has been amended a number of times.

Following the 2019 UK general election, the Queen’s Speech confirmed that a Renter’s Reform Bill will be introduced for England, proposing changes to the current rental sector, including the introduction of a new ‘lifetime deposit’ for tenants in England. The new Renters Reform Bill is expected to be introduced in the spring of 2023 and is likely to now include the abolition of section 21 evictions, new powers to evict based on antisocial behaviour, a new private rented sector (PRS) ombudsman for landlords, a landlord property portal and a new Decent Homes Standard for the PRS. The lifetime deposit concept appears to have been dropped.

In Northern Ireland, the Department for Communities reviewed the operation of the regulations, but this was then put on hold for some time until the reestablishment of the Assembly. However, as power sharing has not yet restarted, the Department for Communities has brought forward changes from 1 April 2023. The main changes affecting tenancy deposits are as follows:

  • The maximum deposit is capped at one month’s rent.
  • The time to protect a deposit has increased from 14 days to 28 days.
  • The time to supply the prescribed information has increased from 28 days to 35 days.

TDS Northern Ireland has an article summarising these and other changes: The Law on Private Renting in Northern Ireland is Changing.

In Wales, the Renting Homes (Wales) Act 2016 enabled the Welsh government to introduce its own version of tenancy deposit protection in due course. The Renting Homes (Fees Etc.) (Wales) Act 2019, banning landlords and agents from charging fees to tenants, came into effect on 1 September 2019 in Wales.

This section is maintained by Steve Harriott, the Group Chief Executive of The Dispute Service Ltd.