Since 6th April 2007, landlords in England who let a property on an assured shorthold tenancy have been required to comply with deposit protection legislation for most tenancies. This obliges the landlord or agent to:

1. Protect the deposit within a Government-approved scheme within 30 days of receiving it; and then
2. Issue the prescribed information to the tenants, and to anyone who has contributed towards the deposit, within that same 30-day window.
3. Keep the deposit continuously protected within a scheme throughout the duration of the tenancy.

At the end of the tenancy, should a dispute arise, the deposit may be apportioned by the scheme following impartial adjudication.

Failure to comply with these requirements can expose landlords to significant financial penalties and result in the loss of the right to serve a valid possession notice until the deposit has been returned.

This guide is intended to explain how to protect a deposit, both before and after the Renters' Rights Act comes into force, along with key information regarding deposit deductions, best practice at the end of a tenancy, and changes of tenant during a tenancy.

A deposit is money taken by the landlord to cover any of the tenant's liabilities or obligations arising from the standard assured shorthold tenancy agreement. If money is being held for this purpose, it constitutes a deposit and must be protected within a scheme within 30 days of receipt if you enter into an assured shorthold tenancy agreement.

Your assured shorthold tenancy agreement should include a term explaining that the money will be held in a Government-approved scheme. It should also include a term setting out the circumstances under which deductions from the deposit may be made.

From 1 May 2026, when the Renters’ Rights Act comes into force, assured shorthold tenancies will be abolished and replaced by assured periodic tenancies. These tenancies will also require you to protect a deposit within 30 days of receiving it. If you had an assured shorthold tenancy before 1 May, the AST will usually convert into an assured periodic tenancy and must continue to be protected in a scheme.

Can I take something other than money as a deposit?

A deposit cannot be taken in the form of property, such as a Rolex watch or a motor vehicle. Should you attempt to take a deposit in any form other than money, you will be prevented from serving a Section 21 notice until it has been returned.

Am I obligated to take a security deposit?

No. Many landlords now choose not to take a deposit, opting instead to rely on deposit alternatives such as Zero Deposits, rent insurance schemes, or simply proceeding without any deposit at all.

However, as most tenancy agreements presume that a deposit will be taken, they will typically contain clauses referring to one. To avoid any complications, landlords should ensure that their agreement clearly states that no deposit has been taken.

How much can I take for a deposit?

You are limited to a maximum of the equivalent of five weeks' rent where the annual rent is less than £50,000, and the equivalent of six weeks' rent where it exceeds that amount.

If your rent is taken monthly, then you can calculate this deposit cap by using the following calculation.

• Multiply the monthly rent by 12 to find the annual rent
• Divide the annual rent by 52 to find the weekly rent
• Multiply weekly rent by 5 or 6 to find your deposit cap. 

Can I charge an additional amount for a pet deposit?

In England, you may not exceed the deposit cap of five or six weeks' rent, and it is generally advisable to request the maximum permitted amount.

From 1st May 2026, when the Renters' Rights Act comes into force, assured tenants will also have a contractual right to request that a pet be kept at the property, so there is little benefit in offering a reduced deposit to tenants who do not have pets at the outset of the tenancy.

To protect a deposit, you will first need to select a Government-approved scheme and decide which type of deposit protection you wish to use.

What deposit protection schemes are available?

There are three approved scheme providers:

• TDS
• mydeposits
• DPS

The different types of deposit protection

You will also need to decide which type of protection to use. All three schemes offer two options:

• Custodial protection; and
• Insurance-backed protection.

The different types of deposit protection

Next you will need to decide which type of protection you want to use. All three schemes offer two different options on how to protect the deposit:

• Custodial protection; and
• Insurance-backed protection. 

What is custodial protection and how does it work

Protecting it in a custodial scheme means the scheme holds the money for you. You must transfer the money to the scheme after you receive it and you must apply to release the deposit at the end of the tenancy. There is no up-front charge for using this service.

What is an insurance-backed protection and how does it work? 

Insurance-backed protection is where you, or your agent, hold the money in a bank account and pay the scheme a fee to insure the money.

More detailed information on how these options work and which is the right option for you is available exclusively to NRLA members.

I've chosen a scheme. How do I protect the deposit?

Once you have selected a scheme and decided on the type of protection, you must, within 30 days of receiving the deposit from the tenant:

1. Create an account with your chosen scheme, or log in to your existing account;
2. Register the deposit. If you are using a custodial scheme, you will also need to transfer the full deposit to them; and
3. After completing the above, but still within the 30-day window, send the prescribed information to the tenants and to anyone else who contributed towards the deposit.

Does a holding deposit need to be protected?

You are not required to protect a holding deposit until you have entered into an assured shorthold tenancy agreement (or an assured periodic tenancy if you are entering into the tenancy on or after 1st May 2026).

Once the tenancy is agreed, however, the holding deposit must either be applied as part of the first rent payment or put towards the security deposit. If you have chosen to use the holding deposit as part of the security deposit, it must be protected within 30 days of agreeing to enter into the tenancy.

Holding deposits from 1st May 2026

From 1st May 2026, the Renters' Rights Act prohibits landlords from collecting any rent before signing a tenancy, except for rent paid as part of the holding deposit.

With this in mind, we recommend using the holding deposit as part of the initial rent payment and requiring a separate payment for the security deposit in full before the tenancy is signed.

Until the tenancy is agreed, please bear in mind the separate requirements that apply to holding deposits, which are covered in our tenant fee ban toolkit page.

Frequently asked questions about deposit protection

Members can access our frequently asked questions about deposit protection by logging in.

Once the deposit has been protected — but not before — you must serve the scheme's required information on all tenants and anyone who has contributed towards the deposit, within 30 days of receiving it.

This information comprises:

• The prescribed information form;
• The deposit certificate or receipt; and
• A copy of your chosen scheme's terms and conditions or scheme rules.

Your chosen deposit scheme will provide you with this documentation, but you will need to complete the prescribed information form before serving it.

What is the prescribed information?

Your chosen scheme will provide you with a form setting out the required information that must be served on your tenants once the deposit has been protected.

This includes:

• The name, address, telephone number, e-mail address, and any fax number of the scheme;
• The scheme leaflet or brochure; and
• Details of how the deposit may be returned or how a dispute may be raised.

It also requires you, as the landlord or agent, to provide key information about the tenancy, such as:

• The deposit amount;
• The property address;
• The names and contact details of the landlord, agent, and tenant;
• The term of the tenancy that sets out when the deposit may be retained; and
• Signed confirmation by the landlord or their agent that the information provided is accurate.

This information is mandatory. You should ensure that all details are accurate before issuing the prescribed information, as failure to do so could result in a financial penalty and/or prevent you from lawfully evicting the tenant until it has been correctly served.

Which clause in my tenancy sets out when the deposit may be retained?

If you are using the NRLA assured shorthold tenancy agreement, the deposit terms are set out in clauses 5.0.

Notes on serving the prescribed information

• The prescribed information may be signed by the landlord or their agent.
• Tenants must be given the opportunity to sign the prescribed information. The NRLA strongly recommends that all recipients sign a document confirming that they have received the prescribed information together with the accompanying documents. The NRLA checklist for assured shorthold tenancy agreements is well suited to this purpose.
• Where your tenancy permits it and you hold everyone's contact details, you may serve this documentation by e-mail. The NRLA tenancy has been designed to facilitate service by e-mail.
• Joint tenants: Where there are joint tenants, the landlord need only complete one form, but it must be addressed to all tenants. All tenants must be named, even if a lead tenant has been appointed to manage the deposit.
• Third parties who have contributed towards the deposit: Where a third party has paid towards the deposit, the prescribed information must also be addressed to that third party and served on them separately.