How to protect a deposit

As a property manager, protecting a tenant's deposit is not just a best practice; it's a legal requirement. Understanding the ins and outs of deposit protection can save you from potential legal headaches and ensure a smooth tenancy process. To help you get started, we're covering the essentials of deposit protection, including legal requirements, deadlines, and step-by-step instructions on how to properly protect a deposit.

What is deposit protection?

Deposit protection is a legal requirement designed to ensure that tenants' deposits are safe throughout their tenancy. As a property manager, you are required to safeguard a deposit in a government-backed deposit protection scheme. These schemes hold the deposit for the duration of the tenancy, and ensure that tenants will get their deposit back at the end of the tenancy, provided they've met the terms of their tenancy agreement, haven't damaged the property, and have paid their rent and bills.

How long do I have to protect a deposit?

As a property manager, you must protect the tenant's deposit within 30 days of receiving it. This is a strict deadline and failure to comply can lead to significant penalties.

Can I protect a deposit after 30 days?

If you fail to protect the deposit within 30 days, you must return the deposit to the tenant. Additionally, failure to comply with this deadline means you cannot serve a Section 21 notice to regain possession of the property. This can complicate your ability to manage the property and tenants effectively.

How to protect a deposit

To protect a deposit, follow these steps: 

Choose how to protect the deposit

The first step in protecting a deposit is choosing the right deposit protection scheme. There are several options available, and it's crucial to select the one that best fits your needs. Concurrent, our end-to-end property management software, integrates with mydeposits for deposit protection. You can choose between their two deposit protection schemes:

• mydeposits Custodial: This scheme holds the deposit for the duration of the tenancy. This option is free for landlords but requires them to transfer the deposit to the scheme.
• mydeposits Insurance: With this option, landlords hold the deposit in their own accounts for the duration of the tenancy and pay a small fee to insure it. 

Protect the deposit using your chosen scheme

Once you've chosen a scheme, the next step is to protect the deposit by registering it with the scheme. Each scheme will have specific instructions and processes, but generally, you'll need to provide details about the tenancy and the deposit amount.



Issue prescribed information to the tenant

After protecting the deposit, you must provide the tenant with prescribed information. This includes the deposit protection certificate and other relevant details about the scheme. The deposit protection scheme will typically provide you with the necessary documents, which you must then pass on to the tenant. This step is crucial as it informs the tenant of their rights and how their deposit is being protected.

Simplify deposit protection 

Protecting a tenant's deposit is a fairly straightforward process, but it requires timely action and adherence to legal requirements. By understanding deposit protection and your responsibilities as a property manager, you can ensure compliance and foster a positive relationship with your tenants. Taking these steps not only protects the deposit but also shields you from potential legal issues and helps maintain the integrity of your property management practices.

For more information, check out our property managers’ guide to deposits for student lets.