Tenancy Deposit Scheme
A Tenancy Deposit Scheme (TDS) is sometimes referred to as a tenancy deposit protection scheme, or TDP.
Tenancy deposit protection ensures that if the tenant adheres to the tenancy agreement, pays their rent and bills in full, and does not cause any damage, their deposit will be returned.
There are two types of tenancy deposit protection; insurance and custodial:
Insurance-backed deposit scheme
The tenant's deposit is held by the landlord, and the landlord pays a fee to the TDP scheme. If a dispute arises at the end of the tenancy, the deposit is transferred to the TDP scheme until the dispute is resolved.
Custodial deposit scheme
Under this scheme, the tenants' deposit is paid over to the scheme administrator. At the end of the tenancy, the deposit is released by the scheme once the landlord and tenant have agreed whether any deductions should be made.
There are currently three TDP schemes operating in England and Wales, including the Deposit Protection Service and the Tenancy Deposit Scheme.
Read more about selling a property with tenants in situ.
About the author
Gaynor Haliday is an experienced legal researcher and published author. She has had numerous articles published in the press and is a legal industry commentator.
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