How to protect a tenant deposit
When you rent your property to a tenant, you need to protect the deposit on an assured shorthold tenancy that started after 6 April 2007. Currently, you must do this within 14 days of taking the deposit.
You can protect the deposit by way of a custodial scheme or an insurance-based scheme.
The custodial scheme holds the funds for you, the insurance-based scheme allows you to hold onto the deposit but register it for a fee with a company.
The schemes in England and Wales are
If you receive a valuable item as a deposit instead of money (e.g. a car or watch), you don’t have to put it in a TDP Scheme.
For in-depth guidance here is the Government website that gives you all the information you need to do this.
What happens if a tenants deposit is not protected
The landlord will face penalties if he/she does not protect a tenancy deposit. A court can order the landlord to pay the tenant between 1 and 3 times the amount of the deposit if it has not been secured. For further Gov.UK guidance, if you are a Tenant click here if you are a Landlord click here.