Cleaning tops tenancy deposit claims for fifth year running
2 weeks ago | 20 comments
Government hints insured deposit schemes may be axed over fraud concerns
12:01 AM, 18th June 2026, 2 weeks ago
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The government has announced potential changes to the tenancy deposit protection system, including plans to remove insured deposit schemes.
Under the Renters’ Rights Act, landlords must place a tenant’s deposit in a government-approved tenancy deposit scheme such as the Deposit Protection Service (DPS), MyDeposits or the Tenancy Deposit Scheme (TDS).
Housing minister Matthew Pennycook said the proposed removal of insured schemes was aimed at making “tenant deposits as safe as possible”.
Low awareness
Custodial schemes hold the tenant’s deposit with an independent protection provider for the duration of the tenancy. Insured schemes allow landlords or letting agents to keep the deposit themselves, backed by insurance through an approved protection provider.
Under the proposed reforms, letting agents and landlords would no longer be permitted to hold tenants’ deposits in their own bank accounts, with all deposits instead required to be held in custodial tenancy deposit protection schemes.
In a written Parliamentary question, Liberal Democrat MP Lee Dillon asked the government about differences in the speed of deposit returns and alternative dispute resolution (ADR) outcomes between insured and custodial tenancy deposit schemes.
Mr Pennycook said tenant representative groups “consistently report low awareness” of the difference between the two types of scheme.
He added: “Under the insured model, tenants who dispute a landlord’s deduction can feel pressured to accept a deduction, rather than pursue Alternative Dispute Resolution (ADR).
“Where ADR is used, feedback from tenant representative groups report that it operates effectively and the impartial service provided by TDP providers is valued.”
Tenant deposits as safe as possible
Mr Dillon also asked what evidence underpins the government’s proposal to remove insured tenancy deposit schemes from the reformed tenancy deposit protection system.
Mr Pennycook said the move was aimed at making “tenant deposits as safe as possible”.
He said: “Under the custodial system, money is held by the Tenancy Deposit Protection provider as a neutral third party. Under the insured scheme, there is an inherent power imbalance against tenants given the landlords and letting agents hold the deposit.
“The custodial scheme provides tenants with more confidence to challenge deposit deductions and use the Alternative Dispute Resolution service provided.
“There is growing evidence that the insured model also carries a higher fraud risk, with incidents of exploiting insured registration being reported. When agents fail to maintain insurance or Client Money Protection cover, reimbursement for losses can also be delayed, leaving tenants exposed.”
Tenant’s deposit must be protected
As previously reported by Property118, the government says that to use most possession grounds landlords must show that the tenant’s deposit was protected in a government-approved scheme and that they complied with the scheme’s requirements when the deposit was received.
A Ministry of Housing, Communities and Local Government spokesperson told Property118: “The Renters’ Rights Act will allow a court to award possession if the landlord has stored a tenancy deposit in a government-approved scheme (and complied with related legal requirements), or returned the deposit to the tenant, either in full or with deductions as agreed between the tenant and landlord.
“The court can also award possession if a separate, specific court process has been undertaken to determine whether the deposit was stored appropriately.
“The Renters’ Rights Act does not change what will count as a valid deduction from a deposit, which includes unpaid rent and bills.”
Tags:
custodial tenancy deposit schemes, insured tenancy deposit schemes, Matthew Pennycook, tenancy deposit protection, Tenancy deposit schemes
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Member Since April 2019 - Comments: 18
9:26 AM, 18th June 2026, About 2 weeks ago
More ways to screw over landlords.
Member Since March 2015 - Comments: 8
9:33 AM, 18th June 2026, About 2 weeks ago
Reply to the comment left by Sam Smith at 18/06/2026 – 09:26
Ever get the feeling you’ve been cheated?
Member Since September 2018 - Comments: 3641 - Articles: 5
9:39 AM, 18th June 2026, About 2 weeks ago
Mr Pennycook said the move was aimed at making “tenant deposits as safe as possible”.
ITS ALL LEGALLY PROTECTED, insured or custodial.
“Under the custodial system, money is held by the Tenancy Deposit Protection provider as a neutral third party. Under the insured scheme, there is an inherent power imbalance against tenants given the landlords and letting agents hold the deposit.
“The custodial scheme provides tenants with more confidence to challenge deposit deductions and use the Alternative Dispute Resolution service provided.
BOTH schemes have the ability to for the tenant to challenge and the decision is ultimately made by a third party when it is.
No justifiable reason why this needs to change as it does EXACTLY what it was set up to do.
Member Since May 2017 - Comments: 23
9:52 AM, 18th June 2026, About 2 weeks ago
Reply to the comment left by Sam Smith at 18/06/2026 – 09:26
In 26 years as a landlord I have never had a disageement with a tenant over deductions made from a deposit. I regularly deduct, with the tenants permission, for outstanding utility bills which take a week ot two to come through after the tenant has left, and occasionally for damage or sub standard cleaning.
I suppose now I wil have to document, with photos, every minor detail or risk not being repaid if there is a disagreement within 3 months of the tenant leaving, There is also the comfort of having the deposits sitting in your bank account.
I am totally fed up with being portrayed as a rogue and having blanket impositions placed on all landlords when as usual it is only the minor 1 or 2 percent who may try to take advantage. They will undoubtedly fly under the radar as usual and any legislation will be ignored!
Member Since May 2014 - Comments: 91
9:53 AM, 18th June 2026, About 2 weeks ago
Wow, another way to shaft landlords. If it happens i hope it’s for new tenancies only, or that’s a big cashflow out at once that i wasn’t expecting.
Member Since January 2023 - Comments: 161
9:55 AM, 18th June 2026, About 2 weeks ago
I have experience of both. I can say with conviction tenants get their deposits back much more quickly where the landlord holds in a segregated clients account, with the tenant insured against infidelity. We pay out deposit refunds within a day or two however TDS it is at least a couple of weeks. Once again with the best of intentions, the Governments iniative will largely hurt rather than benefit tenants. Leave the deposit schemes as they stand. I would not object to single landlords or letting agents without a track record of ten years trading being obliged to utilise custodial schemes.
Member Since October 2023 - Comments: 41
10:08 AM, 18th June 2026, About 2 weeks ago
Just another reason to sell up when we’re faced with the ideology of this interfering government who see private landlords as the enemy. From the champagne socialists who care more about their voter base then the actual PRS landlords who pay the taxes to keep the country going. You can see what Labours intentions are and that is total control by stealth.
Member Since July 2013 - Comments: 483 - Articles: 1
11:47 AM, 18th June 2026, About 2 weeks ago
Reply to the comment left by Reluctant Landlord at 18/06/2026 – 09:39
Correct, no evidence base to remove the insured schemes whatsoever.
Just another way to hurt tenants because all landlords will see it as another cost that we will pass onto the tenants in higher rents.
Member Since August 2018 - Comments: 163
4:57 PM, 18th June 2026, About 2 weeks ago
It’s the usual claptrap. I went to ADR once and that was enough. The idiot doing the resolution claimed he couldn’t discern the age and original cost of the damaged windows even though he had been given a copy of the invoice.
These people are lazy and incompetent so if a tenant threatens ADR and I am super confident I am in the right, I simply say “ok, I’ll give you back the disputed amounts and then I’ll sue you in the Small Claims Court”. I reckon I’ll get a fairer hearing and the tenant has backed down and accepted my deduction on each occasion. The last thing they want is a CCJ.
Member Since June 2023 - Comments: 6
5:06 PM, 18th June 2026, About 2 weeks ago
Reply to the comment left by Martin Thomas at 18/06/2026 – 16:57
So returning the deposit itself isn’t settlement of a subsequent claim and really worth the cost for a few hundred quid of extra wear? If the place is trashed they don’t have a chance of winning, if they don’t have any money the ccj is just a cost for you.