Government pledges deposit schemes will deliver good value for landlords and tenants

The government has announced its current contract with the Tenancy Deposit Scheme (TDP) will end in 2028, while pledging deposit schemes will continue to deliver good value for landlords.

TDP schemes are not government-owned, but certain schemes, including Tenancy Deposit Scheme (TDP), are government-approved.

The scheme itself is expected to continue, and the same provider could still win the next contract. Landlords must continue to place a tenant’s deposit in a government-approved tenancy deposit scheme.

Good value for landlords and tenants

In a written parliamentary question, Labour MP Damien Egan asked: “What steps is the government taking to help ensure that deposit schemes represent good value for tenants and landlords; and what steps is the government taking to ensure the system is transparent?”.

In response, housing minister Matthew Pennycook confirmed as part of the process to re-procure the contracts, the government will work to secure good value for tenants and landlords.

Mr Pennycook said: “The recent extension of the Tenancy Deposit Scheme (TDP) contracts secured significant improvements in value for money and overall performance, including enhanced financial transparency and the introduction of more stretching and relevant Key Performance Indicators, delivering service improvements and the creation of a Social Value fund.

“Ongoing scrutiny of supplier financial performance, transparency of revenue and cost data, and the ability to challenge performance and enforce contractual remedies where required, ensure services continue to deliver strong outcomes.

“The TDP contracts are due to end in March 2028. As part of the process to re-procure these contracts, the government will work to ensure that the service provides good value for tenants and landlords and that the system remains transparent.”

Will be bidding for this contract

Steve Harriott, group chief executive of The Dispute Service, told Property118 the TDS will be bidding for the contract.

He said: “TDS has operated tenancy deposit schemes in England and Wales since 2003, initially as a voluntary scheme and then from 2007 as one of the government authorised tenancy deposit schemes.  We understand that the government intends to procure new contracts later this year for England and Wales.

“These are likely to come into effect from 1 April 2028, and we anticipate that there will be a smooth transition to the new regime for tenants, landlords and agents.  As the largest UK provider of tenancy deposit services, TDS will be bidding for this contract and we are looking forward to building on the success we have had over the last 23 years in providing effective deposit protection and impartial deposit dispute services”.

Landlords must protect deposit

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.”