Deposits: protecting, deducting and winning disputes

Most landlords lose a deposit dispute on evidence, not on principle. The deduction was reasonable, the tenant genuinely did leave the carpet in a state, and the adjudicator still awarded the money back because there was no dated photograph from the start of the tenancy, no signed inventory, and no invoice. Deposit protection itself is the easy part. Getting to keep money out of a deposit is where it goes wrong, and since 1 May 2026 the consequences of getting the protection part wrong have widened considerably.

Protection within 30 days

A deposit taken in connection with an assured tenancy must be protected in a government approved scheme within 30 days of receipt. Thirty calendar days, not thirty working days, and the clock starts when the money reaches you or your agent, not when the tenancy begins. If a tenant pays a deposit on the 2nd for a tenancy starting on the 20th, you are already eighteen days into the window before anyone moves in.

You must also serve the prescribed information within the same 30 days. That is the document telling the tenant which scheme holds the money, how to get it back, what happens if there is a disagreement, and the details of anyone who paid the deposit on the tenant's behalf. Landlords remember to protect and forget to serve. Protection without prescribed information is not compliance, and the tenant can bring a claim for it. The government guidance on tenancy deposit protection sets out the requirements in full.

The three approved schemes

There are three government approved schemes in England:

• The Deposit Protection Service
• MyDeposits
• The Tenancy Deposit Scheme

Each offers custodial protection, where the scheme holds the money, and insured protection, where you hold it and pay a fee. Custodial is free and simpler to administer. Insured lets you keep the cash but means you are holding money you may have to return at short notice, and if you have spent it you have a problem.

Whichever you choose, use one scheme consistently. Landlords who protect one tenancy with one provider and the next with another end up unsure where a deposit sits when a tenancy ends three years later. GMS is registered with the Tenancy Deposit Scheme under membership number G13462, and every deposit on a managed property goes there.

Returning it within 10 days

Once you and the tenant have agreed the amount to be returned, the deposit must be repaid within 10 days of that agreement. The 10 days runs from agreement, not from the end of the tenancy, which is why a slow negotiation is not a breach but an unanswered email after agreement is.

If you cannot agree, the scheme's free resolution service takes over. The disputed portion stays protected while an adjudicator decides it, and the undisputed portion should be released straight away. Holding back the whole deposit when you are only arguing about part of it is a bad look in front of an adjudicator and gives the tenant a reason to dig in.

Why protection now decides whether you get possession

This is the part that has changed and that many landlords have not registered. Under the Renters' Rights Act, a court possession order is only available if the deposit was properly protected, returned to the tenant, or the dispute over it resolved. Section 21 is gone, so possession runs entirely through the revised Section 8 grounds, and a deposit failure sitting in the background can stop the whole claim.

Think about what that means in practice. You have a tenant three months in arrears, you have a clear ground, you serve notice correctly, and then it turns out the deposit was protected on day 34 in 2024. The arrears are real and the ground is made out, and you still do not have possession until the deposit position is put right. The government's overview of the Renters' Rights Act for landlords covers the possession changes, and we have set out the wider picture in our guide to what the Renters' Rights Act requires of landlords.

If you are not certain every deposit you hold was protected in time and the prescribed information served, check now rather than at the point you need to serve notice. A late protection can sometimes be dealt with by returning the deposit before proceedings. That is a conversation for a solicitor, not for a blog post, but it is a great deal easier to have in a quiet month than in the middle of an arrears case.

Adjudication is decided on documents

A scheme deposit dispute is not a hearing. Nobody visits the property. An adjudicator reads what both sides send in and decides on the balance of what is in front of them. They cannot infer, they cannot take your word for the condition of a room, and they will not assume damage is recent.

The burden sits with you. You are the one proposing to take money that belongs to the tenant, so you have to show three things: that the condition at the end is worse than the condition at the start, that the tenant is responsible for the difference, and that the amount you want is a fair figure for putting it right. Fail any one of the three and the money goes back.

That is why a deduction with no dated photograph and no signed inventory usually fails. Without a check in record there is no baseline, and with no baseline the adjudicator has no way of knowing whether the mark on the wall arrived last month or six years ago. A tenant only has to say "it was like that when I moved in" and, absent evidence, that is the end of it.

Fair wear and tear is not damage

Adjudicators separate the two carefully, and landlords routinely do not. Wear and tear is the deterioration you would expect from ordinary living over the length of that tenancy, by that number of people. Carpet flattening in a hallway. Scuffs at skirting height. A worn seal on a shower door. None of that is chargeable, however irritating it is to look at.

Damage is different in kind, not degree. A burn, a tear, a stain that has gone through to the underlay, a shelf pulled off the wall, a door with a hole in it. The test an adjudicator applies is whether an ordinary tenant living ordinarily would have produced this. A four year letting to a family with two children will hand back a more tired property than an eighteen month letting to one professional, and the same level of wear means different things in each case.

Cleaning is the most disputed head of claim and the one landlords most often overstate. The standard is the condition at the start, evidenced, not a professional clean because you would prefer one. If the property was let clean but not professionally cleaned, you cannot charge for professional cleaning at the end.

Betterment and apportioning for age

Even where damage is proven, you will not usually get the full replacement cost. An adjudicator will not put you in a better position than you were in before, and a new item in place of an old one does exactly that. That principle is betterment, and it is applied as a matter of course.

So the calculation is apportioned for the age of the item and its expected life. A carpet with a notional ten year life that is damaged beyond repair after seven years has three years of life left. You get a proportion of the replacement cost, not the invoice in full. The same logic applies to paintwork, kitchen units, white goods and furniture. Landlords who submit a quote for a full replacement and receive a fraction of it tend to feel hard done by, but the arithmetic is standard and it is not a judgement on the tenant's behaviour.

Keep purchase dates and receipts for anything substantial you put into a property. If you cannot show when the carpet went down, the adjudicator will estimate its age, and estimates rarely land in your favour.

What to have ready before you claim

A deduction that holds up is usually supported by all of the following:

• A signed check in inventory with a written condition description of each room, dated and agreed by the tenant
• Dated photographs at check in and check out, of the same things, from roughly the same angles
• A check out report that refers back to the inventory item by item
• Invoices or written quotes for the work, not estimated figures
• Purchase dates or receipts for any item you are claiming replacement of
• Correspondence showing you raised the issue with the tenant and gave them a chance to respond

Photographs need a verifiable date, so a phone image with intact metadata or a timestamped inventory report, not a print with a biro date written on the back. And a check out report carries more weight if the tenant was invited to attend, whether or not they turned up.

Good record keeping starts before the tenancy does, which is also true of the referencing that decides who gets the keys in the first place. Our guide to referencing tenants properly covers that side of it.

Where we come in

Deposits are handled as standard on every property we manage: registration within the 30 days, prescribed information served, inventories and check out reports prepared with dated photographs, and any deposit dispute run for you from start to finish. It sits inside the property management service we run across Doncaster, Rotherham, Sheffield and Barnsley, on one all-in fee with no separate inventory or check out charge. If you would rather talk it through, who we are and how we work is a reasonable place to start, or call the office on 01302 244104.