This is Government-backed initiative that is running in England and Wales only (as at April 2014) where a tenant’s deposit must be put into an approved scheme. Known as a tenancy deposit scheme (or TDS for short), this protects the tenant. You, as a landlord, can elect which scheme you wish to use and must inform the tenant where you have safeguarded their money within 30 days of receiving the deposit.
Alternatively, if you have a managing agent, they will usually arrange this on your behalf as well as inform the tenant.
Launched in 2007, the idea behind the initiative is to ensure that tenants will receive their deposit back at the end of their tenancy period. This is of course subject to them having met the terms of their rental agreement, such as paying their bills on time and leaving the property in a good condition etc.
It was deemed necessary as some tenants were having problems in getting their deposit back when ending a tenancy.
There is more in depth information on the English and Welsh TDS at the Government website .
In Scotland, a similar scheme exists to protect a tenant’s deposit – again, visit the Scottish Government site for more useful information.