Deposit Protection Scheme (The DPS)
The Deposit Protection Service (The DPS) is a tenancy deposit protection scheme accredited by the Government. The DPS provide both a custodial and insurance based scheme.
The custodial scheme is where the landlord submits the deposit free of charge to the scheme and is funded entirely by the interest earned from deposits held in the scheme. Whereas, with the insurance based schemes, the DPS charges a protection fee and the landlord holds onto the deposit for the duration of the tenancy.
The DPS is run by Computershare Investor Services Plc, which has successfully administered a deposit scheme in the Australian state of Victoria for the last eight years.
Online self-service allows landlords to register and make deposit payments, transfers and repayments 24 hours a day. Paper based transactions are also supported. Help and advice is available through a dedicated call centre during office hours.
An independent Alternative Dispute Resolution (ADR) service, run by the Chartered Institute of Arbitrators, will help to resolve any disputes quickly and without the need for court action.
How does the scheme work?
- The tenant pays the landlord or letting agent their deposit.
- The landlord/agent pays the deposit into The DPS within 30 days of receiving it.
- Following receipt of the deposit, The DPS will send a receipt confirming the deposit protection and in the case of the custodial scheme, a unique repayment ID needed at the end of the tenancy to both the landlord/agent and the tenant.
- The landlord/agent gives the tenant the prescribed information, scheme leaflet and terms and conditions of the scheme.
- At the end of the tenancy, the landlord/agent and the tenant agree repayment of the deposit and inform the scheme administrators. The deposit repayment, divided accordingly, will be initiated to each party within 10 days.
- If there is a dispute, The DPS administrators return any undisputed amount to the relevant party, but hold the disputed portion until the ADR service or the courts decide what is fair.
- A tenant pays a deposit of £700.
- At the end of the tenancy, the landlord says he wishes to keep £50 to pay for cleaning the flat and the tenant agrees.
- £650 is returned to the tenant and £50 is returned to the landlord.
- A tenant pays a deposit of £1,000.
- At the end of the tenancy, the landlord says he wishes to keep £200 to pay for replacing damaged furniture. The tenant disagrees, claiming the furniture was damaged before they moved in.
- Both agree to use the Alternative Dispute Resolution (ADR) service.
- £800 is returned to the tenant, but the disputed £200 is safeguarded until the dispute is settled by the ADR service administrator, and repaid according to the decision.
Note: From December 2008, the Deposit Protection Service ceased providing interest on any deposits held, regardless of who the deposit is returned to.
For more information on the Deposit Protection Service click here
To go back to our guide on tenancy deposit protection, please click here
Note: If you decide to use this scheme then you must issue your tenants with the "Prescribed Information", for more information on your obligations Click here.