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Insured or Custodial - which tenancy deposit protection option is right for you?

Wednesday 11 April 2018

For over ten years, legislation has demanded that tenancy deposits have had to be protected in either an Insured or Custodial scheme. But which option should you choose?

Both TDS Custodial and TDS Insured deposit protection schemes have some key benefits and it is important for landlords and their agents to have a choice of which suits them best. Many agents use both options, depending on their landlord client’s instructions.

ARLA Propertymark Industry Supplier, Tenancy Deposit Scheme (TDS) offers a choice of both an Insurance-backed scheme and Custodial option.

But what’s the difference between the two? Membership of the Insured Scheme allows the landlord or letting agent to hold the deposit as stakeholder for the duration of the tenancy (for agents this must be a ring-fenced client account) and the landlord, registering the deposits directly, pays online to complete the registration process. If there is a dispute at the end of the tenancy, the disputed sum is transferred to TDS until an adjudication is published or an agreed resolution is reached. Letting agent members pay an annual subscription.

TDS Custodial has now been operating for just over two years and has become the choice for professional lettings agents looking for a robust, easy-to-use Custodial scheme. The Custodial Scheme is free to use and whenever you wish to protect a deposit, an amount equivalent to the deposit is transferred to TDS who will hold it for the duration of the tenancy. At the end of the tenancy, the deposit is released according to agreement by the parties or if the landlord and tenant are unable to agree, TDS offers a free dispute resolution service or the parties can chose to take the matter to court.

Custodial schemes involve a little more administration for the agent as they effectively do their own paperwork and then log onto the scheme to initiate the deposit repayment process.

Both options are easy to use and, should a dispute arise over the return of the tenancy deposit, there is always the choice to use the TDS Alternative Dispute Resolution process.

Both TDS Insured and TDS Custodial Schemes can be managed from start to finish online, including dispute resolution, making whatever scheme you choose to use easy and trouble free.


About TDS
Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.
We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.

TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.

TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.

TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.

TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.