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Custodial or Insured, which scheme comes out on top?

Monday 17 February 2020

Propertymark Industry Supplier, Tenancy Deposit Scheme (TDS) reveal the most popular type of tenancy deposit protection scheme.

Since the Housing Act came into effect in 2004, it has been a legal requirement for landlords and letting agents to protect deposits on assured shorthold tenancies in a government-approved tenancy deposit protection (TDP) scheme.

There are two types of schemes offered by government-approved providers: Insured and Custodial.

The Insured scheme provides insurance-backed deposit protection for a small fee while the landlord or letting agent keeps hold of the tenant’s deposit. Whereas, deposits protected under Custodial schemes are held by the TDP provider for free. 

There isn’t a great difference between the two schemes. In the case of the TDS, which has both Custodial and Insured options, customers can enjoy similar benefits in either of the two schemes such as free and impartial dispute resolution when disagreements arise over deposits.

The Insured scheme has been around for longer but, as the fee-based option, it is still the most popular scheme? 

There are some who believe Custodial schemes are now winning over Insured schemes but what does the big picture data from the wider market reveal?


TDS has reviewed recent industry tenancy data to ascertain whether Custodial deposit protection schemes are gradually replacing Insured deposit protection schemes – or whether the opposite is true.

By analysing market data from the period April 2019 to the end of September 2019, TDS found that 55 per cent of all deposits were protected in Insured schemes while 45 per cent were held in Custodial schemes.

However, the Custodial scheme showed the greatest growth in the period – especially for TDS which saw a 34 per cent increase in deposits protected under their Custodial scheme. There was good growth in TDS Insured, too, but not to the same scale.

What does this tell us?

  • Insured still has the bigger share but Custodial is seeing impressive growth.  It’s clear that both tenancy deposit protection schemes are still popular amongst landlords and letting agents.
  • Both schemes are continuing to show growth in deposits, which is encouraging for the private rented sector. The market is still performing.

After a year of change with the tenant fees ban and deposit cap, and further uncertainty to come, it will be interesting to see if or how legislation will affect deposits, schemes and, perhaps most importantly, deposit disputes over time.

TDS will continue to monitor the big data to see if these changes impact on deposit protection in the coming months.

If you’d like to learn more about industry observations, visit to read the latest statistical reviews.