Deposit Scheme Chooser
Custodial or insured? Work out which is actually cheaper for your portfolio, and the fee you would have to beat.
What the two types actually are
There are only three government-authorised schemes in England: the Deposit Protection Service (DPS), the Tenancy Deposit Scheme (TDS) and mydeposits. All three offer both types of protection, and the tenant is equally protected under either. The only real difference is who holds the cash:
- Custodial: you hand the deposit to the scheme. Free to use. The scheme holds it for the tenancy and keeps any interest it earns.
- Insured: you keep the deposit in your own account and pay the scheme a fee per deposit. You keep any interest. If a dispute is raised you must transfer the disputed sum to the scheme.
So the question is narrow and financial: does what you earn on the money beat the fee you pay to keep it? That is what the calculator above answers: it gives you the break-even fee, so you can compare it against whatever a scheme actually quotes you.
Either way the two hard deadlines are the same: protect the deposit and serve the prescribed information within 30 days of receiving it, and never take more than the cap. Check yours here.
Frequently asked questions
What is the difference between a custodial and an insured deposit scheme?
Who holds the money. With a custodial scheme the provider holds the cash and the service is free to use. With an insured scheme you keep the cash in your own account and pay a fee per deposit for the privilege. The level of protection for the tenant is identical either way.
Which deposit schemes are government-approved in England?
Three: the Deposit Protection Service (DPS), the Tenancy Deposit Scheme (TDS) and mydeposits. All three offer custodial protection, and all three also offer an insured product. Any other provider is not authorised.
Who keeps the interest on a protected deposit?
Under custodial protection the scheme holds the money and keeps any interest it earns. Under insured protection you hold the money, so you keep the interest, which is the main financial argument for paying the insured fee.
Is an insured scheme worth the fee?
Only if the float is large enough that what you earn on it beats the fee, or if you genuinely need the working capital. For most landlords with one or two tenancies the sums are small and free custodial protection is the sensible default.
These tools are just the start
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