These requirements apply to any deposit taken in relation to a new assured shorthold tenancy granted on or after 6 April 2007. It does not apply to continuation tenancies (ie where T stays in occupation as a statutory periodic T). Within 14 days of accepting the deposit, L must enter it into a government designated tenancy deposit scheme, and provide T with prescribed information. Currently, there is one custodial scheme and two insurance-backed schemes. The Deposit Protection Service (www.depositprotection. com) is the only custodial scheme which is free to join for Ls, but the deposit must be paid over to the scheme. Thus, L loses control over the money. The Dispute Service (www.thedisputeservice.co.uk) and Tenancy Deposit Solutions (www.mydeposits.co.uk) are insurance-backed schemes, whereby L registers the deposit with the service but does not have to hand over the deposit (although there is a fee to be paid).

The sums involved are enormous. In the first six months of the scheme, it was reckoned some 600,000 deposits had been protected (over 3,300 per day), and one of the insurers said it was protecting deposits of over £2,083m.

The key sanction against an L who fails to comply with the tenancy deposit rules is that L cannot serve notice under s21 HA 1988 requiring possession of the assured shorthold (and so L cannot commence proceedings to recover possession). Essentially, it gives a new defence to T, if L has not complied with the scheme; but the defence is no more than a delaying measure (ie L can take steps to comply with the scheme, and then serve a valid s21 notice). For a commentary on the three available schemes see [2008] NLJ 397,. © Practical Lawyer