Custodial vs Insured Deposit Scheme in Northern Ireland

Two Models, Same Legal Obligation

Both TDS NI and mydeposits NI offer custodial and insurance-backed deposit protection. The model you choose changes who holds the money and what happens during a dispute, but both satisfy the 28-day statutory requirement under Article 5A of the Private Tenancies (Northern Ireland) Order 2006.

How Custodial Works

You transfer the full deposit to the scheme within 28 days. The scheme holds it in FCA-regulated bank accounts for the duration of the tenancy. Neither you nor the tenant can access the funds until the tenancy ends.

Cost: Free. The scheme funds itself from interest earned on the pooled deposits.

At tenancy end: Either party applies to the scheme for release. The scheme notifies the other party. If both sides agree on the distribution, the scheme releases the funds within five working days.

During a dispute: The money is already with the scheme. No additional transfer is needed. The adjudicator reviews the evidence and directs the scheme to distribute the funds according to the decision. Either party may seek a review within 10 working days on grounds of factual or legal error; if no review is requested, the scheme repays the deposit within the following five working days.

The catch: You lose access to the deposit money for the entire tenancy. If you were counting on it as a cash-flow buffer, it is not available.

How Insurance-Backed Works

You keep the deposit money in your own bank account. You pay the scheme a non-refundable protection fee per tenancy. You register the tenancy and deposit details on the scheme portal, and the scheme issues a Deposit Protection Certificate.

Cost: A per-tenancy fee. The amount varies between TDS NI and mydeposits NI and may depend on the deposit size.

At tenancy end: You pay the agreed amount directly to the tenant. No scheme involvement is needed for an uncontested return.

During a dispute: You must transfer the disputed amount to the scheme for adjudication. The scheme's insurer guarantees payout to the tenant — and recovers any shortfall from you if necessary.

The catch: You pay a fee, and you carry the obligation to transfer funds if a dispute arises. If you fail to transfer when required, the insurer pays the tenant and pursues you for the debt.

Side by Side

Which One for a Self-Managing Landlord

For a landlord with one or two properties, the custodial scheme is usually the cleaner choice. No fee, no responsibility for holding the deposit securely, and no obligation to transfer funds if a dispute arises. You register the deposit, transfer the money, and the scheme handles everything until the tenancy ends.

The insurance-backed scheme suits landlords who want to keep deposit funds accessible — perhaps across a larger portfolio where the pooled deposits represent meaningful working capital. The fee is the price of that flexibility.

Either way, the 28-day deadline, the 35-day prescribed information requirement, and the one-month deposit cap apply identically. The model you choose does not change what you owe the tenant or the law.

Switching Between Models

If you want to change schemes or protection models mid-tenancy, contact the scheme administrator first and confirm the transfer steps. Regulation 14 allows a landlord to ask the current scheme to transfer a deposit directly to another scheme; keep the deposit protected while the change is arranged.

For a full breakdown of both models and the registration steps for TDS NI and mydeposits NI, see our Northern Ireland Tenancy Deposits guide.

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