Is Deposit Protection Free in Northern Ireland?

The Short Answer: Custodial Is Free, Insured Costs a Fee

Both approved deposit scheme operators in Northern Ireland — TDS Northern Ireland and mydeposits Northern Ireland — offer two types of protection. The custodial option is free. The insured option charges a protection fee.

This means every landlord in Northern Ireland can meet their statutory deposit protection obligation without paying anything. There is no registration charge, no annual subscription, and no per-deposit fee for custodial protection.

How Custodial (Free) Protection Works

Under the custodial model, the landlord transfers the full deposit amount to the scheme operator within 28 calendar days of receiving it from the tenant. The scheme holds the money in FCA-regulated bank accounts for the duration of the tenancy. Interest earned on the pooled deposits funds the scheme's operations and dispute resolution service.

At the end of the tenancy, the landlord and tenant agree on any deductions, and the scheme releases the money accordingly. If there is a dispute, the scheme's Alternative Dispute Resolution (ADR) service adjudicates — also at no charge to either party.

The trade-off: the landlord does not have access to the deposit funds during the tenancy. The money sits with the scheme until the tenancy ends.

How Insured (Paid) Protection Works

Under the insured model, the landlord pays a non-refundable protection fee to the scheme operator and keeps the deposit money in their own bank account. The scheme provides insurance backing — if the landlord fails to return the deposit at tenancy end, the scheme's insurer pays the tenant and then recovers the debt from the landlord.

The fee varies by scheme and deposit amount. It is typically a one-off payment per tenancy (or per protection period), not a recurring subscription.

The trade-off: the landlord retains use of the deposit funds during the tenancy, but pays for the privilege. If a dispute arises and goes to ADR, the landlord must transfer the disputed portion to the scheme before adjudication proceeds.

Which One Should You Choose

For a single-property landlord protecting one deposit, the custodial scheme is usually the simplest path. It costs nothing, removes the complication of managing a separate client account, and the scheme handles the money.

Landlords with multiple properties may prefer the insured option to keep deposit funds liquid — particularly if the deposits are large and the cash flow matters. Letting agents often use insured schemes because they manage client accounts as part of their business infrastructure.

Both options satisfy the statutory duty. The law does not prefer one over the other. What matters is that the deposit is protected within 28 days and prescribed information is served within 35 days.

What About Registration Fees

Creating an account on TDS NI or mydeposits NI is free regardless of which option you choose. Account creation is not the same as deposit protection — you must complete the full registration of the specific deposit (property details, tenant details, deposit amount) and either transfer funds (custodial) or pay the protection fee (insured) before the scheme issues the Deposit Protection Certificate.

Landlord Registration with the Landlord Registration Scheme at landlordregistrationni.gov.uk carries its own separate fee and is a different obligation entirely. Registering as a landlord does not protect any deposit.

The Tenancy Deposits in Northern Ireland guide compares both scheme types side by side and includes a decision flowchart for choosing between custodial and insured based on your portfolio size and management style.

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