Do Landlords Pay Interest on Deposits in Wales?

If you’re renting in Wales, you may wonder whether your landlord has to pay interest on your deposit and what your rights are when it comes to deposit protection. Understanding the law can help make sure you get back what you’re owed and that your deposit is kept safe under Welsh regulations.

What Is a Tenancy Deposit?

A tenancy deposit (sometimes called a security deposit) is money you pay to your landlord at the start of your rental agreement. It acts as security in case of property damage, unpaid rent, or other breaches of tenancy terms. In Wales, there are clear legal rules about how deposits must be handled.

Deposit Protection Schemes in Wales

Landlords in Wales must protect deposits with a government-approved tenancy deposit scheme within 30 days of receiving it. There are three official government-backed schemes:

• The Deposit Protection Service (DPS) (insurance or custodial)
• mydeposits (insurance or custodial)
• Tenancy Deposit Scheme (TDS) (insurance or custodial)

Once protected, your landlord must provide you with written details (known as ‘prescribed information’) explaining how your deposit is safeguarded, the scheme used, and how you can get your money back at the end of the tenancy.

Do You Get Interest on Your Deposit in Wales?

The law recognises that holding a tenant’s deposit could earn interest. However, in Wales, landlords do not have a legal obligation to pay you interest on your deposit. The main aim of the deposit protection schemes is to keep your money safe, not to provide you with a return.

Some deposit schemes do accrue interest while holding funds. But this interest typically goes towards running the scheme itself, not to individual tenants. You can check with your specific scheme’s website for further details.

Relevant Tenancy Legislation for Wales

The main law governing deposits in Wales is the Housing Act 2004, Part 6, Chapter 4, and the Renting Homes (Wales) Act 2016 which came fully into force in December 2022.¹ Rental contracts made after December 2022 are known as occupation contracts under this law.

Returning Your Deposit at the End of the Tenancy

Your landlord or agent must return your deposit promptly at the end of your tenancy, minus any agreed deductions for things like damage or unpaid rent. If you don’t agree with the proposed deductions, all three government-approved schemes offer a free dispute resolution service.

If you’re unsure whether your deposit has been properly protected, ask your landlord or letting agent for details and check directly with the relevant scheme.

What Happens if the Landlord Doesn’t Protect My Deposit?

If your landlord doesn’t protect your deposit in time or fails to provide you with the scheme’s details, you can apply to the county court for compensation. The court may order your landlord to pay you up to three times the deposit amount as a penalty.

Official Forms Relevant to Your Deposit

• Form N208: Claim Form (Part 8 Claim)
  If you believe your landlord hasn’t protected your deposit or returned it, you can use Form N208: Claim Form (Part 8 Claim) to start a court claim.
  Example: You move out, your landlord withholds your deposit, and it’s not protected. You can use this form to start legal action.
  

Always check the official government guidance on deposit disputes for step-by-step instructions.

Dispute Resolution and the Residential Property Tribunal Wales

While most deposit disputes are handled by your deposit scheme, certain housing matters for Welsh tenants (including issues around landlord conduct or property conditions) are handled by the Residential Property Tribunal Wales. However, direct deposit disputes normally go first through your deposit protection scheme.

How to Check if Your Deposit Is Protected

You can search the three main schemes online using your tenancy details. Visit each scheme’s website and enter your postcode or deposit details to confirm protection status.

• Check with DPS
• Check with mydeposits
• Check with TDS

FAQ: Interest and Deposit Rules in Wales

1. Do landlords have to pay interest on my deposit in Wales?
   No, there is no legal requirement for landlords in Wales to pay tenants interest on their deposits.
2. How do I know if my deposit is protected?
   You should receive details from your landlord. Alternatively, check online with the three government-approved deposit schemes using your property details.
3. What should I do if my landlord didn’t protect my deposit?
   You can apply to the county court for compensation using Form N208, or seek advice from Welsh Government resources.
4. Can I use the dispute service even if my landlord didn’t pay interest?
   The dispute service is for disagreements about deductions or non-return of your deposit. As interest isn’t required, you can’t dispute over interest alone.
5. Which tribunal covers deposit issues in Wales?
   Most deposit return disputes are handled by the scheme, but housing issues may go to the Residential Property Tribunal Wales.

Key Takeaways on Deposit Interest in Wales

• Landlords in Wales do not need to pay you interest on your deposit.
• All deposits must be protected in a government-approved scheme; check your protection status online.
• If your deposit is not protected, you may take legal action and could receive compensation.

Need Help? Resources for Renters in Wales

• Welsh Government: Tenancy Deposit Protection guidance
• Residential Property Tribunal Wales
• Shelter Cymru: Free specialist advice for renters
• Citizens Advice Wales: Renting Privately

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1. Housing Act 2004, Part 6, Chapter 4; Renting Homes (Wales) Act 2016

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