Who keeps the interest earned on a deposit?
With custodial schemes the deposit sits with the scheme and any interest is dealt with under the scheme rules, usually retained to fund the service.
3 min read · Updated 2 August 2026
Overview
With custodial schemes the deposit sits with the scheme and any interest is dealt with under the scheme rules, usually retained to fund the service. With insured schemes you hold the money, and the tenancy agreement decides whether interest is passed on.
Practical guidance
- Say clearly in the agreement how interest is treated.
- Never treat deposit money as working capital — it must be available on demand.
- Keep insured-scheme deposits in a separate client account so the balance is traceable.
Related content
General information for UK landlords and letting agents, not legal advice. Rules differ across England, Wales, Scotland and Northern Ireland — check your local requirements or take advice before acting.