Since 6 April 2007 it has been compulsory to pay tenant's deposits into one of the protection schemes. This must be done within 14 days of taking the deposit and Landlords must also notify their tenants of the scheme details within 14 days. Despite hefty penalties for not adhering to the scheme - compensation for the tenant of three times the value of the deposit and restrictions on obtaining possession of the property while the deposit remains unprotected - some landlords remain unaware of the law.

If you appoint a managing agent to deal with your let, ask them whether they are a member of one of the insurance based schemes. Most professional letting agencies are, and will usually register your tenant's deposit with the scheme for a small premium. The agent will keep the deposit once registered and it will be returned to the tenant at the end of the tenancy less any agreed deductions. If you can t agree on how much to deduct, the schemes provide a free adjudication service to avoid having to take the matter to the small claims court, which usually takes more time and expense than the value of the deposit warrants.

If you're managing your own let, you will generally need to lodge the money with a custodial scheme, again within 14 days of receiving it, and notify your tenant in the usual way when this has been done. The insurance based schemes are also open to private Landlords and you can register the deposit and obtain your certificate online.

If you don't do this, a clued-up tenant can make an application to court to ask for an order that you pay them 3 times the deposit. With average deposits at around £800 it can be en expensive lesson. Complying with the scheme after the application to court is made but before the hearing won't necessarily get you off the hook either - there are two County Court decisions on the point, one of which ruled in favour of the Tenant and the other in favour of the Landlord. Until a higher court decides exactly how to deal with those set of circumstances, there's no guarantee available as to how your case will go. Don't take the chance - make sure you're quick off the mark and protect your deposit as soon as your tenant pays it over.

The three government authorised schemes are:

• The Deposit Protection Service (www.depositprotection.com, telephone 0870 707 1 707) is the only custodial deposit protection scheme. It is free to use and open to all landlords and letting agents. Landlords can register online while the scheme provides a template for the information to be provided to tenants.

• Tenancy Deposit Solutions Ltd (www.mydeposits.co.uk, telephone 0871 703 0552) .is an insurance-backed scheme jointly owned by the National Association of Landlords and Hamilton Fraser Insurance.

• Tenancy Deposit Scheme (www.thedisputeservice.co.uk, telephone 0845 226 7837) is an insurance backed scheme. Landlords can join online and access a range of related forms and documents.

It is important that landlords comply with the requirement to protect deposits since if they do not they can be ordered to repay the tenant three times the amount of the deposit.

For the leaflet Letting? Are you protecting your tenant’s deposit? go to www.direct.gov.uk/en/TenancyDeposit/DG_066385.