Why do I need to pay a deposit?
Deposits are taken as security against possible non-payment of rent or damage to the property. If rent arrears or damage exceeds the deposit held, the landlord or their appointed agent can take further action, if necessary through the courts to recover these costs.

Who will hold this money?
The housing act of 2004 (chapter4, sections 212-5 & schedule 10) made provision for both the protection of deposits and resolution of disputes over their return. 
The Dispute service operates under one such scheme: The Tenancy Deposit Scheme (TDS).

Since legislation came into effect on the 6th of April 2007 all deposits taken for an assured shorthold tenancy have to be covered by such a scheme.

Benefits of the TDS scheme

• Your deposit is protected during the tenancy
• Where there is no dispute the deposit is returned promptly
• In the case of a dispute, the return of the deposit will be dealt with fairly by an independent case examiner (ICE)
• The ICE will make his decision after hearing from both sides, and the deposit will be paid out without unnecessary delay.

How do I know my deposit is in this scheme?
At the start of the tenancy you will be issued with a ‘Certificate of tenancy registration’ this details the terms of the tenancy including the deposit paid, the unique registration code can then be checked against the TDS registration web site.