Paying the deposit
When you hand over the money for a deposit, make sure you get a receipt immediately.
Ask for a written statement that says what your deposit covers, and that it will be returned when you leave if there is no damage and you are not in debt.
Make an 'inventory' - a detailed list of the contents of the property - and note the condition of items on the list - digital photographs are ideal. Ask the landlord to sign and date it, sign it yourself, and keep a copy.
Protection by law
Deposits have caused lot of problems in the past, with disputes about how much should be returned at the end of the tenancy. But things have changed.
By law all cash deposits taken for new assured shorthold tenancies must now be protected by a 'tenancy deposit protection scheme' - which gives both landlord and tenant a fair solution.