Tenancy Deposit Protection in Scotland: What’s it all about?

NLA rep for Fife and Dundee, Gerry Mcdougal, gives us her advice on TDP

In light of  my|deposits Scotland being awarded official government approval to provide tenancy protection for landlords, letting agents and tenants in Scotland, NLA rep for Fife and Dundee, Gerry Mcdougal, gives us her advice.

Protecting deposits taken on tenancy agreements will become mandatory from 2nd July 2012 after the Tenancy Deposits Scheme (Scotland) Regulations 2011 became law in March 2011. Under these new regulations, all landlords will be required to protect each tenant’s deposit in a government authorised scheme within 30 days of the beginning of the tenancy. What’s more, all deposits held by landlords for existing tenancies will need to be protected by 15 May 2013 at the latest. For more information on the regulations for existing tenancies, visit my|deposits Scotland 

Tenancy Deposit Protection is designed to end the practice of unfairly withholding deposits, guarantee deposits are safeguarded throughout the duration of the tenancy and ensure that deposits are returned to tenants quickly and fairly.

Unlike in England and Wales, Scotland is operating a custodial scheme; there will be no equivalent of the insurance backed schemes currently operating in England and Wales and therefore, landlords with properties on both sides of the border will not be able to protect Scottish deposits in the English insurance based schemes. The custodial scheme means there is no cost either to the tenant or the landlord, even if there is a dispute at the end of tenancy.

Whilst the law will be enforced from 2nd July, to date there is a lot of confusion amongst landlords as to what they should be doing and when. In fact, I have come across a number of landlords (especially those who aren’t members of landlord organisations) who didn’t even know there was a scheme being introduced!

In preparation for the Tenancy Deposit Protection regulations, landlords should be getting up to date on the latest guidance and advice. my|deposits Scotland has produced a Resource Centre available at www.mydepositsscotland.co.uk – take a look.

Tenancy Deposit Protection also offers a Dispute Resolution Service which, in the event of a dispute between the landlord and tenant, requires the landlord to justify their request to retain the deposit by proving the property is in a worse condition than when the tenant moved in. Whilst this could be time consuming, get it right and you won’t have too many problems.

Despite the protection of the Dispute Resolution Service and the convenience of deposit protection, the new legislation is not popular amongst many landlords. It is generally felt that the good, responsible and professional landlords are being penalised for the behaviour of the remaining bad, unprofessional landlords who refuse to return deposits for no good reason. My own view is that the introduction of Tenancy Deposit Protection, although potentially onerous in terms of the extra work involved, may increase professionalism in the sector.

Once we know how Tenancy Deposit Protection works, we’ll be able to take advantage of the benefits. I believe the schemes will really come into their own if the landlord and the tenant disagree on the details of the inventory at the end of the tenancy.

I just hope that the media catch on to the importance of Tenancy Deposit Protection so that tenants themselves are aware of the regulations and in turn put pressure on the less professional landlords to put their deposits in a scheme. A landlord who doesn’t protect the deposit within the time limit is likely to end up having to repay the entire deposit while also paying a fine of up to three times the deposit – a costly price to pay for silly landlords!

Are you a landlord in Scotland? Are you ready for the new regulations? Tell us what you think.

3 responses to “Tenancy Deposit Protection in Scotland: What’s it all about?

  1. mattwardman2000

    As an LL in England, I don’t have particular problems with it.

    The problems have been:

    a – That the original legislation in 2004 was a pile of badly drafted poo (thank you, Mr Blair and your idiot friends), and it has taken hundreds of k of £££ in the Courts to try and sort it out to something sensible and practical.

    That is merely part of kneejerk bad-regulation cum bipolar politics which infest this area of policy.

    And is, unfortunately, merely part of the territory.

    The next road accident is going to be landlord licensing, where costs in England show every sign of being 5-10x more than in Scotland. More overheads for tenants.

    b – Extra complications in Tenancy Deposit regulation as part of wider campaigns to reduce landlord freedom of action.

    The number of tick boxes and potential procedural mistakes to be watched goes up and up and up, any one of which gives clever lawyers another opportunity to make things more difficult, and costs money which is ultimately paid for by tenants.

    c – The creation of perverse incentives for legal action.

    Keep it simple and it will be fine.

    The one in Scotland I would be more worried about would be the attacks on some reasonable separate fees, which means they have to be incorporated into the rent and so no ones knows what they are.

    Matt

  2. How do these new rules relate to the rights of the Landlord when a Tenant fails to pay rent – as happened in my case? I may be out of date on the regs, but I understood that there was little a landlord can do until a tenant has failed to pay 3 months rent. If the deposit is only for the equivalent of two months rent, then how many landlords are going to incur the legal costs associated with recovering the remainder.

    I fully support the schemes but the landlord should be able to decide how much the deposit should be, depending on the type and duration of the tenancy.

  3. I have just entered a tenancy in Scotland (October 2012) and the letting agent is refusing to use a deposit protection scheme. What should I do?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s