Deposit protection schemes in Scotland - what do you need to know?
Mon 13 Jun 2022
Protecting your tenants' deposits is not only vitally important to the smooth running of tenancies, but also a legal obligation and can help avoid disputes at a later date. So, it really does pay to fully understand your obligations as a landlord when it comes to keeping deposits safe.
Deposit protection schemes will differ depending on where you are located and what regulations your government has approved, which is why we will provide a detailed outline below of what you need to know about deposit protection schemes in Scotland.
As a landlord, you have certain responsibilities to uphold when it comes to your property and your tenant.
During a tenancy, things won’t always go smoothly, which is why a deposit should be put in place to act as a guarantee against things such as damage to the property, cleaning bills that need to be covered due to the property being left in a poor condition, unpaid bills or rent.
A deposit can, however, not be used to cover costs to replace items that are damaged or worn due to normal wear and tear which includes worn furniture and carpets.
Tenancy deposit schemes
Within 30 working days of a new tenancy starting, you must ensure that your tenants’ have their deposit registered in a tenancy deposit scheme.
Their deposit money will be stored and protected during the tenancy, preventing you, as the landlord, from taking money out of the deposit during your tenancy. There are no additional costs for the tenant when a landlord registers a deposit.
There are three schemes which have been approved by the Scottish government and as a landlord, you should use one of these to keep deposits safe. They are:
● Safe Deposits Scotland
● My Deposits Scotland
● Letting Protection Service Scotland
Once a suitable scheme has been selected, as a landlord you will have to inform your tenant how much the deposit is, what date you have received the deposit, what date it was registered with the deposit scheme, which scheme it was registered with, and the contact details for the scheme.
The tenancy deposit scheme will also be in contact with your tenant to confirm that you have provided them with the necessary details.
Deposit registration and payment
If the deposit has not been registered with any of the schemes listed above, then the tenant will be entitled to compensation. The First-tier Tribunal Housing and Property Chamber can order you to pay the compensation if the deposit is not registered within 30 working days and could be up to three times the amount of your deposit.
If your tenant applies for a tribunal, which is allowed either during the tenancy or up to three months after the tenancy has ended, then you could also be ordered by the tribunal to register your deposit with a scheme.
At the start of the tenancy, you may ask for rent and a deposit to be paid. You can ask for a maximum of two months' rent as a deposit. Provide a receipt to the tenant to confirm that the payment has successfully been made to protect yourself from misleading your tenant in any way.
Once the tenancy ends, you should tell your tenancy deposit scheme whether you want to make any deductions from the deposit before it is returned to the tenant. The deposit scheme will then clarify if the tenant agrees with the deductions, and if not, then a request for a depute resolution can be made.
If a dispute resolution process has been requested by your tenant, then you are obligated to enter into it, however, there has to be evidence provided that there have been negotiations prior. The scheme will take into account the evidence that you and your tenant have given to them, and a decision should be reached within 20 working days.
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