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Tenancy deposit protection – how can landlords remain compliant?

Fri 02 Aug 2019

The importance of protecting your tenants’ deposits, and the issues that you could face if you don’t have been highlighted once again by recent findings.

During the last 18 months, over 200 landlords from across Scotland have been found in breach of the law designed to protect tenants’ deposits, according to research conducted by SafeDeposits Scotland.

The organisation, a not-for-profit deposit protection scheme, also revealed that awards of over £186,000 were made to tenants by the First-tier Tribunal for Scotland (Housing and Property Chamber) that rules on deposit protection compliance.

Here we outline what deposit protection means for landlords and how Letting Solutions can ensure you are compliant at all times.

What are the rules on deposit protection in Scotland?

Since 2012, it has been a requirement, by law, for landlords in Scotland who take a deposit from their tenant to lodge the deposit with one of three government-approved schemes within 30 working days of the tenancy starting.

The three government-approved schemes are as follows:

Upon registering the deposit with one of these providers, you must then provide written information to your tenant outlining: the amount of the deposit and the date you received it, the date the deposit was paid into the tenancy deposit scheme, the address of the property, and the name and contact details of the tenancy deposit scheme provider you used.

You must also inform your tenants of the circumstances in which all or part of the deposit may be kept at the end of the tenancy, as well as providing a statement confirming that you’re registered (or have applied to be registered) as a landlord for the property with the local council that covers the area where your rental property is situated.

Crucially, and as was the case in the above scenarios unveiled by SafeDeposits Scotland, if you don't use a tenancy deposit scheme your tenant can apply to the First-Tier Tribunal for Scotland (Housing and Property Chamber), either during the tenancy or up to three months after it has concluded. You could be ordered by the Tribunal to pay up to three times the deposit to your tenant – showing the folly (and potential costliness) of not protecting your tenants’ deposits in the right way.

Further information on exemptions, how to return a deposit and what happens in deposit disputes can be found here.

What would non-compliance cost landlords?

To conduct its research, SafeDeposits Scotland accessed papers publicly available on the Tribunal website and studied the decisions it has made since it started hearing cases of deposit protection non-compliance at the end of 2017.

Here, it found that £186,657 had been paid out to tenants, the equivalent of over £900 per case.

Even though landlords can be fined up to three times the deposit value, the average award for the cases studied was revealed to be 1.31 times the deposit value – however, this can still end up being a significant outlay. The largest award made to tenants, for example, was for a rental property in Edinburgh, where the landlord was ordered to pay out nearly £4,000.  

Working with an agent can help you to remain compliant

We previously looked at how there is poor awareness among landlords and tenants when it comes to key deposit rules, which tallies with the findings above that landlords are often not acting out of malice, but simply ignorance of the legislation or forgetfulness.

This is where working with an experienced, reliable letting agent can help – taking the pressure and hassle away when it comes to deposit protection and ensuring full compliance.

Here at Letting Solutions, West Lothian’s first dedicated lettings agency, we can help you get the most from your rental properties. As part of our tenancy management, we offer professional lease preparation and execution, advice on safety issues and other regulatory requirements, and deal with security deposits and insurances, amongst many other things.

Simply give us a call on 01506 496 006 to find out more. We also provide a free and instant online valuation to give you an idea of how much you could be charging in rent each month and how much your rental property could be worth.

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