Tenancy Deposit Scheme

Tenancy Deposits – The New Arrangements in Scotland

Tenancy Deposit protection has been in force in England and Wales for several years and now Scotland is to follow suit with its own scheme.  Whether you welcome this or shudder at even more government involvement probably depends on your perspective and experience.  All we can say is that at Simply Let we have hardly ever had a deposit retention disputed.  It seems to us that, with a detailed inventory agreed by both parties at the commencement of a tenancy, then through common sense and honest discussion over any issues arising at the end disputes can be avoided, and it makes me a little sad to see honest human interaction being replaced by bureaucratic process.  Be that as it may, we are to have a scheme in Scotland.

Although the enabling Regulations were enacted some time ago, the Tenancy Deposit Scheme will come into effect only when one or more providers are approved by the Government. This is widely expected to happen early this summer.

Currently there are two contenders being considered to run the scheme; SafeDeposits Scotland and the Letting Protection Service Scotland, and it is widely anticipated that both will receive Government approval.

 SafeDeposits Scotland describes itself as an innovative partnership between landlords, agents and tenants and comprises the following bodies.

• Scottish Association of Landlords (SAL)
• National Federation of Property Professionals (NFOPP)
• Royal Institution of Chartered Surveyors (RICS)
• The Scottish Council for Voluntary Organisations (SCVO)
• Shelter Scotland
• National Union of Students Scotland (NUS Scotland)
• The Dispute Service (TDS)

It is -

• a not-for-profit limited company registered in Scotland.
• supported by the Dispute Service which is already operating in England.
• based in Scotland with an office in Glasgow and Edinburgh (We believe that they are looking to have a presence in Inverness also).

Full details are on the SafeDeposits Scotland website at http://www.safedepositsscotland.com

Letting Protection Service Scotland (LPS)

• a subsidiary of Computershare Investor Services plc, a company registered in England and Wales.
• based in Bristol.
• already operating one of the deposit schemes in England and Wales.

Full details are on the Letting Protection Scotland website at http://www.lettingprotectionscotland.com/

So how will the schemes work?

• Both will be completely free to use
• Both will offer online payment of deposits as well as by cheque.
• Both will offer a dispute resolution service with independent adjudicators.

When must deposits be protected?

The scheme will come into effect when the first provider is approved.  This is expected to be about May this year, but some time slippage is quite possible.  When deposits must be lodged will depend on whether the tenancy is in existence when the first scheme becomes operational or whether it commences after that date.

All deposits received after a scheme first becomes operational must be submitted to an approved scheme, and information provided to tenants within 30 working days of the start of the tenancy.

Landlords already holding deposits before a scheme becomes operational must also lodge those deposits but will be allowed up to nine months to submit them to an approved scheme, according to the status of the tenancy.

What happens if a landlord uses a letting agent?

The duties in relation to tenancy deposits apply to landlords, irrespective of whether an agent might be taking and currently holding the deposit.  However, although the obligation falls on the landlord, the agent can lodge the deposit on the landlord’s behalf.

It is important to realise that any sanctions imposed as a result of non-compliance with the regulations would apply to the landlord and not to the agent and, since the penalty for non-compliance can be up to three times the amount of the deposit, landlords using an agent should satisfy themselves that the agent is acting in accordance with the Regulations.

In future blogs, I'll summarise how the lodgement and reclaim processes are to work and run through what happens if there is disagreement between landlord and tenant.    

J R Gell

Director, Simply Let.