Rental deposits in Scotland – are you breaking the law?

Rental deposits in Scotland – are you breaking the law?
22
Jul

We’re all familiar with the idea of paying a deposit for a rental property, but with all the legislation governing rental deposits in Scotland, are you doing everything in line with the law?

Recent research by SafeDeposits Scotland found that in the last 18 months, over 200 landlords have been found to be in breach of a rental deposits protection law. Consequently, almost £200,000 has been paid out to tenants.

Here we take a look at everything you need to know about rental deposits in Scotland:

  • Why should you take a deposit?
  • How much should you charge as a deposit?
  • What happens to rental deposits in Scotland, once paid?
  • What is a tenancy deposit scheme?
  • Are there any exceptions to using a tenant deposit scheme?
  • How do you return the deposit to your tenant – or to you?
  • What happens if you and your tenant disagree about the deposit return?
  • How can I make the deposit process easier?

 

Why should you take a deposit?

Quite simply, a deposit helps to protect you as a landlord of a long term let property. The money held as a deposit can be used to cover any costs that you may be left with at the end of a tenancy, such as repairs, cleaning, unpaid rent or any unpaid bills left by the tenant.

If you have a robust process for vetting and selecting tenants, or use a good letting agency to find tenants, then you’re less likely to have any issues at the end of a tenancy.

 

How much should you charge as a deposit?

You can set the deposit at whatever you feel is appropriate for your property – but rental deposits in Scotland cannot legally be more than two months’ rent.

 

What happens to rental deposits in Scotland, once paid?

Once your tenant has paid you the agreed rental deposit, you must follow the current tenant deposit protection legislation. This came into force under the Tenancy Deposits Schemes (Scotland) Regulations 2011:

  1. You must transfer the deposit to a government-approved tenancy deposit scheme within 30 working days of the start of the tenancy.
  2. You must provide your tenant with written confirmation of the details relevant to their deposit.

 

What is a tenancy deposit scheme?

A tenancy deposit scheme is an independent third party which holds the tenant’s deposit in a safe, designated account for the duration of the tenancy. There are currently three approved scheme providers managing rental deposits in Scotland.

If you don’t comply with the legislation, then your tenant is permitted to apply to the Housing and Property Chamber of the First-Tier Tribunal for Scotland. Your tenant can do this at any time during their tenancy or up to three months after the end of their tenancy, and the Tribunal could order you to pay your tenant up to three times the value of the deposit.

 

Are there any exceptions to using a tenancy deposit scheme?

There are exceptions to using a tenancy deposit scheme for rental deposits in Scotland, although these are not commonly found in the private rental sector.

A list of exceptions to registering a rental deposit can be found in the information for landlords on the mygov.scot website.

 

How do you return the deposit to your tenant – or to you?

At the end of a tenancy you need to contact your tenancy deposit scheme provider and request that the deposit be paid back to your tenant. This request is called a ‘proposal for deposit repayment’ and you can usually do this via an online form. If you’re using a letting agent, then they may do this on your behalf.

You will need to advise if the full deposit should be returned to the tenant or if any of the deposit should be returned to you to cover any costs you incur – such as for any repair work required or to cover any unpaid bills. You should be prepared to provide evidence of these costs.

Your tenancy deposit scheme will then contact your tenant to advise them of your request. Your tenant has 30 working days in which to confirm their agreement or disagreement. If they don’t do this within the time period, then you will be paid any share of the deposit that you have requested. Any share of the deposit due to the tenant will continue to be held in the scheme until they claim it back.

It’s worth noting that although it’s usually the landlord or their agents who submit a repayment proposal, a tenant can also make an application.

 

What happens if you and your tenant disagree about the deposit return?

If you are unable to reach an agreement with your tenant then your tenancy deposit scheme provider will refer you to their dispute resolution service, which is free of charge.

The dispute resolution service will use an independent person to consider evidence from both you and your tenant and then come to a fair decision. If you cannot prove your claim, then the deposit must be returned to the tenant.

 

How can I make the deposit process easier?

Once you understand the process, rental deposits in Scotland are fairly straightforward – but with some planning and preparation you can give yourself the best chance of success on your deposit claims:

  • Prior to each tenancy you should invest the time to create a full written and photographic inventory of your property, and update this periodically at inspections during the tenancy. This ensures that you can provide evidence to back up any claim that you may need to make on the deposit.
  • Using a robust system to vet potential tenants is also a key factor in ensuring that a tenancy runs and finishes as smoothly as possible.

If you feel that you don’t have the time to vet tenants and check references, or to create inventories that are as detailed and up to date as they should be, then get in touch with us to see how we can help. Our team are experienced at undertaking detailed written and photographic inventories, which translates to an excellent success rate on our deposit claims. We offer a tailored service to suit our clients’ needs and we’re proud to say that 100% of our landlords would recommend us to other landlords.

If you’d like to chat about our services or have any queries about rental deposits in Scotland, please get in touch with us – we’re always happy to help.