The Tenancy Deposit Scheme – Two Years On

21 Oct
Ian Langley

Ian Langley, Director at mydeposits Scotland

Our corporate partner for Tenancy Depsoit Schemes, mydeposits Scotland, provides an update on the legal obligations of the scheme and how it has gone over the first two years.

In July 2012 tenancy deposit protection legislation was introduced to safeguard the tenant’s deposit and ensure its return at the end of their stay, provided the terms of the Tenancy Agreement have been met.

A reminder of the basics:
When a landlord, or an agent acting on behalf of a landlord, takes a new deposit from their tenant, they must transfer the deposit to a government approved Tenancy Deposit Scheme within 30 working days from the tenancy start date.
Key information about the deposit and the scheme – often called the Prescribed Information – must be given to the tenant within the same 30 working days deadline.

Importantly, the law is retroactive, meaning all deposits that landlords and agents were holding before the law was introduced in July 2012 should also have been transferred into a Tenancy Deposit Scheme by May 2013.

Penalties for non-compliance:
Fail to comply and the tenant can apply to the Sheriff Court for a penalty fine of up to three times the deposit amount and they can apply for this up to three months after the tenancy has ended. There have been several high profile cases of the penalty fines, including one of £3450 for the failure to lodge a deposit worth £1150 in accordance with the legislation.

How it works:
There are three government approved schemes, including mydeposits Scotland. Once the landlord/agent has transferred the deposit, the scheme safeguards it in a secure bank account for the tenancy duration, and then returns it at the end
of the tenancy once both parties have authorised its release. All the schemes are completely free to join and use, and are funded entirely from the interest earned on deposits held.

Deposit disputes:
If the landlord or agent believes the tenant has broken the agreed contract terms (such as unpaid rent or damage to the property) but the tenant disagrees, then a free alternative dispute resolution service is available to resolve the issue.

Any undisputed deposit amount will be returned to the tenant, without waiting for adjudication. Both parties are invited to provide evidence, with the burden of proof placed on the landlord or agent to provide evidence to justify their claims. If no, or poor quality evidence is supplied then the adjudicator must award the deposit amount to the tenant.

Summary, Two Years On

Since its introduction, the scheme had had its critics. However, the vast majority of tenancies end with deposits being returned quickly and fairly, without the need for the scheme’s free and impartial alternative dispute resolution service. It has also helped protect tenants from rogue landlords and has enhanced the professional image of the letting industry generally. Overall, tenancy deposit schemes have had a positive impact on deposit protection in Scotland.

For more information about the scheme and about out corporate partner, visit www.mydepositsscotland.co.uk.