Call for action on tenants’ deposits

Under the new rules, landlords and letting agents must place tenant deposits with an approved third-party scheme. Picture: TSPL

A year after the first tenancy deposit schemes (TDS) were launched it has emerged that several letting agents are finding ways around the rules, with one now the subject of a legal claim.

The schemes were introduced with the aim of preventing disputes over withheld deposits. Under the rules, landlords and letting agents are required to place tenant deposits with an approved third-party scheme.

But Scottish Government figures show that fewer than half of eligible deposits had been transferred into a scheme by mid-May, the deadline for landlords to comply.

And it has now emerged that one tenant is seeking to raise legal proceedings against a letting agent at Edinburgh Sheriff Court, claiming an alleged breach of the deposit legislation.

Mark Harrison, of Flexlaw Solicitors who is representing the tenant, said: “My firm  currently has instructions on behalf of a number of clients to pursue claims against landlords who have failed to comply with their obligations to lodge tenants’ deposits into one of the approved tenancy deposit schemes set up under recent legislation.”

He said there was evidence that several letting agents were “showing a systemic disregard of the law” by opting against paying deposits into a scheme.

“It is hoped that such attitudes may change, although it is regrettable that it may take court action from committed tenants to force this,” said Harrison.

The letting agent in question is accused of opting not to place tenant deposits into any of the three schemes available.

Jon Black, secretary of Edinburgh Private Tenants Action Group (Eptag), said: “We are shocked but not surprised that this letting agency is ignoring the law. The fact that laws are being ignored highlights the fact that tenants need to get organised and stand up for their rights against rogue letting agencies and landlords.”

A spokesman for the firm said the tenant in question had been informed that it didn’t want to use a TDS and that the deposit would be converted into rent.

“We also invited her to contact us should she have any queries and heard nothing.  In her vacating letter, we reiterated the point and again heard nothing.”

He added that the firm felt the extra work and cost  of being involved in deposit schemes were not justified “because, prior to the TDS coming into operation, the vast majority of our tenants left their properties clean and tidy when they vacated”.

Its decision to stop taking deposits was in fact improving the process, the spokesman argued, with tenants more likely to leave properties in good condition, whereas previously they often expected to get charged for cleaning anyway.

“The main benefit for the tenant is peace of mind – knowing they won’t get ripped off at the end of the tenancy – as well as not having to wait to have their deposit returned when they move on to their next property,” he said.

But Edinburgh SNP MSP Marco Biagi said letting agents and landlords had nowhere to hide if “they think they are above the law”.

“It is a firm commitment that any deposit must be lodged with one of the approved third parties within the agreed timescale of 30 days,” said Biagi. “Any business that flaunts these rules must face the legal consequences.”

Firms or landlords failing to comply face fines of up to three times the deposit amount and a possible ban from renting out property.

Black, of Eptag, called on the Scottish Government to take action. “While there are many well intentioned pieces of legislation now governing the private rented sector,  enforcement is what is sorely lacking. We hope that the Scottish Government takes firm action against such illegal practices by strengthening the law in the upcoming housing bill.”