Deposit scheme to safeguard landlords and their tenants

Service aims to provide fair deal for all, writes Chris Marshall

A SCHEME is being introduced to safeguard millions of pounds in deposits paid by tenants in Scotland’s rental market.

According to the Scottish Government, tenancy deposits amount to more than £74 million annually, with an estimated 11,000 tenants having £3.6m of their deposits wrongly withheld each year.

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A new tenancy deposit scheme – the Letting Protection Service Scotland (LPS) – has now been approved, which aims to protect the reputation of the majority of private rented sector landlords who act professionally and responsibly.

Landlords or their agents will be required to pay deposits to and provide key information about the tenancy, the deposit, and the scheme which is protecting it, to the tenant.

The scheme will be free for landlords and letting agents to participate in and will provide access to a free and independent dispute resolution service when the return or otherwise of a deposit cannot be agreed by the tenant and landlord.

Two further schemes are being considered with the intention of starting all three schemes, which will operate across Scotland from 2 July. In order to provide landlords time to prepare, the legal requirements to submit deposits into a scheme will come into effect from November this year.

Housing minister Keith Brown said: “Up to 11,000 tenants annually have £3.6m of their deposits wrongly withheld, which is why this government is taking action to ensure tenants receive a fair deal.

“It is important to stress that the majority of landlords act responsibly. This scheme is aimed at those landlords who continue to tarnish the image of the private rented sector.

“The new regulations that allow the scheme to operate are also deliberately streamlined with the emphasis on creating a cost effective approach to safeguarding tenancy deposits.”

Kevin Firth, director of The LPS Scotland, added: “With five years of custodial deposit protection experience under our belts, we are delighted to be approved by the Scottish Government to operate a scheme in Scotland. I encourage landlords and tenants to make sure that they understand the legislation and take appropriate action to ensure they are covered.

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“It will be compulsory for landlords and letting agents in Scotland to protect their deposits with a government-approved scheme as soon as the legislation launches. It is crucial that those in the private rented sector don’t fall foul of this legislation and take the appropriate steps to ensure that they are prepared for its introduction.”

Graeme Brown, director of Shelter Scotland, said: “Each year millions of pounds from deposits are unfairly withheld by landlords and agents in Scotland, causing hardship to tenants and the very real threat of homelessness due to a lack of funds to secure their next property.

“At the same time, too many landlords are uncertain about the grounds on which they can legitimately withhold a deposit. The introduction of a compulsory scheme to safeguard deposits is a step in the right direction towards protecting tenants, landlords and agents.

“Against a backdrop of increasing financial hardship and a growing private rented sector, we hope the tenancy deposit scheme achieves a transparent and fair system for all.”