Some tenants’ deposits unprotected despite scheme

TENANTS are being left in the dark about Scotland’s deposit protection system a year after the landmark plan came into force, it has emerged.

Many tenants' deposits remain unprotected, according to new figures. Picture: TSPL
Many tenants' deposits remain unprotected, according to new figures. Picture: TSPL
Many tenants' deposits remain unprotected, according to new figures. Picture: TSPL

The first tenancy deposit schemes (TDS) were launched on 2 July 2012 with the aim of preventing disputes between tenants and landlords over withheld deposits.

But 12 months on, doubts have been raised over the effectiveness of the new system. Fewer than 130,000 of nearly 300,000 eligible deposits had been transferred into a scheme by mid-May, the final deadline for landlords to comply. And experts warn that many tenants remain unaware of their rights under the system, with landlords accused of failing to communicate the arrangements.

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The legislation requires landlords and letting agents to place tenant deposits with an approved third-party scheme. They’re also obliged to give tenants confirmation of the amount paid and details of the scheme holding their deposit, which remains there during the tenancy in a designated account.

Any dispute over the deposit at the end of the tenancy can be ruled on by a free independent mediation service.

Scottish tenants are losing up to £3.6 million a year in unfairly withheld deposits, the Letting Protection Service Scotland has estimated. But just two-thirds of tenants in Scotland know about the TDS, according to research by one scheme, My Deposits Scotland, while fewer than one in ten tenants have discussed the protection of their deposit with their landlords.

It also found that three in ten landlords who have paid deposits into a scheme haven’t told their tenants about it.

Eddie Hooker, chief executive of My Deposits Scotland, said: “The fines for non-compliance are substantial, so landlords and agents must ensure they both protect the deposit and pass the information to their tenants in order to fully comply with the law.”

Colette Murphy, business development director at Lomond Lettings, warned that more work is needed in raising awareness among landlords of deposit scheme requirements.

“Letting companies know, but private landlords who might work in a different sector may be entirely unaware of it, and if they don’t know it’s unlikely the tenant will know.”

The Scottish Government launched tenant information packs in May in a bid to boost understanding of the legislation relating to both tenants and landlords.

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“It’s a step forward, but if landlords don’t provide the packs then tenants won’t know about them,” Murphy said.

Some letting agents and landlords have found ways of getting around the scheme. Several of the biggest letting agents in Edinburgh and Glasgow last year introduced non-refundable “cleaning fees” in lieu of a deposit.

By agreeing to that arrangement, tenants are losing their deposit protection as agents don’t need to register the upfront payment.

Some also require the final month’s rent to be paid at the beginning of the tenancy – an illegal move aimed at circumventing the demands of the TDS.

Alyson Macdonald, of the Edinburgh Private Tenants Action Group, expressed concern at the number of landlords and letting agents that had not yet signed up to a scheme.

She called on the Scottish Government to support tenants by enforcing the laws it had passed.

“The low level of compliance with the deposit protection requirement shows how much contempt many landlords and letting agents hold for their legal obligations towards tenants,” said Macdonald.

“The fact that it is not just a few independent ‘rogue landlords’ who are breaking the law but also some large, well-established letting agencies is further evidence of the disgraceful attitudes towards tenants’ rights that can be found across the sector.”

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Margaret Lynch, chief executive of Citizens Advice Scotland, said: “The scheme is well intentioned, but it’s clear that it’s not working in practice.

“A year since its introduction, only half of deposits are actually being registered.”