Everything you should know about tenant deposits in Scotland
It’s been more than 10 years since the Tenancy Deposit Schemes (Scotland) Regulations came into force in Scotland. This legislation stipulated that all landlords and letting agents must lodge their tenants’ deposits with one of the Scottish Government-approved tenancy deposit schemes.
But how does the system work in practice? And how can you ensure you’re on the right side of Scottish legislation? Read on to find out more.
What is the Tenancy Deposit Scheme (Scotland) 2011 Act?
The act creates the requirement for custodial deposit scheme that protects tenancy deposits paid by tenants to landlords or letting agents, throughout their tenancy.
The act aims to ensure that tenants who pay a deposit to rent a property have their deposit returned to them at the end of the tenancy, provided they have met the terms of their tenancy agreement and have not caused any damage to the property.
The provides peace of mind to tenants and landlords alike, by providing a transparent process for the handling of tenancy deposits.
What is a deposit? And how does the Tenancy Deposit Scheme work in Scotland?
A deposit serves as security against potential damages to the property, unpaid bills, or cleaning costs if the property is left in poor condition. If any of these issues arise, the deposit can be used to cover any reasonable expenses the landlord incurs at the end of the tenancy.
When a new tenancy is agreed upon and the landlord or letting agency receives the agreed deposit, the money must be lodged with a tenancy deposit scheme within 30 working days of the tenancy starting.
There are three tenancy deposit scheme providers to choose from in Scotland:
What are the benefits of the Tenancy Deposit Scheme Scotland?
There has long been disagreement among landlords and letting agents about the benefits of a custodial scheme. The scheme is designed to protect the tenant’s deposit. Under this scheme, the money is considered to belong to the tenant and the landlord. Or their agent must have strong evidence to make a claim against it at the end of the tenancy.
Since the legislation came into effect, the standards for inventory and condition reporting for all new tenancies have improved dramatically. Prior to 2011, most inventories consisted of a few sheets of paper and a rough description of the items left in the property.
Inventories, and the software used to create them, have thankfully moved on. The average inventory report for a one-bedroom flat is now about 45 pages long. A detailed inventory is key to supporting any deposit claim. Without one, any claim will be rejected at the first hurdle.
The inventory is not the only supporting document required to support a claim. When the tenancy ends a Check-Out Inspection report must be compiled, showing any issues that have deteriorated during the tenancy.
What to do if you’re making a claim
The landlord or agent should then enter a discussion with the tenants to discuss the report findings and agree on any costs, before submitting a claim against the deposit.
If the tenant does not agree to the claim, they can request to use the Alternative Dispute Resolution (ADR) service, which is provided by all deposit schemes.
The scheme will appoint an independent adjudicator who will invite both tenant and landlord to submit supporting evidence. At this stage, the landlord should provide any invoices, quotes and statements that support their claim.
The adjudicator will review the evidence provided by both parties and will make a ruling to settle the claim. In all, this process can take around 10 weeks, so we encourage both tenants and landlords to agree on costs to avoid a claim going to ADR.
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