Since The Tenancy Deposit Schemes (Scotland) Regulations were first introduced in 2011, the two most fundamental compliance rules for landlords and letting agents who have received a tenancy deposit have been: to transfer the deposit to a government approved scheme within 30 working days of the tenancy start date; to provide all tenants on the tenancy agreement with particular key information, including confirmation of which scheme holds the deposit and when all or part of the deposit may be retained at the end of the tenancy.
There has always been an option of recourse for tenants where a deposit has not been protected on time, or not protected at all, with this initially being a civil matter under the jurisdiction of the Sheriff Court. In December 2017 this jurisdiction was transferred to the First-tier Tribunal for Scotland (Housing and Property Chamber) which, like the Sheriff Court before it, can instruct a landlord to pay a financial penalty of up to three times the amount of the deposit to the tenant.
The Housing and Property Chamber publishes on its website the decisions for cases that it has handled, and this displays in black and white the monetary sanctions that some landlords have faced. Take for instance the case of a £700 deposit paid in 2013 for a tenancy in Edinburgh – when the tenancy ended in 2020 it became apparent that the deposit had never been protected and therefore the landlord was ordered to pay £2,100 to the tenant. This is just one example of many tenancy deposit related cases where penalties have been imposed – the scale of the penalty will vary and will reflect the circumstances of the case that have been taken into account by the Tribunal.
Tenancy deposit cases and the Housing Property Chamber
Earlier this year the Housing and Property Chamber published its Summary of Work for 1st April 2020 to 31st March 2021, which reported that applications in respect of a failure to comply with tenancy deposit regulations were the third largest category of private rented sector applications after civil proceedings seeking payment orders and eviction and recovery of possession. Some 274 applications regarding tenancy deposits were received during this period and while some were either rejected or withdrawn, 197 of these applications were decided by the Tribunal and the majority (88%) were granted in the applicant tenant’s favour.
Each case published on the Housing and Property Chamber website displays a unique set of circumstances, including many different reasons for a deposit having not been protected on time. In many cases the issue has arisen from an honest oversight, however, as the penalties show this can be a costly mistake to make.
Tenancy deposit protection – designed to protect all parties
It is worth remembering the benefits to all parties of tenancy deposit protection – should the tenant breach their tenancy agreement the landlord can seek to claim a deduction from the deposit at the end of the tenancy, and if a dispute arises from this, the scheme’s alternative dispute resolution service will give them the opportunity to present evidence to an independent adjudicator. This is not an option when the deposit has not been protected and any perceived feeling that withholding a deposit will make up for, say, damage to the property caused by the tenant, will be short lived if the landlord is ultimately faced with a penalty that may well outweigh the cost of the repair required – something that they could have claimed for through the channel of a tenancy deposit scheme and its alternative dispute resolution service.
To avoid both the potential financial implications and the process of having to face the Tribunal, the best thing a landlord can do is to ensure that their tenant’s deposit is lodged with a tenancy deposit scheme and that prescribed information has been issued to the tenants within the regulated 30 working days from the tenancy start date.