Landlords in Scotland who take a deposit from their tenant(s) are required by law to protect the deposit with a government-approved tenancy deposit scheme, but that is if they choose to take a deposit. They do not have to take one. There are some instances where the landlords may opt not to take a deposit, though this is rare.
Should landlords take a deposit?
While it isn’t mandatory, landlords will almost always take a deposit from the tenant. The deposit acts as a security net should the tenant breach their tenancy agreement in any way, including damage to property or not keeping the place clean. This would be grounds for the landlord to claim part of the tenant’s deposit for repairs, or for expenses on the landlord’s behalf due to the tenant, such as costs to pay for a cleaner.
Without a deposit on the line, the tenant might also feel less incentivised to take care of the property as they have no deposit acting as stakes for not following the tenancy agreement.
If the landlord does take a deposit, they can only take up to the equivalent of two months’ rent.
When might a deposit not be taken?
As taking a deposit gives the landlord peace of mind that they will be compensated for any breach of the tenancy agreement, it is uncommon that a landlord chooses not to take one. There are however a few instances where the landlord might decide they do not wish to take a deposit, for example; a property listing that does not ask for a deposit might garner more interest from potential tenants who are keen to move in but cannot afford a deposit.
Landlords might also not take a deposit where there is already trust established with the tenant, for example if they are a friend or family, or have come highly recommended from references. Some landlords might even choose not to take a deposit simply so they can avoid the admin that comes with it, including protecting it.
When should the deposit be taken?
Usually, the tenant’s deposit will be taken before the tenancy officially begins. This often happens after referencing has been completed and agreements have been signed. Paying the deposit prior to moving in helps confirm the tenant’s intention to move into the property, and allows landlords or letting agents to finalise preparations ahead of the tenancy start date.
The deposit should then be protected with a government-approved tenancy deposit scheme, such as SafeDeposits Scotland, within 30 working days of the tenancy start date. This is a legal requirement for all deposits that are taken in Scotland, and failure on the landlord’s part to comply with legislation would be grounds for the tenant to raise a case with the First-tier Tribunal for Scotland (Housing and Property Chamber), potentially seeing the landlord instructed to pay the tenant up to three times the deposit amount.
Along with protecting the deposit, the landlord also needs to provide the tenant with prescribed information documentation, including key info regarding the tenancy and the deposit. This should include:
- The amount of the deposit paid by the tenant and the date on which the landlord received it
- Confirmation that the deposit was protected, along with the date, name of the deposit scheme, and its address
- Address of the property to which the deposit pertains
- A statement that the landlord is, or has applied to be, entered on the register maintained by the local authority under section 82 (registers) of the 2004 act
- The circumstances in which all or part of the deposit may be retained at the end of the tenancy, with reference to the terms of the tenancy agreement
Failure to provide this information within 30 working days could result in similar consequences as if the deposit was not protected.
