Introduction of the Housing (Scotland) Bill

On 26th March this year, a new Housing (Scotland) Bill was introduced to the Scottish Parliament. Within the Bill are several proposed changes including new measures to prevent homelessness, protection of tenants’ rights, pets in properties, and ending of joint tenancies to name a few. Another proposal in the Bill relates to unclaimed deposits, so what exactly is an unclaimed deposit?

Unclaimed deposits

At the end of the tenancy a repayment request will need to be conducted by either the tenant or the landlord, and then it is up to the other party to respond to this request. If both parties are happy with the amount that is being repaid to the tenant and each have accepted, it will then take five working days for the money to be paid into the tenant’s bank account. If there are multiple tenants who should be paid part of the deposit, this is also agreed upon during the repayment request. Tenants will need to provide their bank details to the tenancy deposit scheme that their deposit is held with before funds can be released, and this is a crucial step which many tenants forget about, resulting in unclaimed deposits.

When the tenant does not reclaim their deposit at the end of the tenancy, the deposit stays with the tenancy deposit scheme it is registered with as unreleased funds. The landlord or letting agent may have requested the repayment be sent to the tenant but the tenant has not responded to this.

Tenancy deposit protection scheme SafeDeposits Scotland makes an active attempt to track down tenants who have ended their tenancy but not claimed their deposit, and alert them that they have a deposit which needs to be reclaimed.

Surprising statistics

During the last financial year, SafeDeposits proactively returned 2,590 unclaimed deposits with a combined value of £1,087,152.

At the time of writing, SafeDeposits currently holds 5,258 unclaimed deposits, with a combined value of over £1.5 million. These statistics indicate that tenants are perhaps unaware that they are supposed to receive their deposit back at the end of the tenancy. In fact, many of the unclaimed deposits SafeDeposits holds have come from students who may be living away from their parents for the first time and know very little about deposits and how to claim them back. In particular a lot of these students have come from overseas and return home without claiming their deposit.

It is important that tenants – particularly those living in a rented property for the first time – are aware of the legislation surrounding deposits and know that they should be receiving their deposit back at the end of the tenancy, provided the landlord has agreed to this. Landlords who are in regular correspondence with their tenants might want to give them a heads up after submitting the repayment request so that the tenant can respond to it and receive back their deposit.

What the Bill proposes

The new Bill that has been put forward to the Scottish Parliament proposes several changes which affect the private rented sector. Part four specifically makes changes that affect tenants, with the first section relating to unclaimed deposits. Under current legislation, any deposits where the tenant cannot be tracked down would go to the Crown after six years unclaimed. This section of the bill proposes a new change whereby deposits which remain unclaimed for a period of five years be transferred to Scottish Ministers or into another fund to be used for the purpose of providing advice, information or assistance to private tenants in relation to tenants’ rights, or to provide other services that aim to support tenants. Additionally the Bill proposes that the unclaimed deposits also be used to prevent private tenants from becoming homeless.

Scottish Ministers should prepare reports on how any unclaimed deposits transferred to them or a fund administrator have been used, to be published within three years of the deposits being transferred, and a copy of this should be submitted to the Scottish Parliament. The Bill also allows tenants who have not reclaimed their deposit after the five-year period to submit an application to receive a payout equal to the sum of the deposit, so long as they provide a reasonable excuse and evidence for why they had not previously claimed the deposit within those five years.