<> Tenancy Deposit Schemes: could a landmark case lead to more prosecutions? | National Landlords Association
Article Posted -
12 Jul 2016

Last week, a landmark case in Scotland highlighted the need for deposit protection, after a letting agent in North Ayrshire became the first in the country to be prosecuted for its breach of the rules.

Why is Deposit Protection important?

The importance of protecting a tenant’s deposit cannot be overstated. Failing to do so can result in severe fines and time in court, and can cost landlords and agents the right to use an accelerated possession process when ending tenancies. The majority of landlords and agents already protect their tenants’ deposits, but there are still some who do not, and may not be aware of their legal obligations and responsibilities.

Legal requirements in Scotland

Since the Tenancy Deposit Schemes (Scotland) Regulations were introduced in 2011, all Scottish landlords have been required to hand over deposits to one of the three Government-approved schemes – MyDeposits Scotland, Safe Deposits Scotland or the Letting Protection Service Scotland.

By encouraging the protection of deposits in these schemes it was hoped that agents would be prevented from holding onto money on false grounds and the schemes were established to stop tenants from losing deposits unfairly.

First letting agency to be prosecuted

The agent, Colvin Houston Ltd., pled guilty to the charge relating to two specific deposits that had not been paid into a scheme. The deposits amounted to £925, and the company was subsequently fined £750. This fine was then reduced to £500 for an early plea.

North Ayrshire Council said the landmark ruling at Kilmarnock Sheriff Court could potentially have a “massive impact” for people renting properties across Scotland. Furthermore, the Council stated that there now could be a legal precedent for establishing criminal liability under Trading Standards legislation, thus increasing the penalty for anyone found to be holding deposits without a regulated scheme.

The need for awareness

The case is important, not only for being the first of its kind, but also for highlighting the need for awareness of deposit protection, for both landlords and the tenants they let to.

As we have seen, the risks of failing to protect a tenant’s deposit can be severe. But while it is vital that landlords understand their responsibilities, it’s also vital that tenants know what to expect.

Clearly, more work needs to be done to raise awareness and understanding amongst landlords, agents, and tenants alike.

For more information on tenancy deposit protection, please visit:

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Comments

Submitted by 11615 on 5 August 2016 - 8:37am

I agree that tenants need to be made aware of the laws, but its not easy to do without high cost.

With regard to agents, surely if they don't understand the rules its because they are either amateurs or are dishonest?

The answer lies in all agents having to be members of a professional body and to make it a legal requirement to not only disclose their fees but the legal requirements that they have to comply with, and how a tenant can make a claim against an agent.

This way therefore also makes the public aware.

Submitted by 11615 on 5 August 2016 - 8:37am

I agree that tenants need to be made aware of the laws, but its not easy to do without high cost.

With regard to agents, surely if they don't understand the rules its because they are either amateurs or are dishonest?

The answer lies in all agents having to be members of a professional body and to make it a legal requirement to not only disclose their fees but the legal requirements that they have to comply with, and how a tenant can make a claim against an agent.

This way therefore also makes the public aware.

Submitted by 5206 on 19 July 2016 - 4:48pm

In my opinion the process is over complicated. If same tenants and property should only need to protect once at the start of the tenancy. Currently if renew via a Renewal Memorandum have to protect again. If becomes statutory period need to update it as such. All the time the deposit companies are being paid each time for the renewal of insurance backed schemes. I believe the actual regulations may only require it to be protected once, but subject to the schemes rules.

Submitted by shaidar on 18 July 2016 - 9:00am

Peter, this is the first prosecution of an agent under the Scottish deposit protection legislation. The case you refer to (Draycott v Hannells Lettings Ltd (2010)) falls under England & Wales legislation.

Submitted by 159817 on 17 July 2016 - 1:12pm

I would say that most of tenants are good but not all are same.

Even the good tenants donot want to pay for damage and it could be costly for the landlord.

Protecting deposits is simple with in 30days and I use MyDeposits Scheme so at the end of the term unprotect the deposit and return the deposit quickly to tenants within 10days.

I did not take a deposit once before tenant moving the property as he said he will pay it on the day when he will move in and he gave accuses after accuses and did not pay deposit. He was a professional graduated British from one of the best University and he caused the problems at the end and cost me a lot. He also cheated his business partner and left the country.

Submitted by 6650 on 15 July 2016 - 6:20pm

I used to do deposits before the scheme and found that the paying in and out and leaving the tenant unchecked until termination extra work and usually not worth it. I now do not do deposits and tell the tenant that I trust them. It works, my work load is less and the trust is ususlly honoured with ongoing house care benefits and replacement recommendations.
Life has become much easier and better.

Submitted by 152531 on 15 July 2016 - 4:18pm

Could you please clarify what makes this case 'landmark'?

If it's the fact that the agent was prosecuted instead of the Landlord, then I would draw your attention to Draycott v Hannells Lettings Ltd (2010).

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