Tenancy Deposit Schemes: could a landmark case lead to more prosecutions?
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:
- Tenants – www.mydepositsscotland.co.uk/tenants
- Landlords – www.mydepositsscotland.co.uk/landlords
- Agents - http://www.mydepositsscotland.co.uk/letting-agents