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Landlords, if you’re renting out your property, you may want to take a deposit from your new tenant before they move in. A deposit is a sum of money taken from your prospective tenant which acts as a guarantee against damage to the property, unpaid rent, and cleaning costs if the property has been left in poor condition.

What are the tenancy deposit rules? 

a man in a suit pointing to a black board that says "know the rules" To give you a bit of background, The Tenancy Deposit Schemes (Scotland) Regulations 2011 were introduced in Scotland on 7th March 2011. To comply with the Regulations, any landlord or letting agent in receipt of a tenancy deposit must:

  • Transfer the deposit to a government-approved scheme, such as SafeDeposits Scotland, within 30 working days of the tenancy start date; and
  • 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.

Deposit Amount

The amount that can be charged as a deposit cannot be more than two months’ rent.
For example, if the rent is £500 a month, you cannot ask for more than a £1000 deposit.

Lodging a Tenant Deposit

As per Scottish Government legislation, you must lodge your tenants’ deposit with a government-approved Tenant Deposit Scheme (TDS) within 30 working days of the tenancy starting, otherwise, your tenant can apply to the First-Tier Tribunal for Scotland (Housing and Property Chamber), either during the tenancy or up to three months after it ends. The Tribunal can order you to pay up to 3 times the deposit to your tenant.

There are three tenancy deposit scheme providers to choose from in Scotland:

Returning the Deposit

As the landlord, you must contact the tenancy deposit scheme provider and ask them to return the deposit. You should contact the provider as soon as possible after the tenancy ends.  You should tell the provider how much of the deposit should go back to the tenant and, if there are any repairs or cleaning work to be done, how much of it should go to you to cover these costs. You must prove that you have a claim to retain some or all of the deposit. If you can’t – the adjudicator must return the deposit to the tenant.

Tenancy Deposit Disputes

At the end of a tenancy, a landlord and tenant should always try to agree on any deductions from a tenant’s deposit. If agreements can’t be reached, the schemes offer a free dispute resolution service where an independent adjudicator looks at evidence from both tenant and landlord within specified timescales. The adjudicator will decide on how the deposit should be returned. It’s usually the landlord (or agent) who submits a repayment proposal, but the tenant can make an application too. Your landlord must prove that they have a claim to retain some or all of the deposit. If they can’t – the adjudicator must return the deposit to you.

Alternative Dispute Resolution (ADR)

If the landlord and tenant can’t agree on how the deposit should be repaid, a government-approved tenancy deposit scheme can provide an alternative dispute resolution (ADR) process to help decide how any disputed amount should be repaid. This is an alternative to the tenant taking legal action for the recovery of a deposit through the First-Tier Tribunal (FTT).

If a dispute is referred to ADR, the tenancy deposit scheme will invite the landlord to submit evidence to substantiate their claim to the deposit. The tenant will then be invited to view any evidence submitted and provide a statement and any evidence that they may have in response. The submissions provided by both parties will be passed to an independent adjudicator who will decide how any disputed amount should be awarded.

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Resources: My Deposits Scotland and The Scottish Government Website

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