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A very costly oversight

We reported recently the ruling involving an Edinburgh landlord who received the maximum fine (a sum of £3450) for not protecting their tenant's deposit money in line with the legislation. As it is one of the first rulings of its kind in Scotland since the introduction of tenancy deposit legislation, we’ve been looking at the court decision in detail to see what lessons can be learned in order to make sure others avoid facing a similar fate.

Background of the tenancy

After the tenants initially sought the return of the deposit in February 2013 the landlord claimed entitlement to retain the entire sum of £1150 in respect of alleged damage to the property. However, despite repeated requests, the landlord failed to provide any evidence to demonstrate why they needed to make any deductions to the tenant’s deposit. 

After a lengthy period the tenants accepted part responsibility for some of the damage that the landlord was claiming for and a compromise was reached for the sum of £575 - being 50% of the deposit. 

However, after initially agreeing to the compromise payment the tenant’s realised that their deposit had not been protected and took the issue to the courts.

Lesson learned

We know what the outcome from this case is already, but what lessons can be learned and what’s the take away message?

Lack of evidence

First, the judge commented particularly that the landlord presented no solid evidence to their tenants as to why they needed to make a deposit deduction. Second, the judge also noted the fact that had the deposit been protected - and the matter subsequently settled by using alternative dispute resolution (ADR) - the deposit would likely have been returned to the tenant anyway, due to the lack of evidence on the landlord’s part.

The legislation is there to be enforced

At this point it is useful to remind ourselves that on the face of things this case seems to demonstrate the kind of behaviour that the law was brought in to prevent. The judge made it clear that they were not convinced by the landlord’s argument that the issue was caused merely by an "oversight" and the judge also commented that the legislation will prove useless unless properly enforced.

Ignorance not an excuse

Finally, what this ruling tells us is that ignorance clearly won’t be tolerated by the courts and it should serve as stark reminder of the potential sanctions landlords can face for non-protection of deposits. 

Remember, if you let property in Scotland you must lodge the deposit within 30 working days of the start of the tenancy and pass the prescribed information to your tenants in order to fully comply and avoid a penalty.

The retrospective provision of the legislation means you should also have protected any deposit that you took before the introduction of deposit protection on 2 July 2012. mydeposits Scotland members should visit the Resource Centre to ensure you're familiar with your deposit protection responsibilities and know what you must do in order to comply with the law.