01
Jul
2013

A year of deposit protection

Eddie Hooker, CEO of my|deposits Scotland, looks back over the year to see how Tenancy Deposit Protection has impacted the Scottish rental market.

There’s been a few changes to the way landlords and agents in Scotland operate over the last year. May this year saw the introduction of Tenant Information Packs, but of course July last year was the introduction of Tenancy Deposit Protection (TDP). There were various deadlines for landlords and agents to meet, depending on when they first received a deposit from their tenants. So now that these deadlines have passed and we enter a second year of TDP,  what do we know about the impact it’s had so far?

Awareness

Let’s start with a snapshot of how it’s affected tenants a year on from its introduction. Our regular research has found that tenant awareness of TDP has risen in Scotland from 40% in March 2012 to 65% to date - that’s a rise of 25%. As a consumer protection initiative, it’s an encouraging finding and awareness will undoubtedly improve with time.  However, the research we conduct, which specifically tracks awareness and attitudes toward TDP, shows that the vast majority (92 per cent) of tenants say they haven’t discussed the protection of their deposit with their landlord. It also shows that many say they don’t properly look over the property’s inventory in detail (59 per cent) or read their tenancy agreement thoroughly when they move in (41 per cent).

So in terms of awareness it’s a positive picture so far but tenants need to make sure they’re having the discussion with their landlord or agent about TDP. The introduction of Tenant Information Packs should also help to improve awareness but tenants must carefully read their tenancy agreements and inventories, too. These documents contain important information about deposit protection and, importantly, should include reasons for why the deposit may be withheld at the end of the tenancy. Failing to do so may lead to disagreements about deductions to the deposit and could mean risking some or all of their deposit or delays to its return.

Compliance

In early May 2013 the Scottish Government‘s reported deposit protection take-up figures at a first glance did not seem all too encouraging. However, it is important to note that not all Scottish deposits were required to be protected by landlords or letting agents at that point so it did cause some unnecessary concern. The final deadline has now passed (15 May) and approximately £100m of tenants’ deposit money has been safely lodged within the schemes so far.

Serving the prescribed information

This is a key issue. As well as protecting the deposit landlords and agents must also communicate details about deposit protection – called the Prescribed Information – to their tenants within 30 working days from the start of the tenancy.  Although most TDP schemes assist the landlord or agent in this respect, our research shows that around a third (30 per cent) of tenants say they didn’t receive this information from their landlord or agent during the tenancy. The fines for non-compliance are substantial so landlords and agents must ensure they both protect the deposit and pass the Prescribed Information to their tenants in order to fully comply with the law and avoid a penalty.

Disputes

When the legislation was introduced last year my|deposits Scotland were on the ground supporting landlords and agents and we held a number of workshops and meetings all across the country. Unsurprisingly, many were are unfamiliar with the disputes process and raised genuine concern about it.

A little over one per cent of tenancies actually end up in a formal dispute but it’s an issue that always proves to be a steep learning curve for landlords and agents; the ADR process relies entirely on facts and evidence and the onus of proof lies with them.

Concerns were also raised about existing tenancy agreements, which made no reference to deposit protection or contained any appropriate clauses about the deposit and its purpose.  As mentioned, the dispute resolution process is evidence based, so unless tenancy agreements contain the appropriate wording about TDP –what the deposit is for,  what the likely deductions may be, when the deposit will be returned etc – it could hinder the chances of landlords or agents being successful in the event of a formal dispute.

Our advice at the time was to revisit the wording in tenancy agreements to bring them up to speed with the legislation and this still rings true if you are yet to considered it.

Education and support

So, where form here? Well, a year on the picture painted is largely a positive one.  But it’s vital that landlords and agents remain well versed on their responsibilities as well as what to do in the event that they can’t agree over the return of the deposit with their tenants.

Education is key, so we provide a range of advice and support and we also plan to host even more of our popular dispute workshops in Scotland, which look at the issues in greater detail and more practical ways. Over 90% of attendees at our recent series of workshops in Edinburgh and Glasgow rated the workshops as very good or excellent. So get along to one or don’t hesitate to contact us if you’re interested in something more bespoke; one of our team would be happy to [pay you a vist and discuss your requirements in more detail.

Remember, my|deposits Scotland is here to support everyone with deposit protection. Landlords, agents and tenants should visit the Resource Centre at www.mydepositsscotland.co.uk to see the range of guidance and information we have available.

Eddie Hooker

CEO, my|deposits Scotland

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