The Scottish Government has recently introduced legislation to regulate deposits taken by landlords. The aim is to protect tenants from rogue landlords but, as ever, it will have an impact for the honest ones too.
If you're a landlord, or a tenant; if you advise clients falling into either category; if you have friends or family who might be affected, or if you're simply curious,..................... Springfords have put together a brief summary of the new rules.
In essence, all deposits received on or after 2 October 2012 will need to be placed in one of three designated schemes currently approved by Scottish Ministers. This must be done within 30 days of the tenancy commencing and the tenant must be given full details. Only registered landlords can place a deposit in a scheme but this shouldn't be an issue as registration has been compulsory since 2004.
There are transitional rules for deposits taken before 2 October - broadly, deposits must be placed in a scheme as follows:
Post-7 March 2011 deposits: by 13 November 2012
Pre-7 March 2011 deposits: by 15 May 2013
(or, if earlier, 30 days after renewals
between 2 October 2012 and 15 April 2013)
Some letting agents have decided to move all of their deposits into one of the designated schemes prior to November 2013 regardless of the actual deadline applying, to avoid any doubt or risk of a deposit being missed.
There will also be tighter controls over what can be deducted from a deposit before it is repaid (e.g. cleaning, unpaid rent) and timescales for repayment. Broadly, deduction will only be available for those items specifically provided for in the lease agreement, making it imperative that lease agreements are reviewed to ensure that all required items are included. It will also be more important than ever to ensure that evidence of contentious issues is kept (e.g. photos of damages).
Failure to comply with the new rules can result in a landlord incurring a fine of up to three times the deposit.
While there are exemptions from the rules (e.g. holiday homes, renting a room in your house) using a letting agent will not offer a let-out. Even where an agent is used, the responsibility for compliance rests with the landlord (as do any fines!) so it’s worth getting in touch with your agent to ensure that they are complying on your behalf.
More information on these new rules can be found on the Scottish Governments website at: http://www.scotland.gov.uk/Topics/Built-Environment/Housing/privaterent/government/SGTD1
While the above provides a lot of food for thought, there is still plenty of time to ensure deposits taken are safely tucked away in one of the schemes. If you’d like to discuss any of the above, please get in touch with your usual Springfords contact.